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Commentary

Drillers Big on Conservation of Water



In their never-ending search for villains and scapegoats, environmental activists are blaming U.S. oil and gas companies for exacerbating water shortages in California and elsewhere, recklessly depleting water supplies to support the shale boom.

The facts tell a different story: Shale drillers are among the most conservation-minded companies in our country—precisely because the water they use to free trapped oil and gas from underground geologic formations, in the process known as hydraulic fracturing (or "fracking"), is becoming expensive. So they’ve turned to conservation and recycling.

After fracking, 10 percent to 50 percent of the water used in the process flows back up through the well. This is a resource, not a waste product. Because the value of water has doubled or tripled in some places, energy companies are conserving as much as possible, especially in areas that are just one dry season away from drought.

If it seems almost absurd to imagine oil wildcatters conserving water, it becomes less so when you realize that water accounts for up to 25 percent of a fracking project’s costs, with the typical oil or natural gas well requiring some three million gallons of water. Combining wise water use with recycling can save hundreds of thousands of dollars per well.

Looking at the big picture, fracking actually uses comparatively little water overall—no more than 3 percent of total U.S. freshwater consumption. That’s trivial when compared with other economic activities. For example, the Environmental Protection Agency estimates that irrigation consumes about nine billion gallons of water daily, more than three trillion gallons a year, or more than 60 times the amount used for fracking. Watering lawns uses trillions of gallons of water every year; golf courses, parks, and other recreational facilities also consume far more water than fracking.

Fracking is currently underway in 21 of the 50 states. Experts estimate that 55 percent of the wells created through the use of fracking since 2011 are in drought-prone areas. Water management thus has become critically important for energy producers, especially in bone-dry California, a state that is home to huge shale oil deposits.

The Monterey Shale holds as much as 15.4 billion barrels of oil, according to the Energy Information Administration. That’s more than four times the recoverable reserves of North Dakota’s Bakken Shale or Texas’ Eagle Ford Shale. Full-scale production could provide as much as a $1 trillion boost to the California economy.

Restrictive laws and regulations are not the solution to water shortages, but one of the main causes of the problem. Public policies have kept the price of water artificially low, especially in the western United States. Therefore, no one is motivated to use water wisely.

The oil and gas industry is different. It is conscious of water’s value—and is doing something to find alternatives and achieve efficiencies, without the heavy hand of government forcing it to do so.

Accusing oil and gas companies of squandering water may grab headlines, but the fingers are pointed in the wrong direction. Because they seek to maximize profits, fossil-fuel producers actually use water more wisely than most other consumers.


William F. Shughart II is Research Director and Senior Fellow at the Independent Institute, J. Fish Smith Professor in Public Choice in the Jon M. Huntsman School of Business at Utah State University, and editor of the Independent Institute book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.


From William F. Shughart II
TAXING CHOICE: The Predatory Politics of Fiscal Discrimination
So-called “sin taxes”—the taxing of certain products, like alcohol and tobacco, that are deemed to be “politically incorrect”—have long been a favorite way for politicians to fund programs benefiting special interest groups. But this concept has been applied to such “sinful” products as soft drinks, margarine, telephone calls, airline tickets, and even fishing gear. What is the true record of this selective, often punitive, approach to taxation?







  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org