Water scarcity is forcing big shifts in behavior for farmers in Southwest, but lack of water could also have a profound effect on the America's oil and natural gas boom. A recent report from Ceres estimates that around 47% hydraulically fractured wells in the U.S. were located in high water stress areas, or areas where 80% of available surface water is already needed for agriculture, municipal, or industrial use. Securing water for unconventional drilling already can cost up to 10% of total well costs and prices continue to climb.
The oil and gas industry needs to make choices. Devon Energy (NYSE: DVN ) handles rising costs by recycling waste-water internally, while service providers are starting to specialize in taking care of water recycling issues for the industry.
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This segment is from Wednesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.