Released March 06, 2014 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Future oil & gas production in Colorado could be limited unless the state enacts changes to its water law, adopts a state water plan, increases conservation efforts, and uses public-private partnerships to fund water projects, speakers told attendees at a water conference this week in Denver.
About 340,000 barrels of oil are produced each day in Colorado's Niobrara Shale formation, more than double the production level from six years ago, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.). Experts predict Niobrara production will double in the next few years, providing adequate infrastructure is built and crude-oil prices remain relatively high.
"We're sitting right in the bull's eye of water issues," Forbes Guthrie, vice president of marketing and commercialization at Stewart Environmental Consultants LLC (Fort Collins, Colorado), told about 50 attendees at the Colorado Water Summit, sponsored by Information Forecast Incorporated (Infocast) (Woodland Hills, California). "The drought we're seeing in California's Central Valley is one version of Colorado's future. Hopefully, we can avoid that future."
"Nothing good happens without water," Guthrie continued. "But Colorado is running out of fresh water and low-cost water treatment options. Clean water will trump clean energy as a looming crisis" in Colorado, the Western U.S. and the world, he predicted.
Colorado normally received about 16 million acre-feet of water per year, mainly via snowfall, but about 67% of that water is obligated to more than a dozen other states because of the Colorado River Compact, a 1922 treaty among the states and the U.S. government apportioning the water of the Colorado River System. Moreover, about 80% of what water Colorado is left with is used by farms and ranches, which have longstanding rights to that water through a legal concept known as "prior appropriation," which roughly translates as "first in time, first in rights." The productivity with which that water is used is not a factor in determining who has the right to that water.
The Centennial State is experiencing a surge in oil & gas-related investment in the Niobrara Shale. For more on the pace of oil & gas development in the Niobrara, see March 13, 2013, article - Niobrara Infrastructure Companies Work to Catch Up with Producers. Colorado water experts told the conference there is a problem in the not-too-distant future: Rising demand for water from a growing population and burgeoning industrial activity will lead to a significant shortfall of fresh water. By 2030, the state will have an annual deficit of about 350,000 acre-feet of water per year; by 2050, another 390,000 acre-foot shortfall is projected. One acre-foot is about 326,000 gallons, enough to supply one household for a year.
"Colorado's economic future will be shaped by how we manage our water resources," John Stulp, special policy adviser on water to Colorado Governor John Hickenlooper, told the conference. "Planning for a drought in nothing new for the West, but we have to deal with drought in the future in smarter ways than we have in the past."
That's largely because what worked in the 20th Century--build another large water storage reservoir -- is no longer a politically viable option. The federal government's dam-building agency, the Bureau of Reclamation, is not building new dams; in fact, it is dismantling some of the ones it built in the prior century.
One important step forward is the development of a state water plan. Colorado is one of the few states in the West that does not have one. A draft state water plan is due by the end of this year, and the final plan is due by the end of 2015.
Colorado's water plan "will emphasize conservation, address incremental storage and address drought mitigation," Governor Hickenlooper said in his "State of the State" address earlier this year. "We must create alternative choices to 'buy and dry,'" the current practice where cities and industries buy water rights from farms and ranches, leading to the demise of those farms and ranches. "No matter where we live, we cannot afford to let our farm and ranch land dry up," the governor said.
In tasking a state agency to develop that water plan, Hickenlooper said the goal was to ensure the state maintained:
There are a variety of conservation options that are cost-effective, minimally intrusive and produce acceptable gains, he said. Denver's water utility has enacted conservation measures that have lowered water use by 20% over the last decade, despite a 10% increase in population during that time. A lot of it comes down to installing low-flow fixtures like toilets, showerheads and faucets.
"Water efficient fixtures have saved Colorado 20,000 acre-feet to 40,000 acre-feet of water per year," Stulp told the Infocast conference. The cost and effort to implement those programs has been far less than the amount of time and money it would take to build a new storage facility that could capture 20,000 to 40,000 acre-feet of water per year, he added.
Colorado's oil & gas industry uses about 18,000 acre-feet of water per year to hydraulically fracture wells, he estimated: "It's pretty small in the overall scheme of things--less than 1% of the state's water." But water use by that sector is expected to double over the next 20 to 30 years. The growing use of hydraulic fracturing in oil & gas production has led some Coloradans to advocate for tighter restrictions on hydraulic fracturing to protect the state's water quality and water supply. Colorado's Power Industry uses between 60,000 acre-feet to 70,000 acre-feet of water each year to cool their generators, Stulp said.
Stulp was one of several conference speakers who said conservation was the cheapest, fastest and easiest way for the Centennial State to stretch its water resources, leaving more water to meet future demand by municipal and industrial users. State Senator Gail Schwartz told the conference she is introducing several measures to advance the cause of water efficiency. "The Colorado legislature has more interest in water efficiency and energy-efficiency issues this term, and I will be introducing several bills this session to help better utilize its water while protecting Colorado's prior appropriation doctrine."
"Colorado's existing laws provide no incentive for agricultural users to use water more efficiently," former Governor Bill Owens told the conference. "Agriculture uses 80% of the state's available water, but that water is used very inefficiently. As much as 20% to 30% of water seeps through unlined agricultural canals, depriving downstream users of its use."
"Agriculture is an important part of our state's economy," Owens continued, mindful of the state's powerful agricultural interests. "If we can implement changes that result in a 5% reduction in water use by agricultural users, that would more than offset projected increase in water use by oil & gas companies. Colorado farmers and ranchers want to use water efficiently, but they need to be provided with a legal framework and set of incentives that help them do the right thing."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
About 340,000 barrels of oil are produced each day in Colorado's Niobrara Shale formation, more than double the production level from six years ago, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.). Experts predict Niobrara production will double in the next few years, providing adequate infrastructure is built and crude-oil prices remain relatively high.
"We're sitting right in the bull's eye of water issues," Forbes Guthrie, vice president of marketing and commercialization at Stewart Environmental Consultants LLC (Fort Collins, Colorado), told about 50 attendees at the Colorado Water Summit, sponsored by Information Forecast Incorporated (Infocast) (Woodland Hills, California). "The drought we're seeing in California's Central Valley is one version of Colorado's future. Hopefully, we can avoid that future."
"Nothing good happens without water," Guthrie continued. "But Colorado is running out of fresh water and low-cost water treatment options. Clean water will trump clean energy as a looming crisis" in Colorado, the Western U.S. and the world, he predicted.
Colorado normally received about 16 million acre-feet of water per year, mainly via snowfall, but about 67% of that water is obligated to more than a dozen other states because of the Colorado River Compact, a 1922 treaty among the states and the U.S. government apportioning the water of the Colorado River System. Moreover, about 80% of what water Colorado is left with is used by farms and ranches, which have longstanding rights to that water through a legal concept known as "prior appropriation," which roughly translates as "first in time, first in rights." The productivity with which that water is used is not a factor in determining who has the right to that water.
The Centennial State is experiencing a surge in oil & gas-related investment in the Niobrara Shale. For more on the pace of oil & gas development in the Niobrara, see March 13, 2013, article - Niobrara Infrastructure Companies Work to Catch Up with Producers. Colorado water experts told the conference there is a problem in the not-too-distant future: Rising demand for water from a growing population and burgeoning industrial activity will lead to a significant shortfall of fresh water. By 2030, the state will have an annual deficit of about 350,000 acre-feet of water per year; by 2050, another 390,000 acre-foot shortfall is projected. One acre-foot is about 326,000 gallons, enough to supply one household for a year.
"Colorado's economic future will be shaped by how we manage our water resources," John Stulp, special policy adviser on water to Colorado Governor John Hickenlooper, told the conference. "Planning for a drought in nothing new for the West, but we have to deal with drought in the future in smarter ways than we have in the past."
That's largely because what worked in the 20th Century--build another large water storage reservoir -- is no longer a politically viable option. The federal government's dam-building agency, the Bureau of Reclamation, is not building new dams; in fact, it is dismantling some of the ones it built in the prior century.
One important step forward is the development of a state water plan. Colorado is one of the few states in the West that does not have one. A draft state water plan is due by the end of this year, and the final plan is due by the end of 2015.
Colorado's water plan "will emphasize conservation, address incremental storage and address drought mitigation," Governor Hickenlooper said in his "State of the State" address earlier this year. "We must create alternative choices to 'buy and dry,'" the current practice where cities and industries buy water rights from farms and ranches, leading to the demise of those farms and ranches. "No matter where we live, we cannot afford to let our farm and ranch land dry up," the governor said.
In tasking a state agency to develop that water plan, Hickenlooper said the goal was to ensure the state maintained:
- A productive economy that supports vibrant and sustainable cities, viable and productive agriculture, and robust skiing, recreation and tourism industries
- Efficient and effective water infrastructure promoting smart land use, and
- A strong environment that includes healthy water sheds, rivers, streams and wildlife
There are a variety of conservation options that are cost-effective, minimally intrusive and produce acceptable gains, he said. Denver's water utility has enacted conservation measures that have lowered water use by 20% over the last decade, despite a 10% increase in population during that time. A lot of it comes down to installing low-flow fixtures like toilets, showerheads and faucets.
"Water efficient fixtures have saved Colorado 20,000 acre-feet to 40,000 acre-feet of water per year," Stulp told the Infocast conference. The cost and effort to implement those programs has been far less than the amount of time and money it would take to build a new storage facility that could capture 20,000 to 40,000 acre-feet of water per year, he added.
Colorado's oil & gas industry uses about 18,000 acre-feet of water per year to hydraulically fracture wells, he estimated: "It's pretty small in the overall scheme of things--less than 1% of the state's water." But water use by that sector is expected to double over the next 20 to 30 years. The growing use of hydraulic fracturing in oil & gas production has led some Coloradans to advocate for tighter restrictions on hydraulic fracturing to protect the state's water quality and water supply. Colorado's Power Industry uses between 60,000 acre-feet to 70,000 acre-feet of water each year to cool their generators, Stulp said.
Stulp was one of several conference speakers who said conservation was the cheapest, fastest and easiest way for the Centennial State to stretch its water resources, leaving more water to meet future demand by municipal and industrial users. State Senator Gail Schwartz told the conference she is introducing several measures to advance the cause of water efficiency. "The Colorado legislature has more interest in water efficiency and energy-efficiency issues this term, and I will be introducing several bills this session to help better utilize its water while protecting Colorado's prior appropriation doctrine."
"Colorado's existing laws provide no incentive for agricultural users to use water more efficiently," former Governor Bill Owens told the conference. "Agriculture uses 80% of the state's available water, but that water is used very inefficiently. As much as 20% to 30% of water seeps through unlined agricultural canals, depriving downstream users of its use."
"Agriculture is an important part of our state's economy," Owens continued, mindful of the state's powerful agricultural interests. "If we can implement changes that result in a 5% reduction in water use by agricultural users, that would more than offset projected increase in water use by oil & gas companies. Colorado farmers and ranchers want to use water efficiently, but they need to be provided with a legal framework and set of incentives that help them do the right thing."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
