For Farms in the West, Oil Wells Are Thirsty Rivals

© Matthew Staver/The New York Times
Bob Bellis filled his tanker at a hydrant
in Greeley, Colo., in August to supply a
drilling site. Lease deals with oil companies
are important revenue sources for cities.

For Farms in the West, Oil Wells Are Thirsty Rivals
Sept 5, 2012 | Jack Healy

Greeley, Colorado - A new race for water is rippling through the drought-scorched heartland, pitting farmers against oil and gas interests, driven by new drilling techniques that use powerful streams of water, sand and chemicals to crack the ground and release stores of oil and gas.

A single such well can require five million gallons of water, and energy companies are flocking to water auctions, farm ponds, irrigation ditches and municipal fire hydrants to get what they need.

That thirst is helping to drive an explosion of oil production here, but it is also complicating the long and emotional struggle over who drinks and who does not in the arid and fast-growing West. Farmers and environmental activists say they are worried that deep-pocketed energy companies will have purchase on increasingly scarce water supplies as they drill deep new wells that use the technique of hydraulic fracturing.

And this summer's record-breaking drought, which dried up wells and ruined crops, has only amplified those concerns.

"It's not a level playing field," said Peter V. Anderson, who grows corn and alfalfa on the parched plains of eastern Colorado. "I don't think in reality that the farmer can compete with the oil and gas companies for that water. Their return is a hell of a lot better than ours."

But industry officials say that critics are exaggerating the effect on water supplies.

Energy producers do not - and cannot - simply snap up the rights to streams and wells at the expense of farmers or homeowners. To fill their storage tanks, they lease surplus water from cities or buy treated wastewater that would otherwise be dumped back into rivers. In some cases, they buy water rights directly from farmers or other users - a process that in Colorado requires court approval.

"This is an important use of our water - to produce energy, which is the foundation of all we do," said Tisha Schuller, president of the Colorado Oil and Gas Association. "Think about the big users of water - agriculture, industrial development. All these things require energy."

In average years, farmers and ranchers like Mr. Anderson say they pay about $30 for an acre foot of water - equal to about 326,000 gallons - a price that can rise to $100 when water is scarce. Right now, oil and gas companies in parts of Colorado are paying as much as $1,000 to $2,000 for an equal amount of treated water from city pipes.

That money can be a blessing for strained local utilities and water departments, but farmers say there is no way they can afford to match those bids.

"We're not going to be able to raise the food we need," said Ben Rainbolt, executive director of the Rocky Mountain Farmers Union. "How are we going to produce this with less?"

In the spring, during an annual auction of surplus water in northern Colorado, Mr. Anderson and a handful of other farmers were outbid by water haulers who supply hydraulic fracturing wells. Although Mr. Anderson ultimately got the water he needed as bids settled after the auction, the mere shadow of energy producers at the auction offered a glimpse of their growing presence in the rush for Western water.

"Energy companies are moving quickly to shore up supplies," said Reagan Waskom, director of the Colorado Water Institute at Colorado State University. "They're going to find it, and they're going to pay what they need to pay, and it's on an order of magnitude of what crop producers can afford to pay. That changes the whole deal."

Oil and gas companies estimate that they will use about 6.5 billion gallons of water in Colorado this year, and that figure makes up only 0.1 percent of overall water use, according to state data. Their consumption represents more water than is used making snow on the ski slopes or greening the state's golf courses. But it is paltry compared with the deluge needed for irrigation and agriculture, which accounts for 85.5 percent of Colorado's water use.

Still, the industry is growing fast. The Colorado Oil and Gas Commission estimates that the state's oil and gas water needs will grow by 16 percent over the next three years.

"Water flows uphill to money," said Mike Chiropolos, a lawyer for Western Resource Advocates, an environmental group based in Boulder. "It's only going to get more precious and more scarce."

In June, the group released a study that accused Colorado of underestimating the amount of water used in hydraulic fracturing, also known as fracking, saying the true figure was between 7.2 billion and 13 billion gallons per year - enough to serve as many as 296,100 people.

Despite the drought and worries about water supplies, several cities - and even farmers with water to spare - are starting to line up as eager sellers.

In July, after receiving proposals from several energy companies, Aurora, a suburb of Denver, approved a $9.5 million deal to lease 2.4 billion gallons of effluent water to the Anadarko Petroleum Corporation over five years. It did not come from drinking supplies. It was excess water that "we couldn't capture, couldn't store, couldn't do anything with," said Greg Baker, a spokesman for the city's water department.

But the agreement - the first of its kind for Aurora - drew stiff rebukes from opponents of hydraulic fracturing.

Opponents said the Anadarko agreement would divert water that would have flowed to other users along the South Platte River and send it far from the community. Molly Markert, a city councilwoman who voted against the lease, said she was uneasy about selling municipal water to energy companies.

"I'm not a supporter of fracking," Ms. Markert said. "I don't want to enable them."

For years, Greeley has leased its surplus water to farmers, construction companies and others. In 2008, the oil and gas companies started making offers, said Jon Monson, the city's water and sewer director. Most of the water still goes to agriculture, but the city rented 1,300 acre feet to energy companies last year and is on pace to rent 1,800 acre feet - as much as 586 million gallons - this year.

It is easy math for the city: The farmers pay $30 an acre foot. The oil and gas companies pay $3,300, which will earn the city's water department $4 million to $5 million this year.

Precious as water is, Kreg Edrington, 26, spilled only a little one recent morning as he hooked his tanker truck up to a fire hydrant in Greeley and opened the tap. Like a herd of thirsty elephants, the tankers begin lining up early to fill their steel bellies. In less than 15 minutes, Mr. Edrington's tanker was brimming with leased city water, and he was ready to make the two-hour round trip over gravel roads to a drilling site, where he would empty the tank and turn around for more.

"That's it," he said. "Now I drive away."