|Oil's Growing Thirst for Water |
By RUSSELL GOLD and ANA CAMPOY
CARRIZO SPRINGS, Texas—Water has always been a concern for 65-year-old Joe Parker, who manages a 19,000-acre cattle ranch here in South Texas. "Water is scarce in our area," he says, and a scorching yearlong drought has made it even scarcer.
What has Mr. Parker especially concerned are the drilling rigs that now dot the flat, brushy landscape. Each oil well in the area, using the technique known as hydraulic fracturing, requires about six million gallons of water to break open rocks far below the surface and release oil and natural gas. Mr. Parker says he worries about whether the underground water can support both ranching and energy exploration.
Darrell Brownlow, another cattle rancher, says that if the economically depressed region has to choose between the two, the choice should be simple.
Mr. Brownlow, who has a Ph.D. in geochemistry, says it takes 407 million gallons to irrigate 640 acres and grow about $200,000 worth of corn on the arid land. The same amount of water, he says, could be used to frack enough wells to generate $2.5 billion worth of oil. "No water, no frack, no wealth," says Mr. Brownlow, who has leased his cattle ranch for oil exploration.
Hydraulic fracturing, or fracking, has revived prospects for oil-and-gas production in the U.S. and provided a welcome jolt to many local economies. Less than three years after its discovery, the Eagle Ford oil field here already accounts for 6% of South Texas's economic output and supports 12,000 full-time jobs, according to a study by the University of Texas at San Antonio earlier this year, which was funded by an industry-backed group.
But fracking also is forcing communities to grapple with how to balance the economic benefits with potential costs. To date, criticism of fracking has focused mainly on concerns that the chemicals energy companies are mixing with the water could contaminate underground aquifers. Oil industry officials regard that issue as manageable. The biggest challenge to future development, they say, is simply getting access to sufficient water.
The issue isn't just rearing its head in parched regions like South Texas. North Dakota, another big source of oil from fracked wells, is concerned about the industry depleting aquifers and has threatened to sue the federal government to free up water held by an Army Corps of Engineers dam. Oklahoma, too, is struggling to cope with the industry's thirst.
Last year, Louisiana passed a law to regulate what it called the industry's "unprecedented use of enormous amounts of water" that, if unchecked, has the "potential for chaos and conflicts." In northern British Columbia, which has plenty of water, officials have required companies extracting natural gas to install expensive equipment to recycle water used for fracking. It wasn't a pollution-control effort, but a response to local communities that didn't want their water supplies tapped.
In Pennsylvania, the industry and state regulators have cracked down on the amount of salty water from fracking jobs being sent to water-treatment plants that weren't designed for it. A large amount of this water is now being recycled and reused, cutting down on the amount of fresh water needed to continue developing new wells.
Fracking involves drilling deep into large swaths of dense rock where oil and gas are trapped. To crack the rocks and allow the oil or gas to flow out, energy companies inject millions of gallons of water, mixed with sand and chemicals, at high pressure.
After sending natural-gas production soaring, hydraulic fracturing now is playing a critical role in the dramatic rise of oil production in Texas and North Dakota. Many industry officials believe it will allow Ohio to become a major oil producer, and other states could follow. Oil imports are falling, prompting talk of slashing U.S. dependence on foreign energy sources.
Here in South Texas, tensions are rising as companies scramble to lock up water to drill natural-gas and oil wells. All across the state, companies have been on a buying spree, snapping up rights to scarce river water—easily outbidding traditional users such as farmers and cities. Led by Exxon Mobil Corp., they also are drilling water wells, three times as many as they did five years ago. They are even tapping into municipal water systems, though parched cities have begun cutting them off.
There is no disputing that the boom has been terrific for the local economy, and few residents are calling for an end to fracking. Demand for workers is so high that Carrizo Springs resembles a hastily built labor camp, with thousands of temporary workers filling up a dozen new recreational-vehicle parks. The city's population has nearly doubled to about 11,000 in the past two years, say local officials. Sales-tax revenue in Dimmit County in 2011 is expected to exceed the previous five years combined. The University of Texas at San Antonio study predicted that, by 2020, the oil field will support 68,000 jobs, and its economic output will increase nearly ninefold.
Compared with demands from cities, farmers and even power plants, the amount of water needed to develop oil and gas wells in Texas is small. In September, the Texas Water Development Board released a draft of the 2012 Texas water plan—a report prepared once every five years. It said 56% of water in Texas goes to commercial crops; 26.9% to cities and public-water systems; 9.6% to manufacturing, including refineries; 4.1% to power generation; 1.8% for livestock; and 1.6% to mining, which includes oil-and-gas drilling.
But the report noted that the rise of fracking has been so sudden and steep that it wasn't really integrated into the report. In addition, the oil-industry's water use is concentrated in select parts of the state, magnifying the impact in those places.
Fewer than 2,000 oil and gas wells have been drilled in the past couple of years in South Texas. The industry expects that number to climb to as many as 25,000 over the next couple of decades.
Eagle Ford oil wells are the most profitable of the thousands being drilled into shale rocks nationwide each year, according to an analysis by Credit Suisse Group.
Because of the geology of the Eagle Ford, each oil or gas well there uses the equivalent of 10 Olympic swimming pools' worth of water—nearly twice as much as needed for wells in the Barnett Shale field in North Texas, according to industry and academic data. Most of the water injected into shale wells nationwide is absorbed by the rocks and isn't available for recycling. At the Eagle Ford, practically none of it is recycled.
Most Eagle Ford wells draw water from the Carrizo aquifer. That aquifer "is already stressed, and now you are adding an additional demand," says Ronald Green, a hydrologist at Southwest Research Institute, a nonprofit research-and-development organization in San Antonio that does scientific analysis for the government and industry.
Studies by hydrologists and geologists suggest more than twice as much water in recent years has been drawn from the aquifer as has been recharged by rain. And that was before the Eagle Ford energy boom started.
Last year, oil companies drilled 2,232 new water wells throughout Texas, about three times as many as five years earlier, according to a Wall Street Journal analysis of Texas Water Development Board records. More oil wells are expected, and as the industry refines its techniques and drills longer wells, the amount of water used for each well is climbing.
The oil industry has long believed that its thirst for water could cause problems. The American Petroleum Institute, a Washington-based industry trade association, warned against using fresh water for fracking in its 2010 best-practices advice. In an email, the institute said the industry should consider nonpotable water "whenever practicable," but decisions must be made on a "case-by-case basis."
Some companies are taking steps to use less potable water. Anadarko Petroleum Corp. says it is exploring whether it could extract water from a deep, salty aquifer unfit for people or crops. Devon Energy Corp. has begun recycling a small percentage of the water it uses for fracking.
"We need to be ahead of the curve on some options should there come a time that water is not so readily available as it is today, through drought or regulatory issues," says Jay Ewing, a Devon manager in North Texas.
In Texas, the industry's thirst puts it in direct competition for water with traditional users, which already are drawing more water from aquifers because of the drought. Ranchers have had to lower the pumps in their wells to find enough water.
Kenneth Braden, a 61-year-old rancher who raises cotton southeast of Midland, Texas, says his water wells now pump half as much as last year. He blames the drought and what he says is the "overwhelming" amount of water used for fracking.
Mr. Braden doesn't favor shutting down the wells, which he realizes provide lots of jobs. He says he wants the companies to figure out ways to use fewer gallons. He has tried to raise the issue with them, he says, but hasn't gotten a response. "They're just so much bigger and more powerful than we are," he says. "We're just kind of the little ant that gets squashed."
Under Texas law, an oil company that has the mineral lease on a property has the right to tap aquifers without the consent of landowners.
Dan Waldrop owns 1,200 acres in LaSalle County, about halfway between San Antonio and Laredo, but he doesn't own the mineral rights. The energy company that does has drawn nearly 30 million gallons of water so far from a well it drilled on his property.
He says he is considering trying to make the company pay for it. "In the deed, it says they have the use of the water, and it doesn't say they have free use," he says.
In addition to tapping underground aquifers, oil companies are interested in water from Texas rivers. They have acquired—or are currently seeking to acquire—from local irrigation authorities the rights to nearly 40,000 acre-feet of water a year. That is enough to supply nearly a quarter-million people for a year.
One source has been the Rio Grande. Cities along the river, which are among the fastest growing in the state, draw from it to supply water to residents.
"This is a major concern for us," says Juan Hinojosa, a Democratic state senator from McAllen who represents the area. "The oil companies have a lot more money than we do to buy water rights."
The intense drought over the summer exacerbated the water concerns of cities. More than 964 public water systems, covering 14.7 million Texans, have imposed voluntary or mandatory restrictions, according to the state.
This summer, the city of Grand Prairie, near Fort Worth, stopped selling water to oil companies as part of its drought-contingency measures, which also included lawn-watering restrictions.
Oil companies have long been exempt from most Texas state water rules and permitting requirements, but the state has begun to take a fresh look at the industry's ability to drill water wells wherever they have acquired rights to extract oil and gas. Texas oil regulators have convened a task force to look at a range of issues related to the Eagle Ford boom.
"The No. 1 issue is water," says David Porter, a Republican member of the Texas Railroad Commission, which regulates the oil industry and is seen as generally pro-development. "Everyone is concerned about water." The task force expects to issue recommendations on water next year.
Even people such as Mr. Parker, the rancher worried about water depletion, find it tough to resist the cash oil companies are offering. In South Texas, the water needed to frack a single well can fetch more than $50,000. Mr. Parker decided to sell his water. "If they didn't get it from me," he says, "they would get it from my neighbor."
Mark McPherson, a Dallas-based water-rights lawyer who has represented both ranchers and oil companies, expects conflicts over water to increase as hydraulic fracturing expands. Texas resource-development laws are designed to encourage the oil industry to produce as much as possible, he says, but in recent years, the state's water use rules have been geared toward conservation.
"Those two fundamental philosophies are diametrically opposed to each other," he says. "They are in conflict from the get-go."