Toxic water project sparks controversy with Navajo neighbors
Missed cues grow Native distrust around a New Mexico research project on oil well wastewater.
Daniel Tso, a former Navajo Nation Council member, opposes new oil and gas production or associated work anywhere within the traditional Navajo homeland. (Photo by Jerry Redfern / Capital & Main)
In October 2021, workers from a water treatment company irrigated a 10 x 20 foot test plot of scrubby grass on an oil well site near a Navajo Nation chapter house in northwest New Mexico.
The grass thickened, grew and later shriveled under the high desert sun and drought. Even so, it nourished a statewide, petroleum-based controversy when locals learned that the company was researching “produced water,” a toxic byproduct of oil and gas development, as part of a program to search for new methods of treatment and disposal of the industrial waste.
Daniel Tso, who was chairman of the Health, Education and Human Services Committee of the Navajo Nation Council at the time, says that, since hearing about the test plot, he and others have been working to stop all use of produced water from oil and gas production on the Navajo Nation “through the courts if necessary.”
But the oil production and water treatment companies at the center of the issue and the head of a New Mexico group studying produced water are wondering what all the fuss is about, because they say no produced water was used.
It’s all a big miscommunication, they say.
Even so, that miscommunication highlights the sharp divides between state agencies tasked with protecting human health and the environment, an industry trying to treat and reuse toxic waste and the people who live amid wells in oil and gas fields and feel left out of crucial conversations about regulation and enforcement.
To understand how a misunderstanding could grow into a statewide controversy, first it’s important to know that the term “oil well” is itself an aspirational label and a kind of misunderstanding.
Oil is what production companies want when they drill in New Mexico, but super-saline water — “produced water” — is what they mostly get because, on average, wells here produce four times as much of this naturally occurring, briney, mineral-laden soup as they do oil.
That produced water brings problems for everyone involved with, or adjacent to, oil and gas production. Nobody really wants the salty water because it ranges from toxic to fantastically toxic; if you’re really unlucky, it’s also radioactive. If it spills, it can ruin your land, and currently there are few legal places to put it.
New Mexico state law offers oil and gas producers just three possibilities: It can be reused in drilling operations, it can be injected back underground (which can trigger earthquakes), or it can be used to test new desalination processes through the state’s highly regulated Produced Water Research Consortium (PWRC). All other uses are illegal.
The wellsite in question is owned by a small producer named HPOC. It has just five oil wells in New Mexico, dotted in the sage- and chamisa-covered hills of the far eastern edge of the Navajo Nation around the Ojo Encino Chapter House. The grassy test plot was on the company’s Eagle Springs 8 well site, whose name is a reference to nearby Eagle Springs, where Navajo families have collected drinking water for generations.
Standing next to the oil well, you can see the water tower at the chapter house (a traditional, local form of Navajo government) poking over the northern horizon, a few miles away. A pipe from the wellsite runs east for a half mile over a small hill and ends at Eagle Springs 9, a produced water injection well.
It’s a busy well, because according to state records, Eagle Springs 8 is arguably a 6,000-foot brackish water well with a small amount of oil mixed in. In 2022, it produced 100 times more water than oil.
HPOC’s four other oil wells aren’t doing any better than Eagle Springs 8. A second well on the site pulled 115 barrels of produced water for every one of oil. A pair of wells three miles away pulled 318 to one. The company’s fifth well, Torreon Wash 36, hasn’t produced anything since 2018 when it drew a paltry five barrels of oil and 100 of produced water.
Nyle Khan is co-manager of HPOC. “We’re a small oil company,” he said in a call from his base in California, “and we produce a heck of a lot of water.” Khan says the company looked around New Mexico and had an idea. “Everywhere you read: ‘Shortage of water, shortage of water, shortage of water.’ So we said, ‘Hey, we’ve got a lot of water … Can it be used for anything?’” He brought in another company, called Kanalis — where he used to work — to find out. And in October 2021, Kanalis employees irrigated the patch of test grasses on the Eagle Springs 8 site, igniting the storm.
When Tso at the Navajo Nation first heard of the project, he fired off an official letter to state agencies asking why produced water was being used illegally on or near Native American lands. The agencies scrambled to find out.
When Mario Atencio, a member of Diné CARE, an environmental protection group on the Navajo Nation, first heard of the project and the grassy patch, he thought it was an “experimental use of toxic waste” on Native lands. And if the company thinks its water is safe, he says, “They should drink it.”
The New Mexico Produced Water Act of 2019 tightly circumscribed what can be done with produced water, and it also begat the PWRC. That research program, the only framework in which a company can legally use produced water outside of reinjecting it in the ground, is composed of some 200 state and federal agencies, oil and gas companies, water treatment companies and academics all looking to answer one question: Can produced water be used for anything beneficial?
It’s an urgent question. Oil and gas producers pulled up and reinjected more than 75 billion gallons of produced water in the first 11 months of 2022. By comparison, New Mexicans used less — 61 billion gallons — for everything in and around their homes in 2015, the last year with complete data. As the state faces increasing aridification from climate change, state leaders are hurrying to find new sources of water and more efficient ways to use what New Mexico already has. “With targeted research, proper regulation, and determination of appropriate treatment levels, potential use of produced water outside the industry is possible,” reads a New Mexico Environment Department (NMED) handout describing the Produced Water Act. The catchphrase, used by everyone involved, is “beneficial use” — that’s the PWRC goal.
The consortium’s program manager is Mike Hightower, previously a research professor at the University of New Mexico’s Center for Water and the Environment. He’s pretty sure that properly treated produced water can have beneficial uses, and he’s also pretty sure that the Kanalis project using water from Eagle Springs 8 is a great place to start checking. First off, the well isn’t in the Permian Basin where the water is, on average, 10 times saltier. “So you start off with a better quality of water,” he says. And second, HPOC runs conventional wells — which means that they haven’t been hydraulically fractured, or “fracked,” which shatters the rock and introduces a sand and chemical cocktail into the resulting fractures to help oil and gas flow out.
Those cocktails are considered trade secrets, but recent reports show that among other chemicals, they can contain PFAS “forever chemicals” that contribute to a slew of health problems and are extremely difficult to remove from water. Local reporting over the past four years has uncovered PFAS contamination across New Mexico, polluting groundwater and agricultural sites. But the liquids from nonfracked HPOC wells shouldn’t have them, Hightower says. “It’s really just oil and water.”
In 2021, according to both Hightower and Khan at HPOC, Kanalis began the process of treating and testing produced water from Eagle Springs 8, sharing results with and following the protocols of the PWRC: filtering the water at a facility in Alamogordo; testing it at a lab in Albuquerque; watering grasses at a New Mexico State University agricultural test plot in Los Lunas; and discarding whatever remained in a licensed disposal well in the Permian Basin. They say that all of the water was accounted for, from the oil well through the testing to the disposal well. No produced water returned to the wellsite. The test patch at Eagle Springs 8 was used to determine which grasses grew best in the wellpad soil, and they were watered with tap water.
Hightower says that as far as he knows, Kanalis and Khan have done everything asked of them. “We don’t work with anybody that doesn’t follow our regulations and our guidance documents,” he says. “There’s no lone wolf out there doing it. They’re doing it with the consortium.”
Hightower’s explanation seems straightforward, but the politics clearly weren’t. And he knew it.
In a January 2022 email about the project sent to people at NMED and the state Oil Conservation Division (OCD) — New Mexico’s primary industry regulatory agency — Hightower wrote, “I do not think this could be a more complex jurisdictional site.” He continued, “I have directed [Khan] to work with all three agencies NMED, OCD, and BLM [the Bureau of Land Management] to look at the current requirements before he moves forward on anything.”
Both NMED and OCD are members of the PWRC, so they knew that Kanalis was working with the PWRC. But according to an email from John Rhoderick, director of NMED’s water protection division, tribal governments including the Navajo Nation did not respond to invitations to join the group. He also says, “Reality is that this project caught us flat-footed.” Adding to the confusion: Jurisdiction over produced water changes from OCD to NMED when it leaves a wellsite.
Furthermore, no one got in touch with one key group — the Ojo Encino Chapter House. In an email, an NMED environmental scientist even told OCD’s general counsel, “I don’t believe Mr. Khan’s field project will be possible without local Chapter House support.” That didn’t happen.
These emails and dozens of others surfaced via an Inspection of Public Records Act request made by a group including Atencio, Tso and others opposed to the Kanalis project. They show state agencies surprised by Tso’s allegation and rushing to figure out their responsibilities in what appeared to be the first instance of treated produced water being used outside a laboratory setting.
The emails also show that Khan did contact the agencies Hightower recommended, but he never got Ojo Encino Chapter House support. Khan says he tried contacting the chapter several times in 2020 before starting the grassy test plot, but received no response. In hindsight, that’s not surprising. The chapter along with the rest of the Navajo Nation had shut down because of the COVID-19 pandemic. The Navajo Nation was, tragically, the epicenter of the deadliest per-capita outbreak in the United States. Most activity across the Four Corners ground to a halt. Much of the Navajo Nation stayed home to slow the spread of the virus, and reservation-wide mask mandates ended only in January this year.
Despite the lack of a response from the chapter house, Khan went ahead with the project because none of HPOC’s wells actually sit on Native American-owned land; they’re tucked on federal property managed by BLM. Traveling from west to east, the Navajo Nation’s Eastern Agency fades from solid Native lands into what’s called the checkerboard, for its land-ownership mix of private, federal and Navajo Nation off-reservation trust lands, chopped up in rectangular blocks. The jurisdictional hodgepodge leads to differing rules operating side by side every mile or so across the region, and Eagle Springs 8 sits about 2,600 feet from the closest tribal land.
Khan did brief officials from the Navajo Nation’s Water Quality Program. After that, one of those people wrote a letter to members of the Navajo Nation Division of Natural Resources, titled “Treated Produced Water Used for Irrigation,” saying that an oil company was treating produced water with a reverse-osmosis system and had a test plot of grasses not too far from the chapter house.
That letter quickly made its way to people living in Ojo Encino. It was the document that alerted Tso and Atencio of the project and triggered their angry letters to state agencies. To them it looked like someone irrigated with produced water, and they weren’t happy.
The reaction surprised Khan. “We’re on federal land,” he says. “BLM was notified.” He also says that the water used on the grassy plot at Eagle Springs 8 was fresh water from a local supply — not treated produced water from an HPOC well. “The fact that they’re upset about something, I honestly scratch my head a little bit,” he says.
“I think people got that mixed up,” Hightower says. “If you use fresh water, you don’t have to tell anybody about anything … You don’t go ask NMED if you can drink your tap water either.”
For Atencio, Tso and others on the Navajo Nation, the wellsite and the letter reflect the collision of three issues.
First: They aren’t convinced about the source of the water. The title on the letter — “Treated Produced Water Used for Irrigation” — seemed pretty clear to them. Then, after reading the letter, Atencio and Diné CARE found a page on the PWRC website saying that Kanalis wanted to run an agricultural test using treated produced water on 10,000 square feet near the HPOC wells. The entry was soon removed from the website — Hightower says it shouldn’t have been posted in the first place. “That was proposed. That never took place,” he says. And it never took place, he says, because the PWRC and Kanalis realized it would be illegal. Kanalis didn’t have permission from NMED to use produced water for irrigation.
Second: Atencio and others view the lack of consultation with the chapter house government as an insult to Native sovereignty. State agencies should have done a better job of monitoring the PWRC and clearly informing local Navajo people of the project, Atencio argues. “It’s a cornerstone of basic state-tribal collaboration,” he says. “This is why we’re incredibly angry.”
Third: History offers a harsh record of what happens even when there is clear local consultation. For decades, extraction companies have come to the Navajo Nation to drill oil or gas wells or dig coal or uranium mines, always promising jobs and riches, often leaving people sick and vulnerable. Uranium mines left a legacy of health catastrophes. For 50 years, coal-fired power plants polluted the air. Coal mines and oil and gas operations filled a massive, climate-warming methane cloud over the Four Corners. Those oil and gas operations contributed to increased air pollution and led to poisonous spills of all kinds — including produced water. In one example from 2019, an oil company spilled 1,400 barrels — nearly 59,000 gallons — of produced water from a fracked well near Mario Atencio’s grandmother’s home, releasing a toxic stew into a creek where grazing sheep and cattle drank. A week later, a neighboring well exploded.
For these reasons, Atencio and Tso are opposed to any new oil and gas production or associated work on any tribal land or anywhere within the traditional Navajo homeland. They no longer trust the systems that are supposed to protect them. And the promise of a new water source in a dry land doesn’t sway them.
Meanwhile, testing continued.
Hightower says that the first laboratory tests of the treated water from Eagle Springs 8 came back very clean. He says that when he saw the first results, he thought, “Man … this test really came out well.”
Dan Mueller of the Environmental Defense Fund is a member of the consortium’s technical committee, which he says acts as a peer review council on testing procedures. He says he can’t comment on testing results before they are made public, but he did say that the committee looked at the early Kanalis results and asked the company to redo them because there wasn’t enough data in what he called a “very draft document.” He also said that he thought Kanalis had been “very forthright” in its dealings with the consortium.
Mueller was referring to the first set of tests that Kanalis did in 2021. Hightower says the consortium will soon publish a second set of Kanalis test results. “I can’t tell you whether it’s going to be a good enough quality for drinking water. But I do know that the regulations currently for livestock watering and for ag are significantly less restrictive,” he says.
And he thinks that could be an eventual local use for treated produced water from HPOC wells. Hightower says, “I have tons of Navajo friends that are always talking about ‘Yeah, you’re doing the right thing, Mike. We need more water … We can use it on the rez.’”
In an email in early 2022 to NMED and OCD, Hightower wrote, “The Navajo may or may not want the water, but the BLM might, or the Jicarilla or the Utes might. While [HPOC’s] lease is near Ojo Encino, the operations are on BLM land, and the uses currently will be on BLM land.”
He finished, “How can I withhold support for a potential application part way through the process from a person that might not be impacted by the application?”
Atencio shrugs at this defense. “The road to hell is paved with good intentions, right?”
The idea that the water would be spread on nearby non-Native lands doesn’t make him feel any better. The Navajo Nation leases neighboring BLM checkerboard land for grazing: He worries that contaminated water could affect those grasses, and groundwater doesn’t follow the checkerboard boundaries. Atencio says, “There’s a potential to contaminate already pristine water in the local aquifers, which has been serving as the main source drinking water — the sole-source drinking water — in the area.” That’s what happened with the produced water spill four years ago near his grandmother’s home, and he doesn’t want to see that mistake again on or near Native lands.
In the Navajo horse creation story, Sun Bearer created the original four horses, each a different color, each for a different compass point and for riding in different conditions. He gave Turquoise Boy a talisman to create more horses for the Navajo people. This happened atop a mesa in Dinetah, the Diné homeland in today’s Eastern Navajo Agency, possibly near Ojo Encino.
If Sun Bearer had ridden around Dinetah on Sept. 23, he would have taken either his abalone or jet black horse, because they are best in rough conditions. The night before, a pounding rain turned the roads around Ojo Encino into mud bogs. For decades, oil and gas operations have taken fossil fuels and profits out of the area and left dirt roads behind. Now, many were washed out and impassable, even to high-clearance trucks.
That day, Rhoderick from NMED, OCD Director Adrienne Sandoval, Atencio, Tso and a small crowd of other NMED, OCD and environmental folks gathered at Ojo Encino Chapter House to tour the Eagle Springs 8 site in person and try to clear the air.
At one point during the tour, the convoy of state and private trucks and cars happened to follow a pickup truck carrying 55-gallon barrels of water as it threaded through mud slicks and craters on the way to a house sitting alone in the green sage covered hills. Kendra Pinto, the Four Corners Indigenous Community field advocate for Earthworks, later tweeted of the day, “Driving the muddy, rutted dirt roads around Ojo Encino and the shield under my truck ripped off at the corner.”
After several mucky detours, the agency and environmental convoy ended up at Eagle Springs 8. Under a brilliantly clear blue sky, the view stretched 60 miles between Mount Taylor — a massive, extinct volcano to the southwest that marks the southern boundary of the Navajo homeland where it is known as Tsoodzil — to the water tower at Ojo Encino to the north, to the bluff where the original Eagle Spring still flows to the northeast. During a walkaround, everyone passed the grassy test patch that spawned the controversy. “Well, I see that they’ve proved that they can grow a nice plot of weeds,” Rhoderick joked of the scraggly plants there now.
Early in 2022, soon after hearing the allegations of produced water being used at Eagle Springs 8, OCD hired an outside firm to sample and test the soil there. The group gathered in a circle on a patch of scraped ground next to one of the sample sites and kicked the dirt and talked through the situation. Sandoval (who left OCD at the end of December) explained that the soil tests found nothing out of the ordinary and that her division didn’t have any other information to pursue. Rhoderick seconded her thoughts. “This whole Kanalis thing, we’ve found ourselves a step behind,” he said, and before he can go after anyone — much less start a prosecution — he needs evidence. “We have to be able to prove it,” he says. “We have to be able to verify.”
Events inside and outside the Navajo Nation are accelerating the need to verify new produced water disposal solutions and systems. Last year, the state Legislature resoundingly squashed Gov. Michelle Lujan Grisham’s plans for a massive natural gas-based hydrogen development project in the area. After that defeat, she revived and enlarged the project in partnership with Colorado, Utah and Wyoming, aiming for billions in federal money to make hydrogen from natural gas from the Four Corners region, on and around the Navajo Nation. That project cleared its first major federal hurdle at the end of December. Energy giant EOG has plans working their way through the BLM permitting process to drill 14 new, fracked wells just north of Ojo Encino — each of them will need to dispose of millions of gallons of contaminated water from the drilling process and then millions more from production. Furthermore, the state’s continuing oil and gas production boom at the opposite end of the state in the Permian Basin has led to increasing amounts of produced water being reinjected there, triggering an uptick in the number and magnitude of earthquakes.
At the wellsite, Tso, facing the well and its tanks, said, “There are folks who don’t care about what happens around their operations.” He spoke of watching oil and gas development increase year after year in his homeland. He told of watching cattle drink water pooled in the containment ponds built to capture waste surrounding wells and tanks in the Ojo Encino area.
Eventually the conversation died away and the group saddled up to check out the injection well a half-mile away before turning back toward home.
To prosecute a company for a spill or other unauthorized use of produced water, OCD and NMED need solid proof that would stand up in a court of law. “If I have evidence to prove [someone] put produced water on the ground, I’m coming after them,” says Rhoderick from NMED. But in this case, he doesn’t have it. And following the soil testing, neither does OCD.
Khan says the reason is simple: Kanalis didn’t use produced water on the wellsite. The company followed PWRC protocols.
Rhoderick thinks that may not solve the problem for Khan and Kanalis at this point. “I don’t care how good the science is [or] what it shows,” he says. “If the public is adamantly opposed to it, then you’re not going to get it anywhere. And that’s probably the bigger risk to them, is public perception.” Last year, his office issued a memorandum to Hightower and the PWRC reiterating that “off-field discharges of produced water or treated produced water associated with Consortium pilot projects or other non-Consortium pilot projects are not allowed.”
Tso left the Navajo Nation government in January, and he remains dubious about what happened with the test plot at Eagle Springs 8. He says, “Rainfall makes the grass grow. Water makes the grass grow. So what’s the experiment? The experiment is chemically infused, hazardous waste material … applied to rangeland.” He continues to ask state agencies for answers and says, “When you’re dealing with hazardous materials, a community has a right to know.”
“Nyle [Khan] did everything that we asked him,” Hightower says. “He followed all of the rules that we set up.” Hightower pinned the problem on misunderstandings starting with the letter from the Navajo Nation EPA and the redacted online testing spreadsheet on the consortium website. “As far as I can see, [Khan’s] trying to do the right thing,” he said.
Can produced water be cleaned? Can that cleaned water grow crops? Can cattle drink it?
Hightower and Khan are sure the answers are still yes. Hightower says that at a consortium meeting in December, Kanalis presented data showing that the treated water from HPOC’s well was exceptionally clean — but that further rounds of testing would be needed before the process could be submitted to NMED for a permit to use the water outside oil and gas production. How clean was the treated water? Khan says, “There is no PFAS in my water. The water you drink out of your tap can’t make that same claim.”
Atencio says he doesn’t care how clean Kanalis’ produced water is. He thinks that if people want to test produced water or use it outside a well, they need to do it elsewhere. “To have those people down in Las Cruces [where the PWRC is based] rule on this without even inviting us to the table, that’s what colonial governments do,” he says. And as a drying state continues to search for ways to treat colossal amounts of water waste from the state’s biggest industry, he sees more fights ahead.
“Water colonialism is probably going to be the theme of the 21st century,” Atencio says.
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