Ordinance meant to crack down on little guy, not Oil & Gas

City of Laredo Utilities Director Tomas "Tommy the Tank" Rodriguez told the Laredo Morning Times that the real reason for the city's ordinance prohibiting the re-selling of water obtained from the city is to essentially crack down on the little guy, not so much on the fracking companies.

An article appearing today on the Laredo Morning Times is full of reasons why an investigation should have been launched into possible violations of this ordinance by area fracking and fracking-related companies and begs the question:  What is the city waiting for?

Another strange revelation about one particular company has a contract to buy water from the city, but instead claims to be using its trucks to simply transport water to the oil and gas industry. The question(s) here : Then why do they have a contract to purchase water IF they are only transporting it?  Who then is buying the water their transporting? Is it the oil and gass companies these guys are delivering the water to?  Do those companies have contracts to purchase water? If not, then is anybody paying for this water??

As always, city of laredo officials love to point out failed comparisons. The article mentions that while the city of Laredo sells its water for $3.50 per thousand gallons, it states that Brownsville and McAllen sell their water for $1.92 and $1.30 per thousand gallons. This implies that the city is being smart and raking in big bucks for their higher-priced water.  However, the comparison fails because neither McAllen nor Brownsville are in the Eagle Ford Shale.  The comparison should therefore be made between Laredo and cities like Cotulla or Carrizo Springs which are in the EFS and therefore, sell their water to the frackers at rates substantially higher than Laredo. 

Anyway, here's another exceprt from the LMT:

Tomas Rodriguez, the city’s utilities director, said in October the city hasn’t launched a formal inquiry.

“The investigation was supposed to be one to determine if somebody was selling to the oil fields,” Rodriguez said.

“It’s hard for us to determine ‘XYZ’ company is actually selling to the drilling companies.”

Rodriguez said any complaints of possible water resale are examined on a case-by-case basis.

The issue may come down to one of semantics. One company, G&F Oilfield Services, which holds a contract to buy water from the city, said it bills oil and gas companies for freight.

“We don’t charge the water, we just provide the haul,” company owner Filberto Lopez said.
Lopez said freight costs range from between $95 to $110 an hour.

 

Charging for freight of water “is not exactly what the ordinance is against,” Rodriguez said.

He said the ordinance is in place to prevent citizens from charging neighbors, family and friends for drinkable water.
Any commercial entity requesting a meter from the city must provide a reason for use of water in its application.
Companies contracted with the city use phrases such as “filling truck of the field” and “oilfield for the rigs” in their contracts.

Mo-Vac, a vacuum company that lists “gas well” as a reason for use of potable water, declined comment.

Jesus Olivares, assistant city manager, said the city has not contacted law enforcement to investigate possible city code violations.

“If (city management) do(es) find somebody that has been misusing privileges when they sign a contract and if they are doing anything that is criminal, the proper authorities will be notified,” Olivares said.

The City of Laredo charges $3.50 per 1,000 gallons of water, or 0.35 cents per gallon, as determined by traveling water meters.

The cities of Brownsville and McAllen charge $1.92 and $1.30, respectively, per 1,000 gallons.
City Manager Carlos Villarreal has indicated he is aware of possible misuse of city contracts.