Could Groundwater Trading Be the “Oil Patch” of the 21st Century?

R. Brady
Panhandle Groundwater Conservation District, White Deer, TX

In the early part of the 20th century, fortunes were made (and lost) speculating in then oil and gas leases, petroleum production, refining, and sales of petroleum products. As demand for petroleum and its products increased, the larger, easier to discover and develop reservoirs were developed. In the last part of the 20th century increasingly sophisticated methods have been used to find smaller or more difficult to develop reservoirs. Various conservation plans or schemes for prolonging the useful life of petroleum reservoirs have evolved.Well spacing, pumping limits, “unitizing,” and various secondary and tertiary recovery schemes have been used. Price, operating costs, and government policies have driven many of these measures.

Groundwater is following a similar development pattern in the Texas Panhandle. Groundwater is being bought, sold, traded, and developed. Speculators include corporations, individuals, municipalities, and special government agencies.

An example of groundwater speculation is the recent activity in and around Roberts County, Texas. Offering prices, sales prices, and marketing prices have increased over the years; the current price over $300 per acre. Tracts sizes range from a single section to one offering of approximately 170,000 acres. Others have proposed selling water at the wellhead for a fixed price.

Groundwater Districts are performing a role comparable to that of the Texas Railroad Commission in regulating groundwater production. Well spacing, property line separation distances, and production limits are methods that are familiar to those involved in petroleum production.

AAPG Search and Discovery Article #90903©2001 AAPG Mid-Continent Meeting, Amarillo, Texas