Published on September 3rd, 2014 | by Tina Casey12
Fracking Boom Hits Water Wall
September 3rd, 2014 by Tina Casey
The World Resources Institute has released a new report that lays out the potential for water scarcity to put the brakes on oil and gas fracking among the world’s top 20 shale countries, including the US and Russia. When you take geopolitics into account, that’s quite an interesting angle on top of the environmental and climate risks we’ve been covering.
The new report, Global Shale Gas Development: Water Availability & Business Risk ranks the top 20 countries according to potential commercial reserves.
Fracking And Water Resources
For those of you new to the topic, fracking is a drilling method that enables oil and gas to be extracted from shale formations. It has been used in the US for many years, but until recently fracking wells in the US were relatively shallow and located in sparsely populated areas.
Modern fracking is a different story altogether. The technology to drill deeper, and horizontally, has enabled fracking to take hold in more populated areas including the Marcellus shale in Pennsylvania and other Northeast states. Modern fracking operations can also require millions more gallons per well than previously, and consequently millions more gallons of contaminated wastewater.
A Bush-era loophole in federal clean water regulations has stymied EPA oversight, but the agency has found workarounds in some cases, including a record fine against Chesapeake Energy.
Aside from water contamination issues, the sheer volume of water required for fracking opens up a whole other can of worms, namely, competition for water supply with agricultural, commercial, and residential users as well as for habitat preservation.
Water Availability & Business Risk
Here’s a quick rundown of the top 20 countries with the largest shale reserves:
40% of countries with the largest shale reserves have severely limited freshwater supplies.
38% of commercially viable shale gas deposits are located either in arid areas, or areas under high/extremely high levels of water stress.
386 million people live over shale plays, making water-related conflicts more likely around new hydraulic fracturing operations in populated areas.
That last item dovetails with the stakeholder concerns and competition we noted above. When you add other fracking-related concerns, including earthquakes, local air quality impacts, and potential negative impacts on existing economic activity such as the tourist industry, you’re looking at a lot of pushback coming down the road.
Check out Pennsylvania and New York, where local governments are successfully deploying zoning laws to prevent fracking operations, and you’ll see how much that pushback has grown in just the past few years.
WRI’s four recommendations for mitigating water risk won’t give much comfort to gas and oil industry stakeholders. Here’s the lowdown:
Conduct water risk assessments to understand local water availability and reduce business risk.
Increase transparency and engage with local regulators, communities, and industry to minimize uncertainty.
Ensure adequate water governance to guarantee water security and reduce regulatory and reputational risks.
Minimize freshwater use and engage in corporate water stewardship to reduce impacts on water availability.
Fracking, Water Resources, And Geopolitics
Russia has been playing the gas card in its dealings with Europe and Ukraine, and going by WRI’s report, it doesn’t seem likely that Russia will have to concern itself with water supply issues.
Russia ranks #9 out of 20 in shale gas resources but WRI ranks the country’s exposure to water stress in its shale play areas at low. Russia also ranks #1 for tight oil and has low exposure there, too.
On the other hand, the US ranks #5 for shale gas but gets a medium-to-high risk ranking from WRI. In the context of the Russia-Ukraine conflict, the recent push for more US natural gas exports looks like it’s going to hit a wall.
Now here’s something else to add to the mix. Saudi Arabia is obviously off the charts when it comes to fracking and water risk because it is an arid region. However, the country’s state-owned Saudi Aramco recently announced that it has come up with cost-competitive ways to tap into its vast tight (non-shale) gas reserves.
The company also hinted that the tight drilling operation is low-hanging fruit, and it will eventually figure out a way to pry gas loose from its shale plays, presumably with minimal water use.
One more thing: major fossil companies are already hinting that they see a ceiling on the ability of US gas to compete in global markets over the long run, even though pressure to increase gas exports continues apace.
ExxonMobile, for example, just dropped a ton of cash to expand its Baytown, Texas facility for processing shale gas into plastic.
Hold on to your hats.
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