October 8, 2012
Groundwater is a precious natural resource in South Dakota which has more intrinsic value to the land and its people than another natural resource that uses groundwater—oil and gas. Groundwater is a term of art and a term of the science of hydrology which refers to undergroundwater as opposed to surface water. Should South Dakota become more active in the oil patch; the state should also address water's intrinsic value, and plan for the proper management and use of groundwater in the oil patch equation. The use of groundwater may, by rights, be used in large quantities in oil and gas development and exploration. Groundwater is part of the private landowner's property. The right to water, while regulated, is generally given to the landowner. However, in most states and under case law the owner of mineral rights, that is the oil developer, is entitled to take from the land and use that amount of water which is 'reasonably necessary' for the exploration and removal of the company's mineral rights. Oil exploration and development companies are entitled to construct water wells and draw from undergroundwater sources. A developer has, in most states, an implied right to make use of water underlying the surface estate without liability.
An issue of growing concern to all parties involved is the considerable increase in water use required for modern drilling techniques like hydraulic fracturing. Coupled with limited water supplies, these techniques could bring about a transformation in a surface owner's or community's access to groundwater. In the Bakken Formation, for example, approximately three million gallons of water are required to fracture stimulate each well; requiring up to six billion gallons per year. Fresh, or potable, water is in fact preferred in certain fracking procedures. Because of these water uses and current estimates for oil production over the next decade, North Dakota is struggling to make sure it can balance the demands on its natural resources. Good oil companies are not abusers of a region's natural resources. Recently for example the Ft. Berthold Reservation issued two good-practices management awards to oil companies which are operating on reservation property. Nevertheless as South Dakota studies the oil and gas economy it must also address this issue, work with the landowners, ranchers, communities and prospective oil companies and protect perhaps the state's first natural resource – Water.
David L. Ganje is a natural resources and business lawyer with offices in Rapid City. Mr. Ganje is also a member of the State Bar of South Dakota Natural Resources and Environmental Law Committee but the opinions expressed in this article are his own.