Tags: oil | water | rights | shale

Big Oil Snapping Up Western Water Rights

By Gene J. Koprowski   |   Thursday, 26 Mar 2009 10:36 AM

Six major oil companies have purchased rights to billions of gallons of water in the West, potentially jeopardizing water supplies throughout the region, a new report by Western Resources Advocates, an environmental group, indicates.

Relying upon public records, the report examines more than 200 water-rights pacts reached by six energy companies, including Shell and ExxonMobil, which, it is estimated, are collectively entitled to at least 6.5 billion gallons of water from rivers in western Colorado, as well as almost 2 million acre-feet of water from the state’s reservoirs.

That's akin to the entire supply of water the Denver metro area for six years.

They’re getting ready for a return to high oil prices, triggered by a declining U.S. dollar. The trillions the Federal Reserve has put into circulation to bail out the global economy nearly guarantees raging inflation. As the dollar drops, oil prices will rise quickly.

That would make shale — oil trapped in rocks — suddenly viable again. The United States controls an estimated 1.5 trillion barrels of shale oil, five times the stated reserves of Saudi Arabia, but it’s only economically feasible if oil is at least $95 a barrel, according to a Rand study.

Oil is now around $53 a barrel, but it touched $147 a barrel last year (and gasoline went to $4 a gallon) on Chinese demand, speculation, and a weak dollar, a scenario that could easily repeat before long.

Thus the scramble for water now. Shale oil production is a water-intensive process: up to five barrels of water are consumed for every barrel of oil produced. This means that projects producing 1.55 million barrels of oil per day would require 378,000 acre-feet of water each year.

According to a report in the Colorado Independent, if oil shale production hits full capacity in the next 15 to 20 years, there could be a significant political battle over water rights. Extracting oil from shale is an experimental procedure, which still faces regulatory and technological hurdles, according to a report in The Wall Street Journal.

Nevertheless, China, among other countries, already processes shale oil in its own territory.

The report has kindled a public debate over what the impacts of oil shale mining will be on nearby communities and the environment. Last September, the mayors of 11 mountain communities in Colorado wrote a joint letter to publicly express worries about possible impacts on the environment and quality of life.

Some activists worry that if the companies put their rights to use, water will be steered away from agriculture and community use.

The White House could help resolve America's energy crisis if it embraced the development of domestic energy sources, according to a white paper by the Heritage Foundation, a think tank in Washington D.C.

"You must be realistic about sources of alternative energy, especially the time that it will take for economically and technologically viable alternatives to be ready to displace conventional energy sources. The process will likely take at least two decades,” write Ben Lieberman and Jack Spencer of Heritage.

“This means that the age of fossil fuels — oil for transportation and coal for electricity generation — will be with us for some time, so we need to ensure that these energy sources are as plentiful and affordable as possible until such time as alternatives can carry the load."

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Six major oil companies have purchased rights to billions of gallons of water in the West, potentially jeopardizing water supplies throughout the region, a new report by Western Resources Advocates, an environmental group, indicates. Relying upon public records, the report...
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2009-36-26
 

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