Report: Water Availability a Risk for Oil, Gas Drillers

A new national report on hydraulic fracturing and water use suggests that oil and gas companies are at risk of running short on the precious resource — especially in South Texas, where the drilling boom took off just two years ago as a severe drought was taking hold and has not let up.

"Water use for hydraulic fracturing will continue to grow, triggering unprecedented county water demands," the report warns. Continued drought conditions and a population surge in areas where drilling is most prevalent are also key factors.

Ceres, a Boston-based analysis firm and sustainability advocacy group, analyzed tens of thousands of reports submitted by drilling companies to the FracFocus government database from 2011 to mid-2013. Of all the shale plays it analyzed nationwide, Ceres found that the county where water use was highest for fracking was Dimmit County, in the heart of the Eagle Ford Shale. 

For the two-and-a-half year period examined, drillers used 3.9 billion gallons of water for hydraulic fracturing in Dimmit County, the report says. According to state data, the entire county used that much water in 2011. In the 10 South Texas counties that make up the Eagle Ford Shale, close to 20 billion gallons of water were used for fracking between 2011 and mid-2013, the report said, and the majority of the water is used in Dimmit, La Salle, and Karnes counties — where the majority of drilling activity is occurring.

The report warns investors in energy companies that they should pay attention to water availability for drillers before they decide where to invest their money. 

“It’s good for investors to ask their portfolio companies, ‘How are they addressing this issue?’” said Steven Heim, managing director for the investment management firm Boston Common Asset Management, who wasn't involved in the study. “It’s a limiting factor.” While some of the water used may be brackish water that is unfit to drink, or recycled water, it is likely that the vast majority of it is freshwater underground, the report says.

Ceres also used data from the U.S. Geological Survey and other sources to determine that South Texas groundwater is in high demand, leading the report to call the area “water stressed” — no surprise to a number of landowners and groundwater regulation districts in the region who have voiced concerns about seeing low water levels in their own wells in recent years. Scientists at the Southwest Research Institute estimate that fracking uses up as much as a third of the overall water demand in some South Texas companies. 

Oil and gas companies say they are ramping up their use of water recycling technologies, as well as drilling farther into the ground for poorer quality water that they can use in lieu of precious freshwater. But such practices are taking off mostly in West Texas' oil-rich Permian Basin, where Ceres found water use to be far less than in the Eagle Ford Shale. The water use there is still significant, however; between 2011 and mid-2013, close to 1.2 billion gallons of water was used for fracking in Irion County, home to the town of Barnhart, which famously ran out of water last year. The county used a total of 1.05 billion gallons for municipal, agricultural and all other activities in 2011. 

Part of the reason less water is used in the Permian Basin is because that region is more in demand for its oil, which usually needs less water to extract via fracking, Ceres' analysis said. But oil and gas companies have also said that water-saving techniques like recycling are more difficult in the Eagle Ford Shale, where they are more needed. That’s in part due to the geology of the South Texas shale play, the Ceres report said: When drillers send billions of gallons rushing down a well to be fracked, far less water comes back to them than in the Permian Basin.

“The use of brackish water as an alternative to freshwater is gaining popularity,” analysts wrote, but added that even brackish water is important for the surrounding community. “Some brackish supplies may be needed in the future to meet local drinking water needs, so this water source should be carefully assessed.”

Heim said that investors need to consider water availability for fracking a serious risk because the Eagle Ford Shale will be a region of drilling interest for a long time. Unlike other Texas oil booms, this one is due in large part to technology that will allow production of oil and gas to continue for decades.

“You’ll just need more and more wells being drilled and more fracking needed, because they’ll need to do it to keep up with the production,” Heim said. “So at some point [water is] something they’re going to have to work out.”

The data is some of the most comprehensive to be collected on water use for fracking in Texas. Previous studies from the University of Texas at Austin suggested that drillers used 25 billion gallons of water for fracking in in 2012, and estimates they may need 40 billion gallons by 2020. That would still be less than 1 percent of the state’s total projected water need, but because the demand is concentrated in certain local areas, it could make up a large portion of those areas’ water needs.