Water shortages pose larger than expected threat to shale gas – FT.com

Water shortages pose a bigger threat to the global shale oil and gas industry than is widely realised, according to one of the most detailed studies to date of how much water is available at some of the world’s most promising shale sites.

More than a third of commercially viable shale gas deposits worldwide are in areas that are either dry or have water supply constraints, according to a study by the Washington DC-based World Resources Institute, an environmental think-tank.

The process of hydraulic fracturing, or fracking, used to extract shale gas can require 7m-23m litres of water, according to the study. The total varies from well to well.

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Of the 20 countries with the largest shale gas resources, eight have deposits in areas that are arid or face high to extremely high water stress, including China, Algeria, Mexico and South Africa.

Similarly, eight of the 20 countries with the largest reserves of tight oil, including shale oil, have them in regions that are arid or with high water-stress, including China, Mexico and Pakistan.

Overall, 38 per cent of viable shale gas deposits worldwide are in areas where water supplies are a potential problem. Of those with the biggest shale reserves 40 per cent have severely limited freshwater supplies.

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The boom in first gas and then oil production in the US has encouraged hopes that other countries with substantial shale reserves – some larger than those in the US – will be able to establish similar industries.

Paul Reig, who leads the WRI’s work mapping water availability, said the wide variation in conditions between different shale regions could be a significant challenge for development.

“If any company is basing its expectation of managing demand for water on its experience in the US, it could be in for a big surprise,” he said.

The WRI says its study is the first publicly open assessment of water availability at all potential commercial shale gas and tight oil resources worldwide.

In the US, hydraulic fracturing and drilling accounts for only a tiny percentage of all water withdrawals, but some shale reserves are in areas where competition for water is very high.

In Johnson County, Texas, for example, water withdrawals for shale gas development in 2008 were responsible for almost one third of the county’s freshwater use, the WRI study said.

Many shale companies use fresh water in their operations but the WRI study underlines the importance of looking at alternatives such as brackish or recycled water, said Dr Cal Cooper, director of special projects and emerging technologies at Apache Corporation, a US gas and oil group. “It’s important to find something other than just fresh water,” he said.

Melissa Stark, managing director for new energy at Accenture, the consultancy, said water use was slowing down shale developments in China. Efforts were under way to make more use of waste water from industry or homes.

In Argentina, she added, plans had been made to build pipelines to take water to the Vaca Muerta shale formation, but a chicken-and-egg problem emerged: the water pipeline would be worth building only if it were clear that production would be on a large scale. However, development would be difficult without the pipeline.

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via Water shortages pose larger than expected threat to shale gas – FT.com.