Limited availability of freshwater could dampen hopes for developing technically recoverable shale oil and gas in parts of the world where water is scarce, droughts are prevalent, and oil and gas companies find themselves facing possible competition with dominant water users.

That is if companies don’t figure out ways to reduce or eliminate freshwater use in the hydraulic fracturing process.

The World Resources Institute (WRI) examined the issue in its report, called “Global Shale Gas Development: Water Availability and Business Risks,” which pinpointed locations where government oversight and corporate policies will be mostly needed to manage freshwater availability for shale development. The report also highlighted possible risks concerning freshwater availability.

“Extracting oil or natural gas from shale poses a number of risks to the environment and requires large quantities of nearby water. Much of this water is needed for fracturing the shale to allow hydrocarbons to flow to the surface. Yet shale resources are not always located where water is abundant,” Andrew Steer, president of WRI, said in the report. “Our analysis shows that China, India, South Africa and Mexico, for example, have large quantities of shale gas but limited supplies of freshwater.

“It also shows that roughly 38% of the area where shale resources are located is arid or under significant water stress; plus, 386 million people live above these areas,” he continued. “These factors pose significant social, environmental and financial challenges to accessing water and could limit shale development.”

Researchers assessed indicators—which included baseline water stress, seasonal variability, drought severity, groundwater stress, dominant water user, population density and reserve depth interval—for Algeria, Argentina, Australia, Canada, China, Mexico, Poland, Saudi Arabia, South Africa, the U.K. and the U.S., based on the estimated size of their technically recoverable shale reserves. China topped the list of countries with high to extremely high water stress where shale is present. Other countries included Mexico and South Africa and to a lesser degree Algeria, Libya, Pakistan, Egypt and India.

The report’s findings showed: 19% of the shale plays are in locations with high or extremely high seasonal variability, meaning water supply varies greatly monthly; 15% are in areas with high or extremely high exposure to severe drought conditions; and irrigated agriculture is the largest water user in 40% of the shale plays.

“Hydrological conditions vary spatially and seasonally across shale plays, with variation among plays, within plays and throughout the year. This variation makes companies’ ability to meet the freshwater demands for hydraulic fracturing and drilling highly unpredictable and estimates based on previous experience not always accurate in new shale formations,” the report said. “This high level of uncertainty can lead to business risks for companies exploring new areas for development. Furthermore, public concern over increased competition and impacts on freshwater availability can threaten a company’s social license to operate and lead to changes in government regulations that could impact both short- and long-term investments.”

WRI provided some recommendations for governments and businesses.

  • Conduct water risk assessments. For companies, this could involve identifying water-related business risks and pinpointing areas to communicate with regulators, communities and other industries to increase water security. Governments can invest more in collecting and monitoring water supply and demand data to “help build a strong, shared knowledge base;”
  • Increase transparency and engage regulators, communities and the industry to reduce uncertainty. This includes more disclosure of water use by companies and collaboration to better understand hydrological conditions and regulatory frameworks within river basins;
  • Ensure adequate water governance to help guarantee water security and reduce regulatory and reputational risks. Companies can engage in public water policy discussions, while working with governments to create water protection and management plans; and
  • Reduce freshwater use and engage in corporate water stewardship to lessen the impacts on water availability, according to the report.

“Using publicly available guidelines, companies can evaluate their potential for using non-freshwater sources and build a business case for investing in technology to recycle or reuse water, use brackish water or otherwise significantly reduce freshwater withdrawals,” WRI said in the report.

Some companies are doing just that in some shale plays.

Apache Corp. is fracking with brackish and recycled produced water in the Permian Basin, where drought conditions have existed. Detailing the efforts in the company’s 2014 Sustainability Report, published online earlier this month, Apache also said it has recycled more than 1.2 MMbbl of produced water in the Granite Wash play in the Anadarko Basin in Texas.

As explained by Apache, here is how the process works in the Permian. Brackish water from the Santa Rosa aquifer is pumped into a lined pond with a 500,000-bbl holding capacity. From there, pipes carry flowback and produced water from well sites to storage tanks where iron is removed from the water. Water from both sources is piped back to the well site for the next fracking job. Before being pumped downhole, the water is chemically treated to kill bacteria. The process is then repeated.

“Overall, Apache used 10 million barrels of brackish water and 3.1 million barrels of produced water in 2013,” the company said on its website.

Organizations also have set out to encourage oil and gas companies to recycle water at shale sites. Water performance standards are among those covered in the Center for Sustainable Shale Development’s air and water evaluation and verification certification process. To gain certification, an operator must recycle a minimum of 90% of the flowback and produced water from its wells in all core operating areas in which the operator is a net water user, among other standards.

On Sept. 18, the center announced Chevron Appalachia as the first company to complete the verification process, earning full certification. The initial certification audit report summary showed Chevron was in conformance with the flowback and produced water recycling standard.

Contact the author, Velda Addison, at vaddison@hartenergy.com.