Rising To The Water Challenge

By Zachary Sadow 18 April, 2018

Barclays' Sadow shares findings from their report - how can energy co's & public utilities alleviate water shortages?

Many industries are highly dependent on reliable sources of water for their day-to-day & viability incl. energy
Oil & gas, power & water utilities, in theory, all face water challenges; fracking water use now >128k barrels per well
Despite differences, sectors can collaborate on solutions e.g wastewater reuse to lower water-related costs by 45%
report coverOn World Water Day 2017, Barclays and the Columbia Water Center released a joint report – “The Water Challenge: Preserving a Global Resource” on how energy companies and public utilities can help alleviate water shortages and improve water quality through new technologies and better practices. Below are key findings summarised by Barclays and first published on their website.
One year on from the report, Barclays partnered with Tsinghua University, one of the world’s top engineering education and research institutions, to host the Barclays-Tsinghua University China Water Summit in Beijing. The Summit explored the challenges and opportunities associated with water infrastructure, technology and financing mechanisms in China. Check out key takeaways from Barclays’ analyst Zachary Sadow on the event here.

Water is undoubtedly one of the most precious natural resources for life on earth. Without access to good quality freshwater, human, animal and plant survival is impossible, while many industries are also highly dependent on reliable sources of water for their day-to-day operations and long-term viability.

However, factors such as climate variability, droughts, growing populations and economic expansion are all placing greater demand on the available water sources.
The extent of the water problem is starkly illustrated by the data: only 2.5% of the world’s water is fresh1, yet the US depends on it for nearly 90% of withdrawals for public and industrial use2. At the same time, groundwater, which makes up 30% off all freshwater, is under widespread stress, with NASA reporting that a third of major water basins globally are being rapidly depleted by human consumption.3

“Only 2.5% of the world’s water is fresh…
…yet the US depends on it for nearly 90% of withdrawals for public & industrial use”

Where the freshwater is (3)

A ripple effect on society and the environment

Water scarcity has a direct effect on public health, availability of food and, ultimately, public safety. In an increasingly interlinked world, with ever-expanding trade routes, water stress in one geographic region not only affects local populations, it can also have a reverberating impact in other regions.

“Countries that import water are especially vulnerable to such shocks”

In agriculture, for example, a shock such as a drought or blight (a fungal disease that spreads rapidly in wet weather) can have a high human cost through famine, but also global implications for food supplies. Countries that import water are especially vulnerable to such shocks.
global water withdawals (4)

What are the water challenges for the energy industry?

Energy companies – in particular, the oil and gas industry, and electric and water utilities – use substantial amounts of water and have an important role to play in protecting resources.
Oil and gas

In the US oil and gas industry, for example, fracking operators have increased their use of freshwater from 5,600 barrels per oil well in 2008 to more than 128,000 barrels in 2014, and over 300,000 barrels in some areas today. Although the industry is improving the way it deals with wastewater, it has been responsible for spillages and other problems.

In the US, fracking operators have increased their use of freshwater from 5,600 barrels per oil well in 2008 to more than 128,000 barrels in 2014

water withdrawal by industry (4)

Power utilities
Electric utility companies withdraw a lot of water for cooling purposes, although much of this is returned to the water cycle. However, in water-stressed regions, these withdrawals may contribute to supply and demand imbalances. The problem lies not so much in contributing to water scarcity as protecting against it.
Water utilities
Water companies have different water constraints from oil and gas operators. The sector is typically publicly owned, with less access to capital to invest in ageing infrastructure and innovative solutions to counter water loss and leakages. Its main challenges include a decline in supply and an increased demand for freshwater.
mains break (3)

And what are the possible solutions?

Despite differences between the sectors, there are opportunities for them to collaborate

Despite differences between the oil and gas sector, electricity providers and water utilities, there are opportunities for them to collaborate through shared learning and innovation. For example, larger, well-capitalised companies in the oil and gas industry, as well as some utilities, can help finance upgrades for capital-constrained small public wastewater utilities in exchange for use of wastewater.

Oil and gas operators
Through a combination of reusing and recycling wastewater and applying innovative technologies, it has been predicted that oil and gas operators could substantially increase reused water for operating oil and gas wells. These companies could also look to use treated brackish water (a naturally occurring mix of fresh and salty water) instead of freshwater.
recycle reuse (2)Reuse: Defined as wastewater that is used within an oil or gas well, requiring very little additional treatment, reuse could lower water-related costs by about 45% and save over 300,000 barrels of freshwater per well.
Recycling: Recycling is treating wastewater to acceptable standards through robust treatment technologies that range from simple filtration, which removes large organic particles, and oil and gas bubbles, to complex procedures that treat water to near freshwater standards. There are many possible uses for recycled wastewater, especially for livestock watering and crop irrigation.
Many factors dictate whether reuse and recycling are viable options for oil and gas companies. Cost, water availability, water quality logistics, and disposal options all have a bearing on whether an operator reuses or recycles.
Electric utilities
Power companies can reduce the amount of freshwater they use by turning to saline and recycled municipal water instead. They can also deploy demand-side management and energy efficiency. Like the oil and gas sector, alternative water sources used with additional treatment can be an opportunity, but they also require additional infrastructure, and are costly and energy intensive.

“Power companies can reduce the amount of freshwater they use by turning to saline & recycled municipal water instead…

…they can also deploy demand-side management & energy efficiency.”

water withdrawal by country (5)
Water utilities
As water scarcity continues to limit existing freshwater supplies, water utilities are looking at alternatives to freshwater sources, including treated brackish, saline and wastewater. Other solutions include managing existing supplies through conservation, smart water management and leak detection technologies.

1 Food and Agriculture Organisation of the United Nations
2 US Geological Survey
3 NASA (https://www.nasa.gov/jpl/grace/study-third-of-big-groundwater-basins-in-distress)

Further Reading

  • Barclays-Tsinghua China Water Summit: Key Takeaways – The Barclays-Tsinghua University China Water Summit brought together industry leaders, corporations, investors and academics to discuss water solutions for China and Asia. Barclays analyst Zachary Sadow recaps key views from the summit
  • Ministry Reform: 9 Dragons To 2 – What does China’s long-awaited ministry re-shuffle mean – who manages what and how? China Water Risk’s Woody Chan and Yuanchao Xu review the roles and impacts of the new Ministry of Ecological Environment & Ministry of Natural Resources
  • Eight Million: China & The Global Plastic Challenge – Sustainable Asia’s Marcy Trent Long & Sam Bekemans share their new podcast series “Eight Million”, which looks into the plastic waste pollution issue globally & in China and what is being done. China Water Risk is featured in episode 2
  • Connecting A New Generation Of Businesses To Water Stewardship – The CEO Water Mandate updated its Water Stewardship Toolbox. Their Peter Schulte shares how it now better connects companies to useful water stewardship resources, including tailored filters based on individual risks & needs
  • Water Stewardship: The Bright Dairy & Food Case – Chinese dairy mega company, Bright Dairy & Food, successfully used water footprint assessments to better water stewardship. Tongji University’s Hongtao Wang and Jin Xu along with WWF China’s Aihui Yang guide us through the case study
  • Unconventional Water For Power Generation – The power sector is China’s largest industrial water user & is also exposed to water stress. Unconventional water sources such as mine water & municipal wastewater can help with this. China Water Risk’s Thieriot explores these sources
  • Rise of ZLD In China’s Power Sector – Treating air pollution in thermal power plants create hard-to-treat wastewater as a by-product: is zero liquid discharge the way forward? Bluetech Research’s Rhys Owen expands
  • The Hidden Cost Of China’s Coal-to-Chemical Sector – Future costs in China’s coal-to-chemical sector could increase by up to 2/3 due to environmental risks. Trucost’s Kaboo Leung shares a new framework from their recent report to stress test these risks & embed them into financial analysis
  • Water Stewardship In Industrial Parks: The Kunshan Case – Kunshan City ranked as China’s most developed county-level city but faces increasingly serious water challenges. Alliance for Water Stewardship’s Zhenzhen Xu, WWF’s Aihui Yang & Qiandeng Environmental Protection Bureau’s Dadi Feng share experiences from their water stewardship project
  • Learning From Singapore’s Circular Water Economy – Hong Kong is facing an imminent water crisis yet Singapore’s novel circular water economy approach may offer solutions from which HK can learn. Utrecht University’s Julian Kirchherr & Circular Economy Academy’s Ralf van Santen explore
  • Water Efficiency Policy: A Technological High-Water Mark? – From biomimicry to data analytics, Singapore is developing new technology to produce clean water without sinking the environment. Lee Kuan Yew School of Public Policy’s Tommy Kevin Lee and Cecilia Tortajada expand
Zachary Sadow
Author: Zachary Sadow
Zachary Sadow is an energy research analyst at Barclays, and is Project Director of the Barclays-Columbia Capstone Program which is currently focused on international water project development. He is also a PhD candidate at the University of Nottingham's School of Politics and International Relations focusing on energy issues and international political economy. He has a BA from the University of Florida, and was a Visiting Scholar at Columbia University's School of International and Public Affairs.
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