Shale Gas & Water: A Tale of 3 Countries

By Andrew Maddocks, Paul Reig 16 October, 2014

WRI's Maddocks & Reig share how China, Argentina & the UK face similar concerns over water & fracking

This article first appeared on the World Resources Institute’s website on 5 September, 2014 (see here).

The shale gas revolution, which began nearly 10 years ago in the United States, is poised to spread across the globe. For many countries, shale gas could strengthen energy security while cutting emissions. But unlocking this massive resource comes with a significant environmental risk: access to freshwater for drinking, agriculture, and industrial use. Drilling and then hydraulic fracturing each shale gas well uses large volumes of water for short periods of time—between 7 million and 25 million liters (1.2 million and 6.6 million gallons).

In September, WRI released Global Shale Development: Water Availability & and Business Risk, a first-of-its-kind report that raises a yellow flag: a series of water availability-related challenges could limit shale resource development on six continents. Three countries help tell the complex story: China, Argentina, and the United Kingdom.

China: shale rich, water stressed

China is already the world’s largest energy producer and consumer. It has the world’s largest technically recoverable shale gas resources, but those resources are located in areas of highest water stress. Over 60 percent of Chinese shale resources are in areas of high to extremely high baseline water stress or arid conditions.

The government and energy companies are grappling with balancing their large reserves & limited water availability

The government and energy companies are already grappling with the issue. In August, China’s two largest energy companies upgraded their forecasts for shale investments, even as the Chinese government halved its shale gas production targets earlier in August. As the world’s largest greenhouse gas emitter, the country’s shale resources could be a key to addressing climate change, but its water concerns must be addressed.

Over 60% of Chinese shale resources are in areas facing high to extremely high baseline water stress or arid conditions

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Argentina: shale rich, less water stressed

Argentina is South America’s largest natural gas producer and consumer, and possesses the world’s second-largest technically recoverable shale gas resources. With low to medium stress over 72 percent of its shale resources, competition for water is less concerning to Argentinian plays overall. However, 28 percent of the resources are in arid areas, so the country will not entirely escape water-related constraints if shale development progresses. A partnership with Chevron helped more than triple production in a shale basin called the Neuquén from last year to this year.

28% of shale resources are in arid areas so the country will not entirely escape water-related constraints

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The United Kingdom: it’s complicated

The U.K. is Europe’s third-largest natural gas producer. Industrial water use accounts for more than 30 percent of the nation’s total water demand, but those withdrawals have been shrinking for the past 10 years as natural gas and oil production declines. The government is now, however, offering tax breaks to boost shale development, and will need to manage water-related risks if shale drilling and hydraulic fracturing expands.

High industrial and domestic demands for water push 34 percent of the UK’s shale resources into high to extremely high water stress, making public concern and conflict around hydraulic fracturing more likely. In July, a report by two scientific groups cited widespread concern over hydraulic fracturing’s safety, so tension is already emerging.

High industrial and domestic demands for water push 34% of the UK’s shale resources into high to extremely high water stress areas

click on map to expand

Global and local significance

This water-shale energy trade off poses significant social, environmental and financial challenges. And over time, competition for water as well as public concerns over hydraulic fracturing will likely increase as shale development expands internationally and global temperature and precipitation patterns shift.

Every country developing shale gas will share a common concern for access to freshwater and competition for water plus public worry over fracking mean that these concerns are likely to grow

Every country contemplating shale development will share a common concern for access to freshwater, but it’s important to consider the localized factors that make every well unique.

Global Shale Development also evaluates water availability for each shale play in 8 other countries either developing shale resources or most likely to develop them in the future: Algeria, Australia, Canada, Mexico, Poland, Saudi Arabia, South Africa, and the United States.

Shale resource development is still nascent in most nations, making this the ideal time to take action.

What can companies and governments do?

Global Shale Development shares four recommendations to help governments, companies, and other groups protect water security while promoting energy security:

• Assess your water risks before deciding to develop shale plays to understand local water availability and reduce risk.
• Disclose all water-related information and work collaboratively with local regulators, communities and industries to build trust between all groups involved while reducing regulatory uncertainty and reputational risks.
• Engage businesses in public water policy processes, work collectively to protect the source of important water supplies, and develop water-management plans to help protect other users’ stable water supplies.
• Build a business case to minimize freshwater use and engage in corporate water stewardship to reduce impacts on water availability. A wide range of tools are available to minimize water use, including developing a water strategy and following water stewardship guidelines.

To start assessing water-availability risks to shale plays in your country or portfolio, contact the Aqueduct team ([email protected]).

Further Reading

• Water Over Energy Security –  In-depth interview with Li Junfeng, the Director General of China’s National Center of Climate Change Strategy Research on the future of coal, gas, nuclear, hydro & renewable energy given limited water and why China has to “walk on two legs” towards energy security
• 2014 World Water Week Takeaways – Check our key takeaways on ‘Water & Energy’ from World Water Week 2014. What are the challenges ahead for Asia & the rest of the world? Dawn McGregor expands
• Hydraulic Fracturing: Lessons from the US: With heavy water use in hydraulic fracking for shale gas plus water pollution concerns, Freyman from Ceres shares water lessons  & challenges learnt from the shale gas boom in the US
• 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
• 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
• 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