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Posted: November 14, 2012

When energy needs and water supply collide

An issue with no easy solution

Bart Taylor

Have water planners in the Colorado River Basin states anticipated a winter with as much anxiety as 2012-13? It would be hard to imagine. As sanguine as they’ve been this beautiful Western fall about the forthcoming snow pack, hope gives way to expectations in November. In Colorado, a foot of weekend snow helped, but without more snow by month’s end, optimism will give way to deep concern. 

Two related news items again brought Colorado River issues into sharp relief here, the most prolific headwater state.

Monday’s report from the International Energy Association that the "U.S. will become the world's largest oil producer by 2017, overtaking current leaders Saudi Arabia and Russia…” was met with relief in many quarters, but perhaps not as enthusiastically along Colorado's thirsty Front Range. Certainly, the state benefits from the boom in natural gas and oil production that has transformed the energy segment in profound ways. And unless another major macro-economic slowdown materializes that would drive energy prices and demand down, Colorado will continue to benefit and be a national leader.

But the technologies driving the spike in natural gas and oil recovery here can be water-intensive, and questions persist about both the availability of sustainable supplies and the state’s ability to manage its long-term water future.

The process of hydraulic fracturing, or “fracking,” requires water. How much is debatable, but in Colorado and other Western states, any new supplies earmarked for energy reduce amounts available elsewhere.  Thus far, the energy sector has worked arm-in-arm primarily with agriculture to acquire enough water to drive the shale gas boom. Long-term, questions remain as to whether ag will continue to divest itself of enough water to support this rapidly growing sector.

This may be especially true with regard to shale oil. The IEA boldly predicts that by 2017, the U.S. “would become the world’s largest oil producer," and become a net exporter of oil by 2030. It’s unlikely, however, that states like Colorado will lead a boom in shale oil production unless more water-efficient processes come online. It’s unclear how the IEA forecasts might account for the water challenge.

Uncertainty over how much water is available even in the near-term for energy quickly became the focus of a court case last week regarding a request for 140,000 acre-feet of water from the White River in northwest Colorado, a tributary of the Colorado River.  The Yellow Jacket Water Conservancy District is seeking a new source to support industrial oil shale development. A state water court rejected its initial application.

Ag and conservation interests have been quick to disparage the filing, on grounds that the White River would be unable to sustain such a diversion and adequately support current uses; and importantly, that the shale oil industry is unproven, that the diversion would be speculative.  Whoever prevails in Colorado’s Supreme Court, the lesson is fairly clear: Any new, substantial filing for water to support shale oil will be challenged here and throughout the West, and not only by conservation or environmental interests. Urban users who also rely on ag transfers to water growth will likely be hyper-competitors for new supplies.

Complicating matters is Colorado’s lack of a comprehensive roadmap, a framework, to evaluate claims by energy and urban providers in the context of the state’s long-term interests. In fact, Colorado’s water community remains divided over the most basic if profound questions, such as whether the state should pursue its remaining Colorado River Compact allocation.

Faced with the enormous economic benefits that flow downstream with every surplus acre-foot of water, it’s likely that Colorado and the other Upper Basin states will choose to develop every last gallon of water to which they’re entitled. But until consensus is reached on this major issue, energy providers will continue to acquire rights in the hope it’s enough to support the current boom and will face growing opposition to filings substantially more modest than Yellow Jacket’s.

Substantial drought will only cause more pain. Stay tuned.

Bart Taylor is the publisher of ColoradoBiz magazine. E-mail him at btaylor@cobizmag.com.

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