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.
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.