Pioneer Natural Resources Co. is the largest oil and gas operator in Colorado's Raton Basin, where it has been producing coalbed methane (CBM) for years. The company has collected produced-water information throughout its operations in the basin. But last year, it took a concept from its previous, small pilot project at a neighboring watershed and quickly built a robust high-tech, and transparent, water-monitoring system.

This combination of near-real-time monitoring and physical-sampling data in the Purgatoire River Basin watershed allows Pioneer to ensure that its produced water is environmentally neutral. It also provides easy, free access to water-quality data to stakeholders via a web interface. Further, the company can supply water from its CBM operations to help an area that traditionally receives only slightly more rainfall than a desert.

For going beyond what is required and providing a model for CBM water-resource stewardship, the Irving-based independent has won Oil and Gas Investor's Best Corporate Citizen Excellence Award for 2010.

Pioneer's vice president of Rockies assets, Thomas Sheffield, and environmental advisor Jerry Jacob led the project.

Thomas Sheffield, Pioneer Natural Resources’ vice president of Rockies assets, expects state agencies will use the company’s water-management data.

"We had been collecting water data for years," says Sheffield. "We felt we had good water-quality data and knew it showed our surface discharge was not adversely affecting irrigation water drawn from the river.

"But as an oil and gas company, that's a difficult message to communicate. What we wanted to achieve was transparency. Additionally, we wanted to be able to look at the operational cost of water discharge versus treatment, as the cost of discharge is infinitely smaller than other options."

Not having to re-inject produced water into a compatible formation saves time and money where the produced water is within regulatory limits for discharge. According to Sheffield, the savings can be millions of dollars.

"That helps sustain the economics of the gas here," he says. "With this data, we can determine any potential effects early and make adjustments. The combination of these things gives us a good ability to properly manage the water resource and still provide return to shareholders."

Building on success

The Purgatoire project was a logical extension of Pioneer's three-station, continuous monitoring project in the Apishapa drainage basin, which lies north of the Purgatoire. The Apishapa project, which was scaled to match the amount of development and discharge in the watershed, was rolled out by Norwest Applied Hydrology with encouraging results, says Jacob.

Environmental advisor Jerry Jacob, who co-led the project for Pioneer, notes that the stakeholders’ response has been positive across the board.

"The feedback on Apishapa was that the project was beneficial to all stakeholders, so we decided to expand to the Purgatoire watershed, where our discharge operations were much larger than the Apishapa. To adequately address water-quality issues in the larger area, we came up with a more sophisticated, larger monitoring project."

A variety of stakeholders in the area, including environmental organizations, regulators and the general public, led primarily by irrigators, had expressed concern about changes in water quality that could result from discharge of produced water into the watershed.

Water is a precious resource in the semi-arid region. "If you take this resource away from the people who use it—for all types of business—it would devastate the community," Sheffield says.

The second, larger water-monitoring project was undertaken in Las Animas County. The project consists of 25 sites along the Purgatoire River, nine of which collect web-accessible, real-time data with installed equipment. Twenty-five locations, including the nine real-time stations, are physically sampled monthly.

It was implemented over a short time frame by international resource management and environmental services company Tetra Tech Inc. Norwest Applied Hydrology assists in system maintenance.

"In January of 2010, we contracted with Tetra Tech to design, implement and maintain monitoring stations. There was a fast turnaround, as stations were up by April," Jacob says. Using a third-party expert such as Tetra Tech increased trust in data and analysis from the monitoring stations.

Initially, Pioneer intended to fund the installation and ongoing operations on its own, but within a few months it was approached by other operators in the basin. The company was able to allocate costs so that everyone could participate. Two other operators have now signed on to the project, and a nearby coal-mining operator has expressed interest.

An independent, web-accessible data stream is now live-charting water level, pH, conductivity, temperature and chloride content. Tetra Tech also samples specific sites monthly for these data, as well as for metals content, alkalinity, total suspended solids and total dissolved solids.

continuous water-quality-monitoring stations are linked to a public website via satellite.

"This is just one part of our water-management process," says Sheffield. "Scientifically, we have gone far beyond what people normally do here."

He notes that this type of implementation is useful not only during an ongoing CBM-dewatering program, but also for taking base-line water samples before resource development begins. There may also be applications in eastern U.S. shale plays, where companies would like to do surface discharge of produced water.

"One of the biggest things we learned is how critical it is to get baseline data," Sheffield says. That data allows stakeholders to interpret changes. Because the information is public and easily accessible, everyone, from the public to landowners to operators, can keep track.

Pioneer and its partners initially invested $1 million in the first year to put the system in place. The company met with landowners to negotiate access to monitoring sites. The installation cost included everything from fabrication to satellite equipment and solar panels, as well as system programming. After the initial investment, the expense to maintain and monitor the system is apportioned out in lease operating costs, notes Sheffield.

"That cost is now essentially an operating expense in the field. In the second year, there is monitoring and maintenance, but there is also ongoing lab work," he says, referring to the manual monthly sampling at certain sites. Maintenance is necessary to maintain accurate readings. Jacob says calibration and lab work go hand in hand, allowing the monitoring team to establish correlations between levels of certain constituents in the water.

fter more than a year of operating the project, Jacob says the response from stakeholders has been positive across the board.

"Together with Tetra Tech, we went out to the community, made sure everyone knew about this website and that the data on it was available, and trained people on how to use it. The website gets hundreds of hits every month."

The project has proved to be more useful than Pioneer had expected.

"It's been a huge benefit for the landowners who use water for livestock and are concerned with wetlands," says Sheffield.

Local and state agencies that manage irrigation can now monitor flows, and the information affords water users some predictability. The water being made available helps to sustain and expand community and agricultural uses, particularly given the semi-arid environment. The Las Animas County Commissioners recently filed a request with the Colorado governor's office for a declaration of drought disaster, as lower-than-normal precipitation and high winds have combined to make farming and ranching difficult. According to Jacob, Governor John Hickenlooper is familiar with the project and sees great value in its data gathering, analysis and transparency.

During his candidacy, the governor visited Purgatoire and talked with landowners. In an article in the Colorado Statesman, Hickenlooper said leftover water from natural gas drilling isn't potable but has agricultural uses, which he called a "perfect example of how we want our oil and gas industry to work with our rural economies." He indicated his support for water monitoring to ensure that water quality is acceptable for agricultural uses.

He and various state agencies are eager to have projects such as this become best practices in the oil and gas industry. With a comparatively small investment and a bit of vision, Pioneer has created a lot of value for stakeholders.

"This is the first time there has been a comprehensive water-monitoring situation with an oil and gas project in Colorado," Jacob says. Because of its success, the Purgatoire project has the chance to lead the way as a new tool in water management, with operators and communities together benefiting from smart use of this most precious resource. M

Watershed monitoring provides real-time data and verifies the quality of water used to irrigate valley-bottom hay fields.