In May, 2013, the non-profit sustainability organization Ceres issued a report that found that nearly half of the 25,000 US oil and gas wells that were drilled in 2011-2012 and that employ hydraulic fracturing have been drilled in water-stressed areas. In a new report, Ceres – pardon the pun – drills even deeper into the existential threat to shale gas development from water shortages. Indeed, it finds that fracking is on a collision course with other water users.
analyzes escalating water demand in hydraulic fracturing operations across the United States and western Canada. It evaluates oil and gas company water use in eight regions with intense shale energy development and the most pronounced water stress challenges. The report also provides recommendations to investors, lenders and shale energy companies for mitigating their exposure to water sourcing risks, including improvement of on-the-ground practices.
The report also identifies companies facing the biggest water sourcing risks both regionally and nationally.
The report states:
Future water demand for hydraulic fracturing will only grow with tens of thousands of additional wells slated to be drilled, and many shale basins and plays are just beginning to be developed. In addition, the shale development business model requires continual drilling cycles to maintain production growth.
All across the country, regulators, producers and service providers are scrambling to find technological and regulatory solutions to mitigate localized water sourcing risks from rapid shale energy development. Some pockets of success can be found…
Viewed more widely, however, water management best practices are lagging and no single technology alone—whether recycling, brackish water use or greater use of waterless hydraulic fracturing technology—will solve regional water sourcing and water stress problems. Ultimately, all shale operators and service providers should be deploying a variety of tools and strategies— including substantially improved operational practices related to water sourcing, more robust stakeholder engagement, and stronger disclosure—to protect freshwater resources for the future. Investors and lenders, in particular, require fuller disclosure on water use trends and requirements to better balance risk-adjusted returns on their dollars invested.The report and its numerous recommendations are essential reading, and should spur action from investors, lenders, companies, and regulators.
In my view, Ceres' latest effort cements the business case for a race to waterless, chemical free fracking.