The energy and water nexus in Houston, Texas

Insight from Christopher Gasson, GWI publisher

We held a remarkable conference on water and energy in Houston at the beginning of the month. It was a complete sell-out, bringing together all sorts of people who wouldn’t normally congregate in a room together, from drillers to desalters, and frac’ers to farmers.

In the past, I have been slightly worried that the water sector’s interest in the energy sector might be somewhat unreciprocated, for the simple reason that the water sector is desperate for opportunities at the moment, whereas the oil and gas industry is awash with them.

The event confirmed that oil needs water as much as water needs oil right now.
Three main things seem to have changed. The first is the growing importance of hydraulic fracturing to the oil and gas industry. This has ensnared the energy industry in the politics of water as never before. The water issues relating to shale gas bring production companies much closer to the community than drilling for oil offshore or in the back of beyond. For example, some frac’ers in Texas take their water from municipal supply. This involves lining up hundreds of trucks to pick up water from fire hydrants in a suburban street. Not surprisingly, the people living near the hydrants are initiating nuisance cases against the energy companies. The water issue for shale is not just about misplaced concerns about the threat to groundwater resources.

The next thing which changed attitudes in the oil and gas industry was the Texas drought of 2011. Up until that point, the attitude went somethiing along the lines of: “We don’t pay for water, and we don’t get paid for it, so why should we care?” Last year, the state received the lowest level of rainfall in four decades, and the average temperature between June and August was the highest on record. It prompted people in the energy business to ask themselves what would happen if they couldn’t get water.

The third thing is that energy companies have begun to think about water in a more strategic way. Could it become a source of competitive value in future? Could it be the next natural resource to invest in?

That is one of the great things about being in the water industry. Every economic activity involves water, but it is a limited resource, and its quality is declining. Sooner or later the rest of the economy is going to have to pay a lot more attention to what we can offer.

As well as this opportunity, industrial water users also offer a challenge. It is not just that they want technology which can solve their problems; they also need something that can make the politics of water work better for them. Energy companies, mining companies and drinks companies not only want to address declining water quality and availability, and the need for greater efficiency in operations. They also need solutions which place them on the right side of the politics of water. They want technologies and solutions which contribute to the wealth of the water environment, rather than detract from it. It is this broader definition of water risk management that the water sector must address in future.