Royal Dutch Shell Plc  .com Rotating Header Image

Oil, Water Are Volatile Mix in West


Energy Firms Buying River Rights Add to Competition for Scarce Resource

DENVER — Oil companies have gained control over billions of gallons of water from Western rivers in preparation for future efforts to extract oil from shale deposits under the Rocky Mountains, according to a new report by an environmental group that opposes such projects.

The group, Western Resource Advocates, used public records to conclude that energy companies are collectively entitled to divert more than 6.5 billion gallons of water a day during peak river flows. The companies also hold rights to store, in dozens of reservoirs, 1.7 million acre feet of water, enough to supply metro Denver for six years.

[Oil, Water Are Volatile Mix in West]

Industry representatives said they have substantial holdings of water rights for future use in producing oil from shale, though they could not confirm the precise numbers in the report.

Before any move into full-scale oil shale production, the energy industry plans a close study of water issues, including the impact its operations would have on ranchers, farmers and communities that all rely on the same limited sources of water, said Richard Ranger, a senior policy adviser for the American Petroleum Institute. “It’s among the most important questions to be examined,” he said.

Bitter fights over water are a recurring feature of life in the arid West, from Colorado to California, and energy companies are just the latest in a long list of users vying for the resource.

Extracting oil from shale is still an experimental process, facing major technological, environmental and regulatory hurdles, and is considerably more expensive than conventional drilling.

But if the price of oil rebounds, the potential payoff is big: the federal government estimates 800 billion barrels of oil, triple the known reserves of Saudi Arabia, lie under the Rocky Mountain West.

For now, the energy companies are not using most of the water they’ve claimed; they’re leasing some of it to other users, most often farmers. But they are stocking up on water rights to be sure they won’t be caught short.

Associated Press

Colorado River water supports 30 million people and dozens of uses, including power generation, above, at the Glen Canyon Dam in Arizona.

Oil, Water Are Volatile Mix in West

Oil, Water Are Volatile Mix in West

“We’re picking up properties as they become available or look strategic,” said Tracy Boyd, a spokesman for Royal Dutch Shell PLC. Shell does not expect to need large quantities of water for at least 15 years, he said, and by then it may have developed less water-intensive ways to extract oil, perhaps using wind power.

Exxon Mobil Corp., too, said new technologies might reduce future water needs. “We continue to be a careful steward of this precious resource and a considerate neighbor in dry years,” said Patrick McGinn, a spokesman.

The Colorado River basin provides water to 30 million people from California to Wyoming, and irrigates 15% of the nation’s crops. Across the West, legions of lawyers and lobbyists fight to extract — or preserve — every precious drop.

Under Colorado law, river water is available, free of charge, to any entity that can show the water will be put to a “beneficial” use. Extracting oil fits into that category, as does, for example, growing alfalfa, providing household drinking water and making snow at ski resorts.

Oil companies can get water rights in two ways under the seniority system Colorado uses for appropriating water. For a minimal filing fee, the companies have claimed scores of “junior” rights that allow them to draw water from a particular river after other users have satisfied their needs. The companies have also purchased dozens of “senior” rights from old-time farming families; those rights give them priority access to water, even in dry years.

Even if the oil companies use every last drop of their entitlements — a scenario widely considered improbable — there’s no risk of the Colorado River drying up.

But a 1922 compact requires the river’s flow to be divided among seven U.S. states and Mexico. If oil shale takes off, it could well use up the last of Colorado’s allotment, said Eric Kuhn, who runs the Colorado River Water Conservation District.

That would leave the booming suburban communities around Denver high and dry, with no water to support future growth, Mr. Kuhn said.

The Shell spokesman, Mr. Boyd, disputed that: “I don’t believe that’s anywhere near true.”

Write to Stephanie Simon at [email protected]

WSJ ARTICLE and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

0 Comments on “Oil, Water Are Volatile Mix in West”

Leave a Comment

Comment Rules

  • Please show respect to the opinions of others no matter how seemingly far-fetched.
  • Abusive, foul language, and/or divisive comments may be deleted without notice.
  • Each blog member is allowed limited comments, as displayed above the comment box.
  • Comments must be limited to the number of words displayed above the comment box.
  • Please limit one comment after any comment posted per post.

%d bloggers like this: