Water Use in the Eagle Ford Shale: An Economic and Policy Analysis of Water Supply and Demand
Project AdvisorGriffin, James
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The Eagle Ford Shale is a massive geologic formation located in South Texas spanning 30 Texas counties from Brazos County in the north east to Webb County in the southwest . With the advent of hydraulic fracturing (HF) and horizontal drilling, over 200 operators have been able to tap into previously inaccessible shale reserves to p roduce abundant amounts of oil and gas. The oil and gas proliferation in the Eagle Ford has seen exponential growth , and production is not anticipated to decline until 2025. In addition, a typical HF well in the Eagle Ford is estimated to consume about 13 acre - feet of water for a standard 5000 foot lateral . Approximately 90% of water for HF comes from fresh groundwater aquifers. This interaction of HF and water consumption is of primary importance from a poli tical and economic perspective. This s erves as t he focal point of our report. Using the tools of statistics, our research considered the groundwater consumption trends within the Eagle Ford counties using water consumption data of municipal, irrigation, mining (oil and gas) and other categories over a span of four years . This analysis showed that fresh groundwater is being consumed at about 2.5 times the groundwater recharge rates . Furthermore, irrigation is using more water than all other water - consuming categories combined. Thus, the water problem reaches well beyond the use of fresh grou ndwater for mining . With respect to likely requirements of water for HF, we posited this question: “ W ill technology bail us out?” Retrofitting learning curves to our data for water uses and the length of the well la teral , we find that after i nitial improvements in water us age, the technology appears to have stabilized. This, coupled with massi ve irrigation water consumption suggests that technology will not be a major source of water savings in the long run. Instead, we must look to better public policies . From a policy perspective, the status quo for groundwater u se is governed by the Rule of Capture and the oversight of groundwater conservation districts (GCDs) . T here exists a real conflict as large - scale water users are competing for a diminishing aquifer resource with no market signals of increasing scarcity. In addition, groundwater wells drilled in connection with oil and gas exploration are exempt from GCD per mitting requirements and receive a de facto “free pass” to water for HF. Likewise, limita tions imposed on irrigation users by the GCDs are rarely binding, so these users usually get a free pass as well. Our analysis leads us to three basic policy recommend ations . The first involves mandatory reporting of all groundwater uses by all classes of water use r s. Currently, government agencies and the public lack basic information on actual water consumption; t his policy seeks to relax that knowledge gap and bring transparency. Second , we propose incentivizing oil and gas companies to substitute brackish groundwater for fresh ground water. Our proposal calls for a severance tax reduction for tho se companies limiting fresh groundwater use for HF in the Eagle Ford. In addition to a temporary reduction in the severance tax, these companies c ould be recognized by the RRC and possibly the TCEQ for their environmental stewardship with a “ Green Star ” designation. Our t hird , most heterodox and long - term recommendation is to define ground water property rights on a per - acre ownership basis, which would attach to the surface owner’s real property. Under this system, the owner s of the water rights would be able to sell their water as they would any other resource, and the market would adjust the price of water to an economically efficient level. Most importantly, it would remove the incentive to use all you can today , leaving more water for the future at a lower future price.
ClientCommissioner Christi Craddick, Texas Railroad Commission
Arnett, Benton; Healy, Kevin; Jiang, Zhongnan; LeClere, David; McLaughlin, Leslie; Roberts, Joey; Steadman, Maxwell (2014). Water Use in the Eagle Ford Shale: An Economic and Policy Analysis of Water Supply and Demand. Available electronically from