The Norman Transcript

April 12, 2014

Drilling operation shows policy gap

By Joy Hampton
The Norman Transcript

NORMAN — While Norman residents are being encouraged to use rain barrels, a Texas oil and gas company is pumping thousands of gallons of treated drinking water into the ground.

The Oklahoma Corporation Commission controls permits for drilling, including the hydraulic fracturing on Franklin Road near the Moore Norman Technology Center by Finley Resources Inc. The city of Norman issues commercial use water meters, however, and that has some residents stirred up. Citing the current odd/even mandatory water rationing, residents are asking why Finley Resources is being allowed to connect to a city hydrant with a rented meter.

Finley has withdrawn an average of about 17,000 gallons of potable water a day since March 12. As of Wednesday, Finley had used 432,000 gallons of water for the operation, according to city records.

“We rent to everybody from Silver Star who puts in roads, to Ideal Homes who puts in houses, to Girl Scout troops that have car washes,” said Norman Utilities Director Ken Komiske. “We cannot discriminate who we sell water to.”

Komiske said as commercial users go, Finley’s 17,000 gallon a day average is not an excessive amount. While the University of Oklahoma with its multiple buildings is probably the city’s top water customer, discounting OU still leaves several large users. Top commercial users go through anywhere from 300,000 gallons a day to 1 million gallons of water a day, Komiske said.

Regular commercial customers pay the city $2.10 per 1,000 gallons used and a $4 fee per month.

By contrast, temporary permits like Finley’s require a $1,000 returnable meter deposit, a $25 monthly rental fee and a higher rate of $2.50 per 1,000 gallons of water used.

Environmentally concerned residents say using potable water in fracking takes it out of the water supply chain. The process is typically done by mixing water with sand and chemicals and then injecting it into the ground. It’s a form of mining for natural gas or petroleum under the regulation of the Oklahoma Corporation Commission through the Oil and Gas Conservation Division.

The Oil and Gas Conservation Division encourages recycling flowback water and using lower-quality water for hydraulic fracturing operations. Alternatives include lower quality groundwater and treated wastewater.

The city does have some off-line arsenic wells not far away, Komiske said, and that might be a possibility in the future if the company continues fracking in the area. That water would have to be trucked to the site, however. A tanker carries 25 tons of water, not including the weight of the truck which puts a lot of wear and tear on the roadways.

“We have a policy gap here,” Mayor Cindy Rosenthal said. “The policy is simply silent on this. To the clerk, there is no difference in applications. We don’t want to be sending mixed signals.”

The week of April 21, Rosenthal said a joint meeting between the city’s finance and council oversight committees to review the matter is likely.

“We ought to have some criteria when we issue these bulk water meter permits,” Rosenthal said. “We’re trying to move very quickly to address this policy gap.”

The city’s legal staff will be involved in the discussion.

“There may be limits on what we actually can do, but all of that will be on the table,” Rosenthal said.

Governmental action that unduly hampers legally permitted businesses can have expensive repercussions. In Rogers County, action by the Board of County Commissioners in 1998 that hampered a limestone mining operation resulted in a 12-year court battle and several appeals. Material Service v. Rogers County ended with a $14 million judgment with interest adding up to an accumulated $22 million against Rogers County.

Revenue bonds were issued to pay the debt.

Initially, the bill was going to be paid through ad valorem (property) taxes. After exploring all of the options, a one-percent county sales tax was adopted to pay the bill. A small portion of the county’s existing one-percent road tax is also being diverted to pay down the judgment.

Counting the interest on the bonds, the judgment will ultimately cost in the neighborhood of $52 million, said Claremore Daily Progress publisher Bailey Dabney.

Norman City Manager Steve Lewis said lawsuits of this nature are a viable concern by the city as it considers what action it can take to limit the purchase of potable water by a legally operating business.

Long term, the answer may lie within the suggestion by the Oil and Gas Conservation Division that lower quality water sources be used for hydraulic fracturing. With a large portion of the state still struggling with drought, and water issues one of the largest on the horizon, lawmakers may be inclined to strengthen suggestions and encouragement into law and regulation in the future.

Joy Hampton



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