Haynes and Boone's Newsroom

Franchise Law Update
01/05/2012
Thomas E. Kurth

Hydraulic fracturing is arguably the most significant development in the petrochemical exploration and production industry since Howard Hughes' invention of the rotary drill bit. While Hughes certainly went to new depths to take the industry to soaring heights, hydraulic fracturing is literally earth shaking. Hydraulic fracturing by its very definition involves water, lots of water. And as we all know: "Whiskey is for drinking and water is for fighting over." This axiom is certainly true today in Texas and likely will have a more literal meaning in the future as an increasing population pushes the limits of water resources.

Contrary to popular belief, water and oil DO mix -- at least in the petrochemical industry. Just as water is critical to sustain most other life, the life of the oil industry -- and certainly the life of "non-traditional" shale plays -- is greatly dependant on water. Although all terrestrial life needs clean water, it cannot remain healthy in an environment in which that water is contaminated by certain hydrocarbons or others chemicals, much less exist under a coating of crude oil.

Accordingly, the mixture of oil and gas law with water law is truly like a great salad dressing. Their proper mixture is difficult and if one of the ingredients is off, the result can be quite displeasing.

Excerpt from The Advocate, the magazine of the State Bar of Texas Litigation Section, Jan. 5, 2012. Online link unavailable.