Potential fracking processes place U.S. water credits at risk, finds report

Sponsored by


May 6, 2014 -- According to a new Fitch Ratings report, hydraulic fracturing could potentially harm local water supplies, causing significant financial stress for U.S. municipal water utilities. Further, potential contamination, diminished water supplies and infrastructure and costs pressure due to fracking could, in the worst case scenarios, cause severe and precipitous credit deterioration.

"Contamination could be a major setback for local utilities as water sales would cease immediately," said Managing Director Douglas Scott." While the cost of cleanup is significant in itself, restoring public confidence in the water supplies may take much longer."

Despite some state regulations requiring oil and gas companies to disclose the chemicals used during fracking, these standards are subject to the federal disclosure laws, which exempt disclosure of certain chemical composition that may be deemed trade secrets. Even if specific chemicals are disclosed, they may not be on the list of regulated contaminants and, as a result, may go undetected during testing and treatment.

"Fracking can be an economic boom for some communities, but its introduction or expansion in unprepared areas could create competition for already-scarce water resources in the case of drought, or place undue stress on the existing water infrastructure in areas that experience rapid population growth," said Scott.

Crude oil production in the U.S. increased 32 percent between 2011 and 2013. Approximately 90 percent of total oil production in the lower 48 states is produced in six shale plays spanning 15 states and 271 counties, via both fracking and conventional well technology. Utilities located in those areas face higher risk for contamination than others, and that risk is likely growing as the use of fracking technology is becoming more prevalent.

With 56 percent of hydraulically-fractured wells located in regions experiencing drought, fracking could leave utilities competing for water supplies. The amount of water used for fracking could be significant in communities already dealing with water scarcity, like those located near the Eagle Ford shale play in south Texas.

In addition, the rise of fracking boom towns could pressure local utilities as they are forced to meet the demands of a growing population over a short period of time. In the long-term, a diminished population of ratepayers could be forced to finance the utility's expanded debt after fracking operations decrease.

###

Sponsored by

Did You Like this Article? Get All the Water Industry News Delivered to Your Inbox or Mailbox

Subscribe to one of our magazines or email newsletters today at no cost and receive the latest information.

TODAY'S HEADLINES

AWWA provides free tools in new online Cyanotoxins Resource Community website

Through a collaborative effort with Hazen and Sawyer and Utah State University, the American Water Works Association has provided several free tools in its new online Cyanotoxins Resource Community. 

North Las Vegas wastewater treatment plant upgraded with MBR technology

As part of an upgrade to its wastewater treatment plant, the city of North Las Vegas, Nev., has implemented a high-performance membrane bioreactor technology from GE.

Reclamation awards $1.49M for nine desalination, water purification research projects

The Bureau of Reclamation recently announced that it has selected nine projects across the United States to receive $1.49 million under its Desalination and Water Purification Research Program. The funding will support almost $13.5 million in research.

Xylem providing dewatering pumps for Panama Canal Expansion Program

The Panama Canal Expansion Program is receiving heavy-duty dewatering pumps from Xylem to fill the third set of basin locks on the Pacific Ocean sector with 1.7 billion gallons of water, as part of performance trials for the system prior to its commissioning.

FOLLOW US ON SOCIAL MEDIA

  

 


© 2015. PennWell Corporation. All Rights Reserved. PRIVACY POLICY | TERMS AND CONDITIONS