Additional Market Data

Water Shortages

Massive amounts of fresh water are required for exploration and production activities. According to the Texas Railroad Commission, in 2005, approximately 2.6 billion gallons of water were used for frack jobs in the Barnett Shale alone.

"The State of Texas could lose some $466 million in tax revenue by 2010 and up to $5.4 billion by the year 2060 due to water shortages. Water demand to go up by 27 percent over the next fifty years; with no new sources of water to exploit."
Susan Combs, Texas State Comptroller, February 4, 2009

Aquifers are being depleted much faster than they are being replenished in many places, wells are drying up, massive lawsuits are already erupting and the problems have barely begun. Aquifers that took thousands of years to fill are being drained in decades, placing both agricultural and urban uses in peril. Groundwater that supplies drinking water for half the world's population is now in jeopardy.
Lessons From Oil Industry May Help Address Groundwater Crisis, Oregon State University, November 3, 2009

New Technologies

New technologies have opened up unconventional sources for oil and gas. Unfortunately, they require huge amounts of fresh water and create a tremendous amount of waste.

  • Hydraulic fracture
  • Refracture
  • Horizontal Wells

Hydraulic Fracturing Explained

Increased Regulatory Scrutiny

In June 2009, the House and Senate both submitted proposals to control the use and disposal of frack water.

Introduction of Bill S.1215, The Frack Act, June 9, 2009
WASHINGTON, DC. U.S. Senator Bob Casey (D-PA) joined U.S. Reps. Diana DeGette (D-CO), Maurice Hinchey (D-NY) and Jared Polis (D-CO) today to introduce companion Senate and House bills, the frack Act -- fracturing Responsibility and Awareness of Chemicals Act, amending the Safe Drinking Water Act.  The legislation would repeal a Bush administration exemption provided for the oil and gas industry and would require them to disclose the chemicals they use in their hydraulic fracturing processes and how these contaminated fluids are managed and disposed of.  Currently, the oil and gas industry is the only industry granted an exemption from complying with the Safe Drinking Water Act.

  • The bill is currently in committee for review.
  • Energy in Depth, a D.C. Lobbying Group, suggests the bill could result in the closure of more than half of U.S. oil wells and one-third of U.S. gas wells.

Increased Environmental Focus

Salazar Toughens Rules on Drilling on Federal Land
Wall Street Journal, January 6, 2010

WASHINGTON -- Interior Secretary Ken Salazar on Wednesday announced policy changes he said would bring more scrutiny and a greater public voice in how oil and gas leases are awarded on public lands.

Mr. Salazar said the changes should ensure stricter environmental standards in oil and gas leasing while bringing more clarity to the process for energy companies hoping to drill on public lands, mostly in Western states.

"We don't believe we ought to be drilling anywhere and everywhere," Mr. Salazar said at a news conference. "We believe we need a balanced approach and a thoughtful approach" that allows development of oil and gas leases on public lands while also protecting national parks, endangered species and municipal watersheds.

 

What can be done with wastewater? Rapid expansion of gas drilling has led to problems with disposal, contamination
Pittsburgh Post-Gazette, Sunday, October 04, 2009 By Joaquin Sapien

"Pennsylvania is at the forefront of the nation's gas drilling boom, with at least 4,000 new oil and gas wells drilled here last year alone, more than in any other state except Texas. This rapid expansion has forced state regulators to confront a problem that has been overlooked as gas drilling accelerates nationwide: How will the industry dispose of the enormous amount of wastewater it produces?

 

Pressure is Changing Industry Practices

Gas Company Won't Drill in New York Watershed
New York Times, October 28, 2009

"Bowing to intense public pressure, the Chesapeake Energy Corporation says it will not drill for natural gas within the upstate New York watershed, an environmentally sensitive region that supplies unfiltered water to nine million people."

Negative Public Perception

Drilling Tactic Unleashes a Trove of Natural Gas and a Backlash

Wall Street Journal, January 21, 2010

A mounting backlash against a technique used in natural-gas drilling is threatening to slow development of the huge gas fields that some hope will reduce U.S. dependence on foreign oil and polluting coal.

Environmentalists and some community activists fear hydraulic fracturing could contaminate drinking-water supplies. They point to recent incidents that they say are linked to fracturing, including a water-well explosion in Dimock, Pa., and a chemical spill in Shreveport.