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Water demand for hydraulic fracturing, also known as fracking, will double to 6 billion gallons by 2015, says the 85-page report released Wednesday. Ceres, a nonprofit based in Boston, focuses on climate change, water scarcity and other environmental challenges.
Northern Colorado’s top three water users, Anadarko Petroleum Corp. (NYSE: APC), Noble Energy Inc. (NYSE: NBL) and Encana Corp. (NYSE: ECA) (TSX: ECA), used a total of more than 1.5 billion gallons of water, according to Ceres’ analysis of data between January 2011 and May 2013. Anadarko used more than 1.1 billion gallons, Noble Energy used more than 400 million gallons and Encana used 200 million gallons.
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“Water sourcing and management is becoming a key competitive advantage – and a critical risk – for oil and gas companies using hydraulic fracturing to unlock new reserves,´ said Steven Heim, Managing Director of Boston Common Asset Management. “Investors need the data to understand how companies are meeting these challenges on a regional or play-by-play basis in order to appropriately value companies and also engage with them to improve their practices.”
Companies in the Denver-Julesburg Basin, a region that includes Northern Colorado, used a total of 2.5 billion gallons during the period. They used an average 810,000 gallons of water per well. In Colorado, water used for fracking amounted to 7 billion gallons during the study period. In 2012 alone, 3.3 billion gallons of water were used by oil and gas producers in Colorado.
By comparison, the city of Boulder uses about 2.7 billion gallons per year for municipal purposes, the Ceres report said.
Fracking involves pumping water, sand and chemicals at high pressure into a drilled hole to extract oil and gas trapped in dense shale formations deep underground.
Encana recycles 90 percent of water it uses in oil and gas production on the Western Slope, but has not found a viable solution to water recycling in Northern Colorado due to operational challenges, spokesman Doug Hock said.
“That’s something we continue to look at,” he said. “It is something we take seriously.”
Encana estimates it will use 472 million gallons in 2014 in Weld County, or about 3.8 million gallons per well.
Encana has looked into several water treatment technologies to treat its water, including conducting an unsuccessful 2012 water treatment pilot program in the region.
“The energy consumption was evaluated to be greater than the benefit, and then it was never economically justified,” Hock said. “Given our relatively small acreage position and the fact it’s scattered across several communities, the environmental footprint involved in trucking or building pipelines to recycle water is at this point much greater than the benefit. It’s something we’ll continue to look at, but with the goal of coming up with a solution that’s economically viable and environmentally sustainable.”
Oil companies and the state of Colorado have frequently pointed out that they use a fraction of one percent of Colorado’s annual water use. Ceres representatives, however, say that oil and gas represents a relatively newer use in a state where the resource already is over-allocated along with the challenge of a lack of water storage.
“In some of these really localized regions, it’s having a big impact,´ said Monika Freyman, author of the report and senior manager for Ceres’ water program. “They’re a bit of the straw that’s breaking the camel’s back.”
Water used in oil and gas production in Colorado often is injected deep underground into wells where it does not rejoin the water cycle, she added.
Jay Famiglietti, hydrologist and professor at the University of California, Irvine, said water use for oil and gas development creates new pressures as water storage in the Colorado River Basin declines.
“The river is over-allocated, and so that will continue to be a problem as snowpack and stream flow declines and population grows,” he said.