Hydraulic Fracturing: Lessons from the US

By Monika Freyman 13 August, 2014

Freyman from Ceres shares what water lessons can be learnt from the shale gas boom in the US

Two key water concerns in fracking: heavy water use (horizontal well = 4.8mn gallons) & water pollution
US shale development outpaced policy & regulations and is now trying to mitigate impacts
Disposal & groundwater depletion are key US challenges; development plans need to be localised & include water

China has limited water resources and yet intends to exploit its substantive shale gas resources. Understandably many are concerned.

Water is a critical but contentious resource for the industry, which is booming in the US and poised to take off globally. Despite vast media coverage on the topic, many issues remain poorly understood by policymakers, the business community and other stakeholders who stand to be affected by the expansion of shale oil and gas expansion and the use of hydraulic fracturing and horizontal drilling techniques.

“In the world’s top 10 countries with the largest shale oil & gas reserves, including China & South Africa, > 60% of  reserves are in regions with medium to extremely high competition for water resources”

As countries explore whether their shale energy resources are commercially viable, water sourcing and potential pollution risks are – and will continue to be – deep concerns. In the world’s top 10 countries with the largest shale oil and gas reserves, including China and South Africa, more than 60% of those reserves are located in regions with medium to extremely high competition for water resources, according to consultants Wood Mackenzie.

While the physical, regulatory and economic drivers of water use vary widely from country to country, there are many lessons and insights that oil and gas companies, regulators and NGOs can learn from the US shale energy experience.

Such lessons are crucial for China where water resources are very limited and yet according to its 12th Five Year Plan the shale gas industry should be pumping 6.5 billion cubic meters of natural gas from underground shale formations by 20151. Hydraulic fracturing has appeal in China because natural gas generates “cleaner” electricity with less greenhouse emissions than coal. It can be potentially better for air but what about water?

Two key issues: water use & pollution

Two issues are particularly pertinent in obtaining shale gas: water use and potential water pollution risks. The relative importance of these issues varies considerably by location, depending on the sources and competing uses for water:

1. Water use

The heavy use of water resources for the hydraulic fracturing process (which entails injecting millions of gallons of freshwater, along with sand and chemicals, into each well to literally ‘fracture’ the shale formations deep underground to release oil or gas).

Some areas in China have a per capita per annum renewable water resource of under 500 cubic meters, which is comparable to countries in the Middle East2.

Average Water Use Per Well By Type of Production

2. Water pollution

The potential risks for surface and groundwater contamination from surface accidents, spills and poor wastewater management.

Groundwater quality in China is already a serious issue. According to China’s Ministry of Environment Protection 2013 report 60% of groundwater is in the ‘bad’ and ‘very bad’ category.

“In the US, the speed and scale of development has left policymakers and the scientific community playing catch-up in terms of understanding and mitigating wide-ranging cumulative impacts…”

In the US, the speed and scale of development has left policymakers and the scientific community playing catch-up in terms of understanding and mitigating wide-ranging cumulative impacts from shale gas and oil development. Even as stronger state regulations take hold, water use impacts are a major concern, especially in hydraulic fracturing hot spots such as Texas and Colorado, states that are marked by aridness, droughts and fast-growing populations competing for limited water.

In water scarce locations such as China, Algeria and South Africa, many of these same issues are in play. South Africa, in particular, is moving quickly to finalise regulations and issue licences to develop the Karoo Basin3, a desert region with limited groundwater.

Policy makers should be asking key water questions…

… How much water will be needed for future projects? Who are the other competing users?

Policymakers in all of these countries should be asking these key questions of the industry. How much water will be needed for future development? Where will it come from? How much can potentially be recycled? What alternative water sources are available? How will the industry’s water use impact local hydrology and other competing water users?

It remains to be seen if China will pass a shale gas and water plan like it did with the “Water Allocation Plan for the Development of Coal Bases”, which pertains that regional water availability will dictate coal development plans for the future.

Challenges and hurdles – Lessons from the US

Recent work by Ceres on water risks in the US shale energy industry pinpoints many of the challenges and hurdles that regulators and stakeholders in other countries can learn from.


Disposal is one major issue. Hydraulic fracturing and subsequent oil and gas extraction produces a large volume of wastewater.

Disposal is one major issue:  a large volume of wastewater is produced…

… in addition, disposal wells are linked to earthquakes

In the US, wastewater returning to the surface from wells is released into streams after treatment (increasingly rare), injected into federally regulated disposal wells (most common) or recycled.

The disposal wells, a legacy of the country’s long history of dealing with wastewater from the coal, oil and gas and other industries, have been hugely popular because of their low cost. But this option has been plagued with poor oversight and may be contaminating aquifers in some regions and therefore may soon be facing tighter restrictions.

Cumullative Number of M3 Earthquakes - USGSIn addition disposal wells are linked to earthquakes4 with some regions now facing an order of magnitude more tremors than they ever did in the past.

In the UK and Europe, the industry is likely to face more disposal challenges. The combination of existing EU directives (such as the groundwater directive) and the possibility of an “unconventional fuels directive” may well preclude low cost and speedy disposal of large quantities of oil and gas wastewater5.

Countries with a history of dealing with produced water from the oil and gas industry may face fewer challenges.


Loss of groundwater reserves

While much of the adverse publicity about hydraulic fracturing has focused on the risks of groundwater contamination, another challenge is the loss of groundwater resources. Worldwide, groundwater resources have been overexploited and often poorly measured and managed. Numerous studies showing that groundwater levels in many parts of the world are falling and that recharging those aquifers can take years, decades, even centuries6.  In some regions industry is turning to brackish (salty) groundwater resources as at times a good alternative to using freshwater, however brackish water resources are being studied as potential future drinking water resources.

Hydraulic fracturing could accelerate groundwater depletion…

…36% of hydraulic fracturing production in the US occurs in regions with significant declining groundwater levels

Hydraulic fracturing could accelerate these pressures, as we’re already seeing in the US. A recent Ceres reportshowed that 36% of hydraulic fracturing production in the US occurs in regions with significant declining groundwater levels after decades of over-exploitation for uses in other industries, municipalities or for agriculture – key among those southern California, which is in the midst of a historic drought, and Texas. Both states have weak groundwater laws with California recently restricting the use of several disposal wells due to contamination concerns8.

As for China, its major shale gas basins are primarily located in central and western provinces with limited water resources and earthquake concerns (more on China’s groundwater – “China’s Water Sources” & “Groundwater Depletion“).

Localised impacts

Localised impacts are another concern. Despite the sense that shale energy production is a US-wide phenomenon, the actual extraction is highly localised. The Ceres report showed that although on a large state wide scale water-use hydraulic fracturing-related water use can be low at a local county scale water use can exceed the water used by all other users combined. Any planning for hydraulic fracturing-related water use needs to recognise this. Decisions need to be made based on local considerations, not on state- or country-wide water use.

Ultimately, no matter the continent or country being scrutinised for shale gas or oil development, regulators and shale producers should follow the same key fundamentals when it comes to the water impacts.

Industry disclosure and engagement with local stakeholders on present and future water needs is critical

First, industry disclosure and engagement with local stakeholders on present and future water needs is critical, and it’s encouraging that more of this is happening in the US. More proactive regional planning between industry players, co-operation to scale and increase regional recycling operations and using non-potable water resources are also hugely important.

Second, management makes a difference. Notwithstanding all the differences in site geology and hydrology, it is essential that water stewardship be imbedded throughout strategic planning, production and across the supply chain. This is especially important given the industry’s diffuse nature and reliance on subcontracted site operators.

As the new kid on the block in many parts of the world, shale energy developers and regulators that steward local water resources need to tread carefully as the industry expands its global presence. After all, no matter the location, water is a precious commodity for everyone.

4 https://earthquake.usgs.gov/research/induced/
6 Tom Gleeson, Yoshihide Wada, Marc Bierkens and Ludovicus van Beek, “Water Balance of Global Aquifers Revealed by Groundwater Footprint,”Nature, Vol. 488, August 9, 2012.

What are the alternatives?

  • Water Drives Coal Reform – To ensure energy security, China needs to protect its No 1 fuel source against water scarcity. Feng Hu takes a closer look at what the new water-for-coal plan and other related policies mean for coal and coal-related industries
  • Avoiding Hydro Wars – With up to 124GW of planned hydropower on China’s transboundary rivers, no wonder regional geopolitical tensions over water is running high. Debra Tan gives the low down on China’s hydropower expansion, are there other options to avoid sparking hydro wars?
  • Inland Provinces: Nuclear At Crossroads – Given China’s limited water resources, is planning to build 28 inland nuclear power plants wise? Wen Bo, policy & media advisor to the National Geographical Society on future nuclear plans and concerns over water resources

Further Reading

  • Is Fracking The Answer For Water Scarce China – Will water limit China’s access to possibly the world’s largest resoure of shale gas? Lisa Genasci discusses China’s possible energy alternative and its hold-backs
  • Water: Shaping China’s Food & Energy Choices -Debra talks about key issues & new trends surfacing from the Fortune Global Forum roundtable and why she thinks the 12FYP Strategic Emerging Industries are the real Magnificent Seven
  • Groundwater Crackdown – Hope Springs – The economy slows down but the Chinese government speeds up groundwater crackdown with increased transparency, blacklists at both central and provincial levels
Monika Freyman
Author: Monika Freyman
Monika is a senior manager in Ceres' water program, where she researches and conducts corporate and investor engagement on the risks and opportunities related to growing water scarcity and water quality issues. Prior to Ceres Monika worked as a research consultant for the Initiative for Responsible Investment at Harvard, exploring the roots of the concept of sustainability to inform the Sustainable Accounting Standards Board (SASB) in their efforts to evolve corporate reporting standards and investor integration of environmental and social factors. As a Chartered Financial Analyst and former emerging market analyst, with a Masters in Freshwater Ecology, Monika is particularly interested in driving greater integration of water risks and opportunities into the portfolio management process.
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