Texas Warns of Toxic Drilling Waste Threats to Permian Basin Oilfields

The General Land Office of Texas has warned that toxic waste fluid from shale drilling threatens to contaminate oil wells in the Permian Basin. The agency oversees 13 million acres of state land and has expressed concerns over plans by Pilot Water to dispose of the toxic waste fluid. The warning highlights the potential risks to the oil industry in the region.

The General Land Office of Texas has issued a stern warning that toxic waste fluid from shale drilling threatens to contaminate oil wells in the Permian Basin, one of North America's most prolific crude oil basins. The agency, which oversees 13 million acres of state land, has expressed concerns over plans by Pilot Water Solutions to dispose of the toxic waste fluid in the region near New Mexico. This warning underscores the growing urgency of the wastewater problem in the Permian Basin and its potential impact on the oil industry.

The General Land Office's warning is backed by several major oil producers in the region. ConocoPhillips, one of the largest producers in the basin, has argued that the proposed disposal wells by Pilot Water Solutions would damage nearby oil reserves and render recoverable oil and gas reserves "permanently left in the ground" [1]. As of March 2024, ConocoPhillips reported that it only produced 37% of the oil it expected in the area near Pilot’s proposed disposal wells, while generating almost double the amount of water [1].

The wastewater problem has reached a new level of urgency, with the General Land Office and ConocoPhillips pushing back against the proposal. The wastewater, possibly from outside of Texas, injected into Pilot’s wells "could have a detrimental impact on oil and gas revenue constitutionally dedicated to the schoolchildren of this state," according to a letter from Dawn Buckingham, commissioner of the land office [2].

The issue is not limited to ConocoPhillips. Coterra Energy Inc. warned investors last week not to expect any oil production this year from wells contaminated by wastewater leaks [2]. Closely held New Mexico producer Stateline Operating Co. has filed a lawsuit against Devon Energy Corp. and Aris Water Solutions Inc., alleging that toxic water leaked from the companies' disposal wells into its production zones and rendered its reserves worthless [1].

Operators are now filing more protests than they were in the past, according to Derek Cook, a Midland, Texas-based attorney at DDC Law Pllc. "They can see the real risks and problems disposal can cause to their prime investment, which is the mineral estate," Cook said [2].

The protest is still pending in the hearings division of the Railroad Commission, which recently warned that wastewater from fracking is causing a "widespread" increase in underground pressure that could harm oil reserves and freshwater resources [2]. The protest underscores the growing tension between water handlers and oil producers over the disposal of wastewater.

As the Permian Basin faces increasing wastewater problems, drillers are clamoring for information. After Coterra discussed the issue on its first-quarter earnings call in May, the company learned that it was not the only producer grappling with well contamination [2].

The General Land Office's warning highlights the potential risks to the oil industry in the Permian Basin. The agency's concerns underscore the need for a more comprehensive strategy for disposing of wastewater in the region. As the industry grapples with this challenge, it will be crucial to find a balance between economic growth and environmental sustainability.

References:
[1] https://seekingalpha.com/news/4483615-permian-basin-oilfields-threatened-by-toxic-drilling-wastewater-texas-agency-warns
[2] https://www.bloomberg.com/news/articles/2025-08-11/us-top-oilfields-threatened-by-fracked-water-texas-agency-warns