FBFK Law attorney Desireé Malone recently authored an article for Texas Lawyer examining how produced water and growing energy demand from data centers are creating new legal and contractual considerations for Texas oil and gas companies.
In “Produced Water, Data Centers and the Contracts Texas Oil and Gas Companies Should Revisit Now,” published November 2, 2026, Malone discusses how changing economic conditions are challenging longstanding contractual assumptions across the energy industry.
The article examines the Texas Supreme Court’s 2025 decision in Cactus Water Services v. COG Operating, which clarified ownership rights to produced water under typical oil and gas conveyances. While the ruling provided important guidance, questions remain regarding ownership of valuable minerals extracted from produced water, potential royalty obligations, and allocation of treatment and disposal costs.
Malone also addresses the importance of evaluating produced-water infrastructure, disposal capacity, and regulatory constraints during oil and gas transactions. These considerations have become increasingly relevant as the Railroad Commission of Texas has strengthened permitting requirements for saltwater disposal wells in the Permian Basin.
Separately, the rapid expansion of data centers in Texas is creating new considerations involving natural gas supply agreements, pipeline capacity, infrastructure commitments, and responsibility for delays or interruptions. The growing demand for electricity has also prompted ERCOT to implement new processes for evaluating large-load interconnection requests.
As these developments reshape the energy landscape, Malone emphasizes the importance of reviewing existing agreements, clarifying contractual obligations, and identifying potential risks before disputes arise.
Read the full article in Texas Lawyer. (Subscription required.)
