TR-466 Water Value and Environmental Implications of Hydraulic Facturing: Eagle-Ford Shale

Authors: W. Allen, R. Lacewell, M. Zinn

Shale gas has emerged as one of the leading energy developments in the United States. Production has risen from roughly 0.9 trillion cubic feet (TCF) in 2006 to 4.8 TCF in 2010. Shale gas now encompasses 23% of U.S. natural gas production and is expected to be at 46% by 2035. Shale gas is considered to be one of the answers to the energy crisis. The goal of this research is to address several issues related to the efficacy of hydraulic fracturing of shale in deep formations to capture oil and gas. In recent years, controversy has risen over the safety of hydraulic fracturing, the amount of water used, the environmental implications, and if the action is economically efficient in the water resources used. This research applies economic principles to develop implications based on industry, government and institutional data, and draw conclusions relative to impacts on the environment, realized amount of water, and value of water used for a typical well in the Eagle-Ford development, a water-scarce region. Relative to very large water consumers such as municipal and irrigated agriculture, hydraulic fracturing is minor but nevertheless this is an arid region with limited water availability. The imputed value of water used for fracturing is several-fold greater than for in other uses. The results are useful to the industry, landowners, policy makers, and other stakeholders.