(EnergyAsia, March 31 2014, Monday) — Thanks to the development of its tight oil reserves, the US boosted crude production to 7.84 million b/d in the fourth quarter of last year to account for more than 10% of the world’s oil output, said the Energy Information Administration (EIA).

The agency said US tight oil production reached 3.22 million b/d in the fourth quarter of 2013. The US and Canada are the only major producers of tight oil in the world as their upstream companies have developed technologically advanced drilling and completion processes to extract oil from unconventional geology.

But critics say the US may be developing its new status as an oil producer at the expense of its increasingly scarce water supplies.

“Tight oil refers to oil found within reservoirs with very low permeability, including but not limited to shale. Permeability is the ability for fluid, such as oil and gas, to move through a rock formation,” said the EIA.

Using the hydraulic fracturing method or fracking, companies inject water mixed with toxic chemicals deep into the earth at high pressure to break up tight geological formations to release oil and gas. Environmentalists, farmers and scientists charge that the chemicals find their way into the soil and permanently contaminate underground water reservoirs.

In a recent research report, Hydraulic Fracturing & Water Stress: Water Demand by the Numbers, US-based sustainability group Ceres tracked the risks from intense shale development to water supplies in eight regions in the US and Canada.

Calling this the first-of-its-kind data on subject, Ceres said the study shines a spotlight on the volumes of water used for hydraulic fracturing by specific companies and puts regional industry water use into the context of local water stress, groundwater depletion and drought.

According to the EIA, in February, 63% of US tight oil production came from two basins: the Eagle Ford in South Texas (1.21 million b/d, or 36% of total US tight oil production), and the Bakken Shale in North Dakota and Montana (940,000 b/d, or 28% of total US tight oil production).

The US represents 91% of all North American tight oil production, with the remaining 9% coming from Canada.

While the EIA made no mention of water issues in these regions, Ceres highlighted the Eagle Ford area as facing “some of the biggest water challenges of any shale play.”

“Hydraulic fracturing water use was the highest in the country at 19.2 billion gallons. The region is meeting an estimated 90% of water demand from groundwater while concurrently experiencing significant groundwater depletion challenges. Operators with combined large financial and water risk exposures in the region include Anadarko, EOG Resources, SM Energy, Marathon Oil, Chesapeake and Murphy Oil,” it said.

Ceres also cited significant water demand pressures, drought concerns and high groundwater use and stress confronting the Permian Basin in Texas and New Mexico.

“More than 70% of the Permian’s wells are in extreme water stress areas and the basin overlaps parts of the depleted Ogallala aquifer. Over 9,300 wells have been reported developed in the Permian since 2011 and hydraulic fracturing water use is forecast to double by 2020. Apache, Pioneer, Devon, Occidental Petroleum, Cimarex, Concho Resources, Energen and Laredo Petroleum have the highest combined financial and water risk exposures to the region.”

Water consumption of about 13.5 million gallons at the Marcellus in Pennsylvania and West Virginia was the second highest behind Eagle Ford, said Ceres.
Among shale energy producers, Ceres found that Anadarko Petroleum has the highest water risk exposure, with more than 70% of its wells in high or extremely high water risk regions such as Texas and Colorado.

Apache, Encana and Pioneer had most of their wells developed in high or extremely high water stress regions while Chesapeake Energy was the biggest user of water for hydraulic fracturing at 12 billion gallons, with most of its wells in regions of medium water stress, it said.

“The top three service providers, Halliburton, Schlumberger and Baker Hughes, accounted for about half of the water used for hydraulically fracturing nationally,” said Ceres.