This article was originally published in The Water Report, the monthly newsletter for water lawyers, and anyone interested in water law, water rights, and water quality in the western United States. Special thanks to David Light for permission to republish.
Hydraulic fracturing (commonly called “fracking”) is perhaps the single most controversial environmental issue of the day. The process involves breaking open otherwise impermeable oil and gas bearing geologic formations using a pressurized mixture of water, “proppant” (generally sand or ceramic beads), and chemicals. The mixture is injected down a wellbore, the proppant becomes lodged in the fractures, holding them open, and after a period of flowback recovery, gas and oil can be recovered. Recent technical breakthroughs in horizontal drilling, combined with improvements in traditional hydraulic fracturing techniques, have opened up vast areas of previously “unconventional” deep shale formations to economic development, resulting in a massive boom in oil and gas production across the country — and prompting major controversy.
Much of the argument thus far has focused on the risk of impacts to drinking water resources resulting from potential releases of chemical-laden hydraulic fracturing fluid through improper storage, spills, or well blowouts. Less attention has been paid to another important aspect of the process: hydraulic fracturing by definition requires water and in practice uses water in significant amounts. As the process becomes more mainstream and development expands into new regions, water resources, not water quality, is likely to become one of the key battlegrounds in the hydraulic fracturing debate.
This article seeks to put the controversy into context by surveying the ongoing efforts to assess the potential impacts of water withdrawals specifically associated with hydraulic fracturing, and then examining the growing and varied body of state-level responses to the issue. It ends with a survey of some of the considerations that a developer seeking to initiate a water-intensive drilling program would want to undertake. The message is clear: project proponents should be aware of potential objections based on water resources concerns, and should incorporate water resources issues into their development planning.
Water Use & Hydraulic Fracturing: Putting the “Hydraulic” in Hydraulic Fracturing
It is common knowledge that hydraulic fracturing requires “a lot” of water. But many sources are less than precise regarding not only how much water is really required, but also what that means in the larger context of water use, and the implications of any increase in industrial use on local water resources as a whole. To understand the issues, it is useful to begin by examining exactly how much water the process requires and what that means.
US Annual Water Use: 150 Trillion Gallons per Year
The United States Geological Survey (USGS) maintains detailed estimates on the amount of water used in the United States every year. The most recent nationwide data is from 2005, with the 2010 data expected in 2014.
The numbers are impressive. In 2005, US surface and groundwater diversions and withdrawals totaled 410 billion gallons per day, or 150 trillion gallons per year. This number is so large that usual methods of comparison — say, 225 million Olympic-sized swimming pools — still do not give a good sense of its real magnitude. To put it in perspective, 150 trillion gallons is enough water to cover every square inch of the total land area of the United States (including Alaska) in 2.5 inches of water; and if a pipeline were built from the Earth to the Moon, it would need to be 142 feet wide to contain it all.
Eighty-five percent of this water is fresh, diverted or withdrawn from lakes, streams, rivers, and fresh groundwater sources. The rest is saline, from marine and briny groundwater sources. Eighty percent is surface water, with the remainder taken from the ground. Fully half of the water put to use in the United States each year is applied to cooling at thermoelectric power plants — large-volume withdrawals are cycled through cooling systems and returned to the source waterbody. Irrigation accounts for nearly another third. The public water supply — the water systems that provide most people with the water they depend on every day to drink, bathe, wash, and water their lawns — currently accounts for about twelve percent of the total, while industrial process use accounts for only four percent of total withdrawals. Aquaculture, mining, domestic withdrawals, and livestock watering make up the difference.
These figures change over time — thermoelectric withdrawals are decreasing, for example, while public water supply use is declining in some places and increasing elsewhere, depending on population growth and efficiency factors — but in a broad sense the numbers begin to paint a picture by which it is possible to discern the genesis of many types of water conflicts. With respect to hydraulic fracturing, the conflict arises where industrial use increases, to the potential detriment of irrigation and public water supply users. The question is: how big is the potential problem?
Fitting in Hydraulic Fracturing: 3 Million Gallons per Frac
Industrial water use — water withdrawn from sources other than the public supplies and put to industrial use — accounts for only four percent of total US withdrawals, and of that only a small fraction is water associated with hydraulic fracturing. Using figures that, while general, have largely remained relevant today, in early 2011 the US Environmental Protection Agency (EPA) estimated that approximately 35,000 wells will be fractured or refractured each year in the United States. See EPA, Draft Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources (Draft Study Plan), p. 19 (Feb. 2011). Each fracturing job requires on average about three million gallons of water, with variations depending on local geology and other factors. For example, EPA estimated that wells fractured in the Barnett Shale in Texas require about 2.3 million gallons on average, while wells in the Marcellus shale in the mid-Atlantic require 3.8 million gallons on average. Wells elsewhere might require as little as 0.5 million, or as much as 5 million gallons of water to successfully fracture. Thus, it will require something like 105 billion gallons of water per year to conduct hydraulic fracturing operations across the country. This is less than 0.1 percent (one one-thousandth) of total US water withdrawals, or 1.75 percent of industrial water use.
These numbers have been cited as suggesting the low-scale impact potential for increasing water withdrawals for hydraulic fracturing. However, these numbers do not tell the whole story. In fact, withdrawal impacts tend to be localized and concentrated where drilling is occurring. Thus, for example, oil and gas development now accounts for close to two percent of total freshwater demand in the Barnett Shale region. Draft Study Plan, p. 19. Drilling booms are occurring in some of the most arid regions of the country, including North Dakota, Colorado, and California. Ultimately, 600 newly fractured wells impose the same water demand as a city of approximately 50,000 people. Id. In areas where water is scarce — particularly where the oil and gas industry are new neighbors — opponents of hydraulic fracturing are pointing to the processes’ water impacts as one potential reason to delay approval, to conduct further study, or even to ban the practice entirely.
EPA’s Hydraulic Fracturing Study: “Essentially, All Models Are Wrong, but Some Are Useful.”
One hallmark of the nascent hydraulic fracturing water arguments is the poverty of useful data underlying the debate. The impacts of large-scale water withdrawals associated with hydraulic fracturing are potential; but is there any hard data regarding the question one way or another? EPA has set out to answer this question as part of its ongoing, multi-year study into the relationship between hydraulic fracturing and drinking water. Seehttp://www2.epa.gov/hydraulicfracturing. EPA’s study is actually a collection of about 18 separate studies, and, as relevant here, includes a water acquisition component through which EPA proposes to evaluate the potential impacts of hydraulic fracturing water withdrawals on water resources specifically.
In February 2012, EPA published a document laying out EPA’s study plan in detail. SeeEPA, Modeling the Impact of Hydraulic Fracturing Based on Water Acquisition Scenarios. The document explains that EPA’s plan is to gather and analyze existing data on water use and hydrology at two selected study areas. EPA will examine the potential impact of water withdrawals for hydraulic fracturing using a series of models. The selected study areas are Garfield County, Colorado and the Susquehanna River Basin in the Marcellus Shale Region, chosen as representative of arid western and wet eastern environments, respectively. In both areas, hydraulic fracturing activities are already underway.
After gathering a range of pertinent information regarding water resources from the study areas, EPA proposes to build a model to evaluate the potential impact of hydraulic fracturing operations under three limited future scenarios, which it calls “Business as Usual,” “Energy Max,” and “Green Technology.” These scenarios will differ as to: the intensity of well development in the area; assumptions regarding future water demand and withdrawal limitations; and industry water needs. “Energy Max” assumes intensive and unrestrained development combined with very high population growth — increasing the risks of resource conflicts. “Green Technology” takes the other extreme, assuming more confined and regulated development requiring less water, and lower population growth. The “Business as Usual” scenario splits the difference.
Will this work produce any useful results? Noted statistician George E.P. Box famously wrote that “essentially, all models are wrong, but some are useful.” Box & Draper,Empirical Model-Building and Response Surfaces, p. 424 (Wiley 1987). No doubt, the assumptions and limitations of EPA’s withdrawal modeling effort will render its results “wrong” in any number of ways — what is true in Garfield County, Colorado may not be true in Kern County, California, and the three “scenarios” seem very unlikely to precisely capture the reality in any given place at any given time. It remains to be seen, however, whether the results will nonetheless be “useful.” To evaluate this, it is helpful to consider EPA’s stated goals. EPA intends to “identify possible impacts on water availability and quantity associated with large volume water withdrawals for hydraulic fracturing” and “determine the cumulative effects of large volume water withdrawals within a watershed and aquifer.” However, there is not much mystery as to how and to what extent large quantity water withdrawals may impact an area’s water resources and competing uses. Further, it is not clear how well EPA’s study in two areas can be usefully applied to the many other areas where hydraulic fracturing will occur.
On the other hand, EPA also intends to “develop metrics that can be used to evaluate the vulnerability of water resources” and “provide an assessment of current water resource management practices related to hydraulic fracturing.” This last goal, especially, may have some real effect in the future, as industry, competing users, and regulators consider whether and to what extent to limit the use of water for hydraulic fracturing, or impose technological or management requirements on industry water use. Time will tell whether EPA’s conclusions regarding best management practices — due in 2014 — will gradually influence future permit requirements, environmental reviews, and proposals for new regulation.
Actions & Reactions: State Legislation and Fights Ahead
In the meantime, states and local governments are not waiting for EPA to complete its study. Water law is state law, and water withdrawals for hydraulic fracturing are happening now. States, therefore, are approaching the problem at the regulatory and legislative level. There appears to be a general movement toward requiring disclosure of: the source of water used for hydraulic fracturing; the amount withdrawn; the amount used in each fracture; and any amount of flowback recovered after the frac. Beyond that, each state faces its own unique problems, and is developing its own unique solutions.
New York: Putting on the Brakes
New York has been at the epicenter of the hydraulic fracturing debate. The potential to recover large quantities of natural gas from unconventional deep shale formations using hydraulic fracturing and horizontal drilling was first recognized in New York, where the Marcellus Shale underlies much of the upper part of the state. The New York State Department of Environmental Conservation (NYSDEC) has been tied up for years in an attempt to conduct a programmatic Environmental Impact Statement on the expanded drilling program, and natural gas development using hydraulic fracturing has been in limbo pending the completion of that study.
In preparation for the eventuality of drilling, however, the state legislature has taken a number of other steps, including the enactment of a law related to high volume water withdrawals that could have a significant impact on large-scale hydraulic fracturing operations. New York’s state water law follows riparian rights doctrines common on the East Coast, and therefore water withdrawal permits have not been a particularly common part of the regulatory landscape there. However, the new law, as now implemented through NYSDEC regulations (see www.dec.ny.gov/regulations/78258.html), requires industrial withdrawals over 100,000 gallons per day to secure an NYSDEC permit, supported by a permit application requiring a detailed engineer’s report and water conservation plan. Furthermore, the permit approval is discretionary. [Editor’s Note: Under the Prior Appropriation Doctrine in the West, the guiding principle is “first in time, first in right” and senior water users are entitled to all of their water rights to the exclusion of junior users in times of shortage. The “riparian doctrine” utilized in the eastern US, on the other hand, allocates surface water use amongst landowners who are adjacent to a stream or river, with the resource shared proportionally during shortages.]
In considering whether to issue the permit NYSDEC must consider a host of potentially complex and controversial factors, including:
- Whether a better alternative water source exists; whether the water supply proposed is adequate, accounting for future drinking water demand projections
- Whether the water is strictly necessary for the proposed use
- Whether withdrawal will be “implemented in a manner to ensure it will result in no significant individual or cumulative adverse impacts on the quantity or quality of the water source and water dependent natural resources, including aquatic life”
- Whether withdrawal “will be implemented in a manner that incorporates environmentally sound and economically feasible water conservation measures”
Thus, even if New York does eventually permit large-scale shale gas development, getting water for the process may prove extremely difficult.
North Dakota: Stepping on the Gas
North Dakota lies on the other end of the spectrum. The state is currently undergoing an industrial revolution, almost entirely due to the development of the Bakken Shale, a tight oil formation underlying much of the state’s northwestern area. North Dakota currently enjoys the lowest unemployment in the nation, and is projected to overtake Alaska as the nation’s largest oil producer in ten years. All of this is driven by hydraulic fracturing — and all of that requires water.
In order to satiate the growing thirst for water in North Dakota, the state’s traditional water supplies have been stretched to their limits. In an arid region, shallow aquifers already taxed by municipal and irrigation use are being pumped down and sold to oil developers. Increasingly, producers have been turning to surface water, specifically from Lake Sakakawea, the largest lake in the state (and third-largest in the country), situated conveniently near the oil fields. The lake is man-made, a federal US Army Corps of Engineers (Corps) impoundment of the Missouri River. Producers, the North Dakota state government, and to a large extent the Corps, all support the use of this water for hydraulic fracturing. The argument has principally been over cost. The Corps is considering a national policy regarding whether and how much to charge for such withdrawals, but in the meantime it is issuing “temporary” withdrawal permits, at no cost. Environmental and other interests allege that industry demand projections greatly understate the amount of water that will be withdrawn from the lake and elsewhere, and thus the environmental impacts that such withdrawals could entail — up to and including the impairment of navigability of the Missouri River in low water years.
Colorado: Western Water Law at Work
New York and North Dakota demonstrate extreme ends of the potential balance between economic development and resource protection. Other states fall somewhere in between. Colorado, for example, demonstrates the regulatory hurdles that industry faces as it seeks new water in the West. The state also provides an important case study in the rising role of water economics in the hydraulic fracturing debate.
Colorado administers water appropriations under Western Water Law’s prior water rights regime, known as the Prior Appropriation Doctrine. Under the doctrine of “first in time, first in right” most of the state’s available water resources already have been previously appropriated for uses other than oil and gas development. The state has also recently undergone severe drought. Producers in Colorado are seeking to expand hydraulic fracturing. Consequently, industry has had to adapt to the restrictions — and opportunities — of the prior appropriations system.
Regarding the restrictions, a good overview is provided in a joint publication of the Colorado Division of Water Resources, Colorado Water Conservation Board, and the Colorado Oil and Gas Conservation Commission entitled Water Sources and Demand for the Hydraulic Fracturing of Oil and Gas Wells in Colorado from 2010 through 2015. The first part of the publication makes a great deal of the fact that in 2010, hydraulic fracturing “reflected slightly less than one-tenth of one percent of the total water used” in the state (a familiar figure from the discussion above). The second half is devoted to discussing potential sources of water for hydraulic fracturing. Tellingly, the simplest method is discussed first: producers are informed that they may transport water in from another state. Failing that, they are informed that new diversions from surface sources are likely impossible, and that limited opportunities exist for new groundwater withdrawals. More viable suggested solutions are market-based: leasing or purchasing water from rights holders — including irrigators and municipal sources. The state is careful to note that such transactions must comply with place-of-use, type-of-use, and any other relevant restrictions on the original water right, unless the parties seek a change in right through formal channels. Finally, the document briefly discusses the potential for using water produced by an active oil or gas well (produced water), and encourages reuse and recycling.
Notwithstanding the complexities, the prior appropriations system has provided the necessary flexibility to allow the Colorado oil and gas industry to get the water it needs. All it takes is enough money. Water rights holders with water to sell are finding that oil producers will pay a heavy premium for the water they need. Thus, for example, in the dry summer of 2012 the citizens of Greeley, Colorado watched as tanker trucks pulled up to local fire hydrants, filled from municipal supplies, and carried the water away to the oil fields. The water was paid for at a premium, providing much needed municipal income, but this experience and many like it have raised fundamental questions regarding the equitable distribution and cost of water. In nearly every case, oil and gas producers are able to outbid all other interests, particularly agricultural concerns, to convert water into energy.
California: The New Frontier
As the above examples demonstrate, states are giving a great amount of thought to the question of water withdrawal impacts of hydraulic fracturing. Up until now, an exception has been California. While oil development has played an important part of California’s history — and hydraulic fracturing has been used there for decades — neither the public nor state regulators have previously paid much attention to the issue.
Then, two years ago, the US Energy Information Administration issued a report indicating that California’s Monterey and Santos shales, underlying much of Kern County and the Central Valley, might contain four times as much oil as the North Dakota formation. Notwithstanding some real geologic differences and technical hurdles yet to be overcome, this oil may now be economically producible via hydraulic fracturing. Consequently, California has begun to come to terms with the fracking debate. The state is in the very early process of developing new regulations and has not yet seriously addressed water withdrawal issues.
It is too early to tell where California will fall on the spectrum. Like New York, it has strong and sophisticated environmental interests seeking to put development on hold. Like Colorado, it has a strong and sophisticated oil and gas industry. Like North Dakota, it has a massive amount of oil potentially ready to be tapped. And like everywhere, that development will require water. Given these facts, the battles over water for hydraulic fracturing in California may reach a whole new level.
Implications For Development Planning
Armed with the above information, those interested in acquiring water for hydraulic fracturing operations should be better prepared not only to develop a strategy for acquiring it, but also to defend against attempts to stop them from getting it. Useful information may be found in the American Petroleum Institute’s API Guidance Document HF2, Water Management Associated with Hydraulic Fracturing (June 2010), but a broader understanding of water use and requirements suggests that the following types of inquiries should be considered:
Requirements analysis. How much water is the project going to need, and when? Any technical evaluation should account for buildout projections over time, and factor in seasonal considerations such as availability in winter versus summer. Be prepared for pushback: is the proposed use “reasonable” or “beneficial” (including relevant limitations on waste) under local water law? What are the best practices for water efficiency and will the project be following them?
Source identification. Where is the project going to get the water? Can it be transported in from out of state; can irrigation rights be purchased privately; are there nearby sources of treated or recycled water that meet the project’s technical requirements? In such cases, what are the use and timing limitations on the existing rights, and do they suit the project’s purposes? If planning to divert from a natural water source, are there any relevant legal restrictions, including whether the water source is open for appropriation and whether the water can be transported from the water source to the project site.
Competing uses. Who is the competition? Any new project may face competition for water with others, who may have the support of preferential state water policies behind them. It is important to identify and consider all other users of any potential water source, including those who would keep the water in place for conservation purposes. Regarding “preferences,” see Clyde, TWR #83.
Potential impacts. As the discussion above demonstrates, water withdrawals may entail physical impacts, and data regarding such impacts may not be developed or readily available. It is wise to survey available information regarding the water resource, and to consider not only the current or average year, but also past and possible future low-water years, to consider whether increased water withdrawals from a source risk impacting competing users, and thereby engendering opposition and, potentially, challenge.
Regulatory requirements. Finally, of course, it is necessary to completely understand all prevailing regulatory requirements — which at this moment may be changing in the project area. What are the project’s water permitting needs, if any? What survey, reporting, and monitoring responsibilities might there be?
There is no doubt that the boom in hydraulic fracturing is leading to increased industry demand for water resources. While the total impact of this increase might be debated, water use is local, and localized use will raise localized concerns over impacts to water resources. Data collection and studies are underway, including the water withdrawal component of EPA’s national study, but it is not clear as yet how useful studies conducted in one area will be at answering questions in other places. In any event, water withdrawals are primarily governed by state law, and project proponents should be aware that states are developing or expanding permitting regimes in response to the now-familiar public concern over hydraulic fracturing.
Hydraulic fracturing developers and operators should build a good technical record to support their water demand projections, work to avoid and mitigate impacts to any water resources and competing users, and, above all, incorporate water considerations early into their planning processes.
For additional information, contact Adam Orford or any member of our Water Resources orEnergy practice groups.