Wood Mackenzie: The Energy Industry's Rising Water Challenge

Around the globe, access to water varies greatly depending on where assets are located, and thus on the local climate and socio-political conditions. The largest production locations for unconventional gas, oil and coal are in the US, Middle East and China, in areas of those countries that also happen to be some of the most water stressed. 

Shale Gas in the US and with Global Expansion

If shale gas production is really to take off globally, government and public concerns over water use and contamination need to be addressed.

"The research shows that more than half of shale and tight gas reserves in the U.S. - as well as the top 10 countries by reserves volumes outside the US - are located in medium to extremely high baseline water stress areas, where competition is high with other local water users and concerns over water quality exist," explained Reig.  

As a result, energy companies operating in these areas face risks of limited access to new sources of supply, and potential well cost increases of up to 15 percent, or sometimes substantially more.

However, across the global energy supply mix, unconventional gas holds some of the most promising opportunities to halve or altogether eliminate its water use with saline water sourcing, recycling and 'green completions’ – and potentially offset well cost increases as a result.

Likewise, some companies are beginning to address public concerns over water contamination with water impact assessment reporting and via collaborative public policy consortiums to more openly engage on shale gas production standards. 

"Wood Mackenzie expects this trend in increasing transparency and public engagement to continue, as companies move into international markets with more pressing water concerns," added Schmidt.