Produced Water Beneficial Use Model Contract between Supplier and User
Successful implementation of a beneficial use project will require an agreement between the producer and the end user to clarify and document mutual understandings and considerations. The entire transaction chain may require more than one agreement as brokers, centralized treatment facilities or other shared infrastructure may be involved. The essential elements of a basic water use agreement include:
- Nature and term of the agreement – sale; short-term lease; or long-term lease.
- Total and annual volume of water to be delivered
- Point(s) of delivery with maximum and minimum flow rates
- Permitted use(s) of the water
- Required water quality characteristics at point of delivery
- Responsibilities of the supplier
- Responsibilities of the user
- Purchase price, lease price or other consideration to be given to supplier
- Verification
- Termination
Other elements to be considered in the agreement include:
- Interruption of service
- Incorporation of regulations
- Warranties
- Indemnification
- Insurance
- Limitations of liability
- Successors and assignment of the contract
- Dispute Resolution
- Confidentiality
All of these elements are negotiable, provided a mandatory use agreement or regulation is not already in place. The draft language presented in the link below is not intended to serve as a final contract. The responsibilities and duties of each party should carefully be considered in consultation with their legal counsel in preparing final language. Current federal law, state law, and local regulations applicable to the transaction will need to be incorporated. Restrictions and mitigation measures derived from the completed environmental review process will need to be incorporated as well.