The Influence of Hydraulic Fracturing on the Water Market in Texas

M.A. Cook, M.E. Webber, July 2014 (Citation)

Abstract

Hydraulic fracturing – the injection of pressurized fluid (often water) to increase extraction rates and recovery of oil or gas – has become increasingly popular in combination with horizontal drilling, especially in shales in Texas. Hydraulic fracturing augments the flow of fossil fuel from a well, but requires a significant amount of water to do so. Thus, the growth in shale wells puts pressure on existing water resources, especially in drought-prone areas of Texas. Due to increased water demands in these areas, that already have low water availability, current water users and landowners have begun to sell their water resources to supply industry needs. This analysis characterizes the current state of the water market in shale-rich areas of Texas, including water pricing, type of water used, source and end use location, original intended use, and current end use — all within the water policy framework of Texas. Between 1987 and 2008, prior to the increase in hydraulic fracturing in much of Texas, the median lease price was approximately $30 per thousand cubic meters (m3) and the average price was approximately $100 per thousand m3. In this preliminary analysis, we found that – between 2009 and 2013 – the median lease price was approximately $3,100 per thousand m3 and the average price was $2,300 per thousand m3 – an increase of two orders of magnitude in the median price of water for mining water use. These prices and market trends open up the possibility for innovation and investments in technologies for water use efficiency in various sectors.

Citation

Cook, M.A. and Webber, M.E. (2014) “The Influence of Hydraulic Fracturing on the Water Market in Texas.” Proceedings of the Shale Energy Engineering 2014 Conference: Technical Challenges, Environmental Issues, and Public Policy, American Society of Civil Engineers, Pittsburgh, Pennsylvania, July 21-23, 2014