This Ceres research paper analyzes water use in hydraulic fracturing operations across the United States and the extent to which this activity is taking place in water stressed regions. It provides an overview of efforts underway, such as the use of recycled water and nonfreshwaterresources, to mitigate these impacts and suggests key questions that industry, water managers and investors should be asking. The research is based on well data available at FracFocus.org and water stress indicator maps developed by the World Resources Institute.FracFocus data was collected for more than 25,000 tight oil (sometimes referred to as shaleoil) and shale gas wells in operation from January 2011 through September 2012. The research shows that 65.8 billion gallons of water was used, representing the water use of 2.5 million Americans for a year. Nearly half (47 percent) of the wells were developed in water basinswith high or extremely high water stress. In Colorado, 92 percent of the 3,862 wells were inextremely high water stress areas. In Texas, which accounts for nearly half of the total number of wells analyzed, 5,891 of its 11,634 wells (51 percent) were in high or extremely high waterstress areas. Extremely high water stress means over 80 percent of available water is already being withdrawn for municipal, industrial and agricultural uses.The research paper provides valuable insights about potential water use/water supply conflicts and risks, especially in basins with intense hydraulic fracturing activity and water supply constraints (due to water stress and/or drought). Given projected sharp increases in production in the coming years and the potentially intense nature of local water demands,competition and conflicts over water should be a growing concern for companies, policymakers and investors. Prolonged drought conditions in many parts of Texas and Colorado last summer created increased competition and conflict between farmers, communities and energy developers, which is only likely to continue. In areas such as Colorado and North Dakota,industry has been able to secure water supplies by paying a higher premium for water thanother users or by getting temporary permits. Neither of these practices can be guaranteed to work in the future, however. Even in wetter regions of the northeast United States, dozens of water permits granted to operators had to be withdrawn last summer due to low levels in environmentally vulnerable headwater streams.The bottom line: shale energy development cannot grow without water, but in order to do so the industry's water needs and impacts need to be better understood, measured and managed. A key question investors should be asking is whether water management planning is getting sufficient attention from both industry and regulators
