Energy and water are intimately interrelated. The energy industry requires vast amounts of water to extract and process oil and gas. In turn, extracting, transporting and treating water utilizes a large amount of energy. This interdependency is referred to as the “Energy-Water Nexus” (a constraint in either resource, limiting the other) and represents a risk for both industries and governments.
According to International Energy Outlook 2011, world energy demand is anticipated to increase 53% by 2035, with demand in the US expected to rise approximately 14% during the same time. In parallel, the demand for water in energy is projected to increase from 10% (2005) to 27% in 2030. In the energy industry, the rate of increase and the amount of water consumed by energy production is higher than for any other sector, except irrigation.
The escalating demand for both energy and water is raising questions: How susceptible is the energy industry to water shortages, and how difficult will it be to treat and manage water resources in the future? (See figure below)
Bridging the gap between energy supply and demand, and the corresponding strains on water resources, requires addressing the energy-water nexus from each side of the equation. It is also important to see water not only as a compliance issue, but rather a strategic resource that can impact business continuity, license to operate and brand value. Implementing a water stewardship plan (a key driver to enabling this shift in mindset) can help energy companies assess how dependent they are on water and develop conservation plans to reduce risk.
Water Stewardship Plans for the Energy Industry
Addressing the energy-water nexus requires reducing the amount of water used in traditional production and moving toward energy sources that are less water-dependent. New technologies, such as “dry cooling” in the utility sector, and water re-use and recycle efforts, are helping this initiative. Water stewardship strategies can help companies assess how a limited water supply can impact internal operations, business partners, and stakeholders, and is different from conventional water management, in that it emphasizes effective resource sharing.
An effective water stewardship plan should account for: 1) operational risk as a result of competition for water; 2) reputational risk; and 3) regulatory risk via license to operate in the area. The starting point for a water stewardship plan should be assessing water usage in direct operations, throughout supply chains, and in product use. Next, companies should assess risks and opportunities by developing an understanding of their water footprint, i.e. how their water consumption compares to other companies performing similar operations. Finally, energy companies should engage stakeholders in the areas of water consumption and develop a common solution for conservation and management. Collaboration with the government should be included in this plan.
In the United States, the influence of the energy-water nexus varies region-by-region based upon energy demand, availability of water, environmental regulations and existing water management practices. In response to the competition for scarce water resources, individual exploration and production companies have launched different water initiatives aimed at using advanced technologies to manage water sourcing, increase re-use, enhance treatment processes, and store and transport process water.
In the long-term, meeting the energy and water requirements of the future will require a completely different way of approaching the use of these natural resources and will necessitate partnerships and innovation in developing energy technologies that require less water and water technologies that use less energy.
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