Fresh Water Resources – A Growing Concern

Fresh Water – Is Depletion a Serious Threat?

Fresh Water for Human UseFor at least three years now, several serious stock analysts who I follow have been suggesting that the next “big deal” will be in and around water. The underlying premise is that we are headed to a place where quality water suitable for human use becomes a commodity. As it becomes more difficult to find, companies and technologies will enter the space to help fill the need. Those companies that have strong leadership positions in the industry will sell their products and services with margin creating profitable growth in an industry we literally will not be able to be without. Although the underlying theme is easy enough to understand, it has always seemed just a little too far out from happening to attract the kind of attention (and spending), to create the demand to drive sales and stock prices to be a valid investment sector in my opinion…that has changed. Today’s competition for fresh water has accelerated at an incredible pace.

Water Droplet - Steve PetersGrowing up in rural Midwest USA, fresh and mostly clean ground water pumped for our use by our own individual well was expected. The mineral iron was an inconvenience which left untreated would yellow laundry, but aside from that, we didn’t worry about harmful chemicals. These wells were plentiful and relatively cheap as one only needed to drill 100 to maybe 300-400 feet down to access  a seemingly endless supply of clean water to quench our thirst, wash our clothes, water our lawns and fill out toilets. As I got older and traveled across the US, I would spend time in large cities which draw their drinking water from nearby rivers or lakes and the taste and odor was quite a change from what I was used to.

When I returned to rural Minnesota in later years it was becoming more frequent for farmsteads to cap their older shallow wells due to apparent leaching of various agricultural elements such as animal waste, certain bacteria’s, fuel leaks, pesticides, herbicides or other unpleasant solutions fouling the source. They would then need to drill a deeper well or move to a different location where they would once again have access to clean water and begin again.

Even though I haven’t been around agriculture since high school years, once a farmer…weather and water are forever more than casual interest topics. Having traveled to Asia and becoming hospitalized with a severe stomach infection due to a very small ingestion of unsanitary water…(one very small dinner salad washed in local water in a 5 star hotel in Delhi)…gave me an even deeper appreciation of drinkable, sanitary water, right from the tap.

Unsafe Water SignI have seen and experienced what life is like when one can’t eat food washed in tap water and can only drink bottled water from reputable companies. Although there are exceptions, generally we are not there in the U.S.…but I am convinced that clean fresh water needs to be a top concern for our country right now; and that we are already headed at incredible speed in the wrong direction. I decided to move from concern to action recently when reminded of another rapid expansion of fresh water use by another financial analyst. Not one I would have expected to convince me further of the need to pay attention, but he did…

This individual is a global advisor to institutions, governments and individuals like me when it comes to energy – oil and gas mainly. I am reluctant to share his name as his career is based on deep connections within the energy sector. I believe he may be one this nations’ brightest men when it comes to energy today, a real heavy hitter. I pay for his energy investment service, but he wrote an article that is public from which I will draw data from time to time.

We at Dragonfly had decided long ago to work very hard at becoming a source of reliable information stripped as much as possible from agendas on any side of an issue. I want to try to do this without being an alarmist or environmental preacher. It is my intention to try to be a good critic. What makes a good “critic”? For myself, and other senior management here at Dragonfly, it means that we are not interested in trying to push our opinions…we have them of course, but will try to keep them aside as much as possible. We will work to offer the good along with the bad and resist feeling compelled to always pass judgment. Instead we will try to focus on assembling the facts to allow you to make your own judgments. This is not easy to do.

I read more and more that us aging baby boomers are feeling a growing need to consider our legacy. As a parent, my children are close to starting their own families so availability of clean fresh water 30 years from now is a current issue for me. And like in this case, when I can, I want to choose wisely what I do and how I do it for my grandchildren’ sake. As a business person, I believe that as civilization continues to mature, in many areas, there are points where any action to change the course of previous efforts will cost much more and deliver a lot less as opposed to actions which could have been taken earlier on. The issue always is of course, getting enough to agree that the issue at hand needs a course change in the first place. Truthfully, I am worried that sooner rather than later, the effort required to deliver fresh water could become much more expensive to try and fix…to the point where the concept of ROI becomes irrelevant.

Like so many things today, there are strong forces – companies and institutions – spending enormous amounts of money to protect their interests by influencing debate and policy. Near the top of that global list are those whose mission is to deliver solutions to the world’s energy needs. This is at least as true here in the U.S. as anywhere else. I don’t condemn this…if they don’t look after their interests, who will? This group includes some of the most powerful companies in the world and water resources are becoming extremely important to their profitability, especially within the last five years or so. This is unfortunate because that may put them in direct conflict with your and my needs for clean fresh water. Hopefully as you learn more you will become more aware and become willing to join in the struggle behind striving to meet ever increasing demands with diminishing resources, which, I believe will be the Mantra for the next few decades and beyond. This will be required. Stewardship needs to add the friction to assure balance between profit motives and our rights as humans to live lives protected from policies that endanger us and our families. And if you are not going to do that, who will?

So let’s begin.

According to the National Oceanic and Atmospheric Association, the ocean covers 71 percent of the Earth’s surface and contains 97 percent of the planet’s water. Only about 2.5% – 3% of all water on earth is freshwater, and about 70% of that is tied up as polar ice and glaciers.

Of the free water remaining, only about 0.3% of it is in rivers and lakes. The rest is groundwater…

Earths Water Resources Location

  • In this graph, we will use their number of only 2.5% of all Earth’s water as freshwater, that necessary to support humanity.
  • The middle bar shows the breakdown on that 2.5% freshwater. Almost all of it is locked up in ice and in the ground. Only 1.3% of all freshwater (which was only 2.5% of all water) is surface water, which serves much of life’s needs.
  • The right side bar shows the breakdown of only the surface freshwater. Most of surface freshwater is locked up in ice, and another 20% is in lakes. Notice the 0.46% of surface freshwater that is in rivers. Sounds like a tiny amount, but humans draw a large part of their water from rivers.


Although the source is a little dated, it still provides a good overall picture of global water resources. The changes we will be discussing do affect the global fresh water resource bar graph above. There is no argument anymore that glaciers, ice caps and sea ice have been diminishing at an accelerating rate. I recently read that Russia is starting to patrol a new seaway which had been covered by ice until recently in the southern fringes of the northern ice caps more or less staking claim to large oil deposits below. Of course, the melting of fresh water resources in the ice caps and most glaciers (68.8% of existing fresh water resources in middle bar of graph), do not directly add to the availability of fresh water for human use.

While on the subject, let’s deal with the oceans as a potential source of water available for human use.

Saline Water.

We all know saline water can be made into freshwater.  The process is called desalination, and its use has grown in attempts to provide people with needed freshwater. From the beginning of our nation, most of the United States has, or can gain access to, ample supplies of fresh water fit for human consumption. But fresh water has been in short supply in some parts of the world for some time. As populations continue to grow, shortages of fresh water look to become more of an issue. How far down that road is the issue here.

What Do We Mean by “Saline Water?”

Water that is saline contains significant concentrations of dissolved salts. In this case, the concentration is the amount (by weight) of salt in water, as expressed in “parts per million” (ppm). If water has a concentration of 10,000 ppm of dissolved salts, then one percent (10,000 divided by 1,000,000) of the weight of the water comes from dissolved salts.

Below are generally accepted guidelines for saline water:

  • Fresh water – Less than 1,000 ppm
  • Slightly saline water – From 1,000 ppm to 3,000 ppm
  • Moderately saline water – From 3,000 ppm to 10,000 ppm
  • Highly saline water – From 10,000 ppm to 35,000 ppm

Ocean water contains about 35,000 ppm of salt.

Source: Saline-water resources of North Dakota, USGS Water Supply Paper 1428, 1958.

The Worldwide Need for Freshwater

The scarcity of fresh water resources and the need for additional water supplies is already critical in many arid regions of the world. It is very likely that the water issue will be considered, like fossil fuel energy resources, to be one of factors contributing to local and global friction in the years to come. Of course being “arid” means they do not have fresh water resources in the form of surface water such as rivers, lakes, etc. and have only limited underground water resources which are becoming more brackish as abstraction of water from the aquifers continues (more on this in a minute).

Desalination Model

Desalination process

The diagram to the left is courtesy of Desware: The Encyclopedia of Desalination and Water Resources. (You will notice the issue right away…the source of the “heat” required in the process.)

Desalination/Distillation is one of the earliest forms of water treatment, and still is a popular treatment solution throughout the world today. For ages sailors used this process on their ships to convert sea water into drinking water. Today, desalination plants are used to convert sea water to drinking water, not only on ships but in arid regions of the world, and to treat water in other areas that is fouled by natural and unnatural contaminants. Distillation is perhaps the one water treatment technology that most completely reduces the widest range of drinking water contaminants.

Our initial graphic provides a basic understanding of the process but in the real world, these plants are elaborate facilities which require a great deal of energy to run when in production.

Below is a picture of a plant in Israel. If you look closely, you can see the huge stock piles of fuel ready to be used in the background. It looks like vast amounts of coal does it not?

Hadera, Israel desalination-facility-

Another view of a plant in Saudi Arabia:

Deaslination plant in Saudi Arabia

As you can see, these are huge industrial plants.

Another view of a plant in Dubai:

desalination Dubai


What you may find surprising are the number of desalination plants in operation around the world. The World Bank published the table below focusing on the Middle East and Africa where the largest concentrations of the plants exist.

Desalination by country

However, they are becoming more common as fresh water resource requirements accelerate.

desalination around the world

In some cases, these plants are being built almost as a safety net, or at least to sit in reserve until if and when the cost of fresh water gets high enough to run these plants at or above a break even point. For example, the plant pictured below was built in 2010 in Beckton on the East side of London which The Guardian reports will only be used in times of drought:

Aerial-view-of-Beckton-east LondonIn a sign of the pressure Thames Water could face if it tried to increase use of the Beckton desalination plant, the Environment Agency’s head of water, Ian Barker, yesterday said:

“Although the Beckton desalination plant will help to provide London with secure water supplies during times of drought and peak demand, we all must do more to reduce water consumption. The Environment Agency believes that metering should be rolled out to households in water-stressed areas. The water industry must also continue to manage leakage from its network of pipes.”

Did you catch that….peak demand?  

Full article here if interested:

If we could produce the heat without any need for carbon based fuels, this could become more attractive. There may be some hope in this area by coupling desalination plants with renewable energy production in order to ensure the production of water in a sustainable and environmentally friendly manner. Solar desalination is used by nature to produce rain which is the main “renewable” contributor of fresh water on earth. All available man-made distillation systems are duplication on a small scale of this natural process. Attention has been growing for the use of renewable energy as sources of heat-energy for desalination, especially in remote areas and islands. The high costs of fossil fuels, difficulties in obtaining and delivering them to these areas, attempts to conserve fossil fuels, interest in reducing air pollution, and the lack of electrical power in remote areas all add more pressure to deliver solutions that don’t sacrifice more green-house gas emissions for clean water generation.

Solar desalintation in  india picture


This coupling is being done on a small scale as we speak. This is another picture of a small – local plant in India.


Is Desalination Really A Solution?

Until the “cost” of water rises to a high enough point, it does not come close to trying to deliver our fresh water needs in this way. Even when it does get expensive enough to break even at the desalinized delivery points, should this ever become the only source of drinkable water, unless everyone moves to the coasts, delivering or piping it into the interior areas of nations adds another layer of costs to the proposition. We can only hope that this does not have to become a “the” solution on a national – or global scale…at least based on any of the technologies available to us today.

Recent Accelerating Pressures on Fresh Water Resources

Shale Fossil Fuels and Our Water Supplies

This is where we need to pay attention. It speaks to the heart of this post.

The investment angle around water suggests that when oil is in the $100 a barrel and up range, there is enough money to fund the drilling and delivering of harder to reach shale oil and shale gas in the recently discovered shale regions we hear so much about these days…and…with a good deal of profit. I have read that the “break even point” is somewhere north of $60 a barrel. Below that, the costs to mine and deliver these products are higher than the revenue generated. What we want to discuss are the enormous amounts of water necessary to force these trapped substances from their home and to the surface.

SHALE Oil Map Locations USA

North America Shale Oil-Gas Locations

If you look closely at the recent large finds of shale oil AND shale gas (see chart to the left), these deposits are in areas far away from the ocean. In the US, they are in places like Pennsylvania, Ohio, Colorado and North Dakota. The only source of any water for these giant inland fields is fresh water. Sometimes rivers but most often ground water as it is the easiest and least expensive source….the same ground water people living in those areas rely on for their human consumption.

Now consider the map below. It is a detailed map showing the principal water aquifers in the United States. Notice how closely they align with locations of shale oil and gas findings and production. This is good news for the mining companies as they have local access to water which we are now going to see is very important.

USA Fresh Water Aquifer Map - Dragonfly Solar

When we speak of the current “energy boom” which has developed mostly over the last 5 years here in the U.S., we are speaking of Shale gas and oil and the process of Hydraulic Fracturing or “fracking”. To move any further, we need an understanding of the processes currently employed to drill and deliver the oil and gas trapped in these rock formations.

What are Shale Gas-Oil and How Does Fracking Work?

Hydraulic fracturing or ”fracking” is a drilling process by which natural gas and oil are mined from the earth. Mining companies use hydraulic fracturing to recover gas from sources such as coal beds and shale gas formations underground. The process requires some of the most advanced equipment in the energy production business to fracture, or crack (hence “fracking”), underground rock formations, aiding the flow of oil or natural gas in areas that would otherwise not easily produce these resources. The natural gas and oil industry has been using hydraulic fracturing on a very small scale since Floyd Farris and J.B. Clark invented the process for Stanoling Oil and Gas Corporation in 1947. The first successful commercial application of fracking occurred in 1949 and sat mostly idle until recently. The costs of obtaining oil and gas with previous fracking technologies were too high to allow for any profits based on the then current price of these fossil fuels as we have already discussed. There have been massive increases in the use of this technology over the last five years.

Today hydraulic fracking is the primary process used by the mining companies to retrieve natural gas and “tight” oil in the US and Canada…and soon around the world. Very recent gigantic finds in South America have those in the fracking business giddy. Fracking is performed in nine out of ten of the country’s natural gas mines or formations today, and this has all happened roughly in the last five years or so.

Hydraulic Fracturing

From Wikipedia:

Hydraulic fracturing map, fracking

Hydraulic Fracturing – Fracking Graph


The above graphic depicts the fracking process (even if I don’t agree with their spelling of the process).

A real basic definition for Hydraulic Fracturing is the process of fracturing rock via pressurized liquid. When we refer to fracking, we are talking about induced hydraulic fracturing/hydro-fracturing. With this process, water is mixed with sand and chemicals and injected under high pressure into a “wellbore” – (lengthy hole created by the vertical AND horizontal drilling process for this purpose), to create small fractures. When we speak of shale, we are talking about a compressed fine grained type of sedimentary rock. Once fractured, the chemicals combined with the pressurized water help free the contents of the shale that is not the shale itself. In shale gas, this is mostly methane but include other hydrocarbons like liquefied natural gases – butane, propane, and ethane in addition to carbon dioxide, nitrogen, hydrogen sulfide and even some uranium bearing solutions. I have read that the Uranium Energy Corporation is planning to use fracking to mine uranium. This would involve oxygenating the water component to increase the solubility to dissolve the uranium, and then pump the solution back to the surface. I am not sure how they would then extract the uranium but I am sure I would pass on a glass of the water that is left after that process. In all cases, the proppant (sand or aluminum oxide) holds these fractures open allowing for the release of previously trapped elements. So, equipment, fuels, sand, water and chemicals.

Once the fluid has delivered the desired contents of the well, about 50% to 70% of the total amount of fluids used is recovered with the balance remaining in the ground. Setting aside the fact that there is a “solution” left in these rock layers for – – (ever?), much of the concern also has to do with what to do with the water solution that is extracted. There are attempts to try to re-use some of the solution but even if that improves, eventually, there will be a great deal of contaminated water looking to find a home. The mining companies are quite secretive on exactly what goes into these solutions, but the data suggests  that there ranges anywhere from 3 to 12 or more chemicals in the solution depending on location and type of hydrocarbons targeted. As you might guess, “freeing” oil requires different solvents and chemicals than freeing methane. In what I have seen, the information that has been released is that the concentrations of any one chemical are relatively small… (more on this later).  Gels/compounds that increase the viscosity of the fluid along with foaming agents, biocides to prevent bacteria, anti-corrosion agents in addition to different acids like HCL, Formic Acid, Boric Acid, and others are used to help disintegrate the minerals of the rock formations. In fact, it is not just the chemicals but indeed some of the residue from the layers of earth the solution is pumped through, (minerals, lead, arsenic, etc…), which can contaminate the water for human consumption. Radon and mercury gases can leak out from the shale formations. I think it is fairly safe to say that without serious and highly expensive decontamination efforts which, for the most part are not being done today, there will be a great deal of contaminated fresh water to deal with in addition to the huge draw on fresh water resources which are already under growing competitive pressures.

With such small percentages, one might conclude that the potential harm caused by the injection of these chemicals is of little concern. The migration of gases and these chemicals to the surface along with the worry of contaminating fresh ground water resources via well flowback and unanticipated underground seismic activity related or not to the fracking process all are in play here. Certainly these are all possible side effects which may not show themselves for years, or even decades from now. At this scale, there is no way anyone can make a promise one way or another that far out. Even though the thought of these processes go against every instinct I have for preserving the integrity of our fresh water resources, lets set the contamination issue aside for a moment and just consider depletion…running out of the quantity of fresh water necessary to support the population growth happening on Earth today.

Global Fresh Water Resource DepletionInterestingly, there is a lot of data on fresh water depletion, however, almost all of it has not had time to catch up with the explosion in fracking. So, in order for us to try to determine how our fresh water resources are fairing today, we will look at the increased fresh water “draw” from wide spread fracking.

Approximately 7 to 15 million liters, 1.85 to 4 million gallons, of water is used per well. In one document sponsored by the Independent Petroleum Association of America, they claim that the total of all chemicals used in the fracking fluids for a project in Texas was less than .5%. You can read more about it here:  They do go on to note that the specific compounds used in a given fracking operation will vary depending on a number of things including of course the target product they are mining as already discussed, along with source water quality, other site specifics, etc…  If we do the math, that would seem to suggest 35,000 to 75,000 liters, or 10,000 to 20,000 gallons of chemicals per well.

These are pay attention stats: As of 2010, it was estimated that 60% of all new oil and gas wells worldwide were being hydraulically fractured. As of 2012, 2.5 million fracking jobs have been performed on oil and gas wells worldwide with over 1 million of these in the U.S. who leads all other countries in the use of these processes. So, whether it is fouled or just used up, at 1 million wells and 2 to 4 million gallons of water per well…where is that taking us?


These processes are really so new in the U.S. that it is too early in most cases to accurately predict mid to long range consequences to fresh water supplies. However, there is data that suggests there are real reasons to worry and this comes mostly from Canada who has been at this at scale longer than any other nation in the world. It gets the bulk of its shale oil and gas from open pit mining when the resources are close enough to the surface as well as deep well – horizontal drilling like that more common in the US. In either case, the water used to flush the hydrocarbons out into recoverable forms is eventually unusable for any purpose. There is no debate about that. Even with some of the open pit mining in Canada which lends itself more easily to some degree of water treatment and re-use, eventually the water becomes un-usable for anything. At this point, this remnant is currently being stored in above ground “lakes” or “tailing ponds” or  re-injected/pumped deep underground and left there. Below are a couple of pictures of some of these areas in Alberta Canada.

tailings pond- lberta CanadaOpen-pit tar sands operations return almost none of the water they use back to the natural cycle because it always ends up toxic and therefore subject to a zero discharge policy. Although a large percentage of the waste water is recycled initially, it eventually ends up in tailings ponds like the one shown to the left taken at an Alberta tar sand operation. It is important to note that this kind of mining is not what we see in the US however many of the “components” involved in eventual delivery of the mined fuels are the same…equipment, fuels, water and chemicals.

Below is the same facility with the tailing pond in the forefront and the operations processing facility in the background.

Tailing Pond Alberta Canada

Industry and government officials have long contended that the contaminants in the tailings ponds are not leaching into the groundwater, as some scientists, conservationists, and aboriginal leaders claim. Opponents to the practice state that the government of Alberta has an inadequate number of groundwater monitoring wells in the tar sands regions. And as a recent Royal Society of Canada expert panel reported, there is also no regional hydrogeological framework in place to assess the cumulative impacts of the oil sands industry on groundwater quality.

Bill Donahue of points out that cleaning up contaminated groundwater is sometimes impossible or prohibitively expensive due to the complexity of aquifers and the dynamic nature of underground channels — something that the U.S. Environmental Protection Agency has learned in attempting to clean up many Superfund sites. This relates to my comments at the beginning of this article regarding arriving at “points” where the costs to correct previous actions become much more expensive than different courses of actions if only taken earlier in the process.

The point here before we move on is that depletion is depletion. In the end, it is my position that we won’t care much if it is due to lack of fresh water resources or lack of usable fresh water resources when and if we get to a point where it demands serious lifestyle changes. My question for you is this: are fresh water resources being depleted at a rate that has run far ahead of mainstream knowledge and honest, transparent debate? You need to decide.


Now that we are all on the same page (I think), let us circle back around to the investment theme. At this early stage of this kind of extraction, the tight oil and gas fields have had access to an abundance of available fresh water at very low prices (already established). This of course is based on demand that does not yet factor large scale ongoing fracking. Since this technology is really just starting to really ramp up, its impact on fresh water supplies have not yet begun to be calculated and published. So far then, most may think that the current state of fresh water supply in the US is okay. Well, that information has been tracked for some time and the results are likely to surprise you. But as mentioned, pay attention to the dates….

Below is a map of areas of the US with recognized fresh water depletion:

                                                     Fresh Water Depletion as of 2008

Ground Water Depletion as of 2008

Ground Water Depletion as of 2008

Hmmm…isn’t that interesting.

This data is as of 2008. So the above map does not include any data from the last 5 years of explosive growth and usage of fresh water to support the fracking taking place in North Dakota…or really anywhere else in the US.  The scale we are seeing today mostly developed in the last five years. Although oil drilling picked up a bit beginning in 2004 in North Dakota and Montana, it subsided once the price per barrel dropped below $60 which was the break-even point at the time. Once the price per barrel recovered after the 2008 economic near collapse, drilling picked up again in earnest and has been on a torrent pace ever since. The concern is the time necessary to make an accurate appraisal around water usage and other environmental concerns has not yet elapsed. In many ways, especially at this scale (as the graph below shows),  it is still so new that real concrete data does not exist…at least anywhere in the public domain that I could find.

Bakken oil Production 2008 - 2013


In just one example, current rock fracturing technology available starting in 2008 has caused a large scale boom in the Bakken formation production shown above. By the end of 2010 oil production rates had reached 458,000 barrels per day outstripping the capacity to ship oil out of the Bakken. The “rush” to North Dakota has been big news in the upper Midwest. The map below shows the location and a small summary of some of the positive revenue generating tremendous growth to much of North Dakota:

Bakken Affect on North Dakota Map

There is no doubt that the shale mining in Bakken has been an incredible economic boon to the Residents of North Dakota as well as Montana and areas in Canada. The growth has been so dramatic that typical services like housing, transportation, city and other local services along with other resources have been unable to keep up. For most, that is a problem they love having. I have traveled a lot to North Dakota over the last 10 to 20 years and the people in that state deserve economic growth as much as anybody. Additionally, I appreciate just how badly the U.S. needs real economic growth as well. Growth driven by real jobs creating real value by producing and delivering solutions to markets everywhere. We need to figure out how to do this better and I think we can.

Another benefit of the oversupply of natural gas in the U.S. has kept the price suppressed which has been more good news, at least for most of us in the US. At roughly $4 per bthu (British Thermal Unit), ….Americans have access to the cheapest price on Earth. In other parts of the world, take Asia for example who pay closer to $13 per bthu, it is a steal. All of that is good. Add the fact that natural gas burns much cleaner than take coal for example, and one can see how marketers are trumpeting the value of harvesting these resources. To really tap into the potential money in Shale Gas – we only needed a way to ship it in quantity to find a solution to the global price difference. Enter LNG –  Liquefied Natural Gas.


I am not going into great detail here as this could easily be a lengthy article on it’s own. Suffice it to say that once the miners figured out a way to economically package a gas for export, the market would explode. Serious cooling is required to transform these mined gases to liquid forms. According to, cooling natural gas to about -260°F at normal pressure results in the condensation of the gas into liquid form, known as Liquefied Natural Gas (LNG). This process is important, particularly for the transportation of natural gas, since LNG takes up about one six hundredth the volume of gaseous natural gas.

LNG Process Graph

A typical LNG process. The gas is first extracted and transported to a processing plant where it is purified by removing any condensates such as water, oil, mud, as well as other gases such as CO2 and H2S. An LNG process train will also typically be designed to remove trace amounts of mercury from the gas stream to prevent mercury amalgamizing with aluminium in the cryogenic heat exchangers. The gas is then cooled down in stages until it is liquefied. LNG is finally stored in storage tanks and can be loaded and shipped.

The LNG industry developed slowly during the second half of the last century because most LNG mining is located in remote areas not (yet), served by pipelines, and because of the large costs to treat and transport LNG. As of 2012, costs for constructing an LNG plant costs are estimated at least $1.5 billion per 1 mmtpa (million metric ton per annum), capacity, a receiving terminal costs $1 billion per 1 bcf/day (billion cubic feet per day), throughput capacity and LNG vessels cost $200 million–$300 million. We all use variations of this process like the 20 lb. propane cylinders used to run many gas grills for example. The main difference we are talking about of course is the tremendous difference in scale and infrastructure required to turn these recent processes into global business.

Once liquified, the concentrate is capable of being squeezed into containers and shipped anywhere. The problem has been that this process requires very specific equipment at very specific ports capable of storing and “passing” the product shippers with the right kind of ships who all add their margin and get it to the end user cheaper than it is being sold today. Just two years ago, there was one port that had been retrofitted to handle serious quantities of this fuel type. These are large industrial ports….huge investments in every piece along the value chain. In the last year alone, 4 more ports have been authorized by the EPA in the US. The massive momentum is well on it’s way with, at last count, over 20 more ports in various stages of adoption in the US alone.

For many people this is all very good news. Given the mainstream scaled choices available to you and me today, I would take growth in natural gas energy production over coal, oil and nuclear any day. And scale is a very big part of the issue here.  At scale to meet demand which would allow for the retiring of the county’s worst polluting plants AND the increased demand we are seeing in the U.S. and all over the world, we do not have a lot of immediate solutions, at least not in the world of fossil fuels; but this is not that debate….it is about water – fresh water.

When considering water resources, and comparing the two graphs above with the previous map showing water depletion as of 2008, you see the concern. We need more accurate, current data.

Once again consider the shale finds which are driving this current US energy boom….

SHALE Oil Map Locations USA

North America Shale Oil-Gas Locations

Groundwater Depletion

Groundwater is a valuable resource both in the United States and throughout the world. Where surface water, such as lakes and rivers, are scarce or inaccessible, groundwater supplies many of the hydrologic needs of people everywhere. In the United States, it is the source of drinking water for about half the total population and nearly all of the rural population, and it provides over 50 billion gallons per day for agricultural needs. Groundwater depletion, a term often defined as long-term water-level declines caused by sustained groundwater pumping, is a key issue associated with groundwater use. Many areas of the United States are experiencing groundwater depletion.

Excessive Pumping Can Overdraw the Groundwater “Bank Account”

The water stored in the ground can be compared to money kept in a bank account. If you withdraw money at a faster rate than you deposit new money you will eventually start having account-supply problems. Pumping water out of the ground faster than it is replenished over the longer-term required to replenish resources causes similar problems. The volume of groundwater in storage is decreasing in many areas of the United States in response to pumping. Some of the negative effects of groundwater depletion:

  • drying up of wells
  • reduction of water in streams and lakes
  • deterioration of water quality
  • increased pumping costs
  • land subsidence

What Are Some Effects of Groundwater Depletion?

Ground Water Depletion Graph

Pumping groundwater at a faster rate than it can be recharged can have some negative effects on the environment and the people who make use of the water:

Lowering of the Water Table

The most severe consequence of excessive groundwater pumping is that the water table, below which the ground is saturated with water, can be lowered. For water to be withdrawn from the ground, water must be pumped from a well that reaches below the water table. If groundwater levels decline too far, then the well owner might have to deepen the well, drill a new well, or, at least, attempt to lower the pump. Also, as water levels decline, the rate of water the well can yield declines.

Increased Costs for the User

As the depth to water increases, more energy is required to drive the pump in addition to the increased costs to get down to the lowered water table. Most wells are priced per foot so the farther they have to go, the more it costs initially and on an ongoing basis. Using the well can become prohibitively expensive.

Reduction of Water in Streams and Lakes

There is more of an interaction between the water in lakes and rivers and groundwater than most people think. Some, and often a great deal, of the water flowing in rivers come from seepage of groundwater into the stream bed. Go the very beginning of the Mississippi River in Northern Minnesota if you want an excellent example. The proportion of stream water that comes from groundwater inflow varies according to a region’s geography, geology, and climate.

Groundwater pumping can alter how water moves between an aquifer and a stream, lake, or wetland by either intercepting groundwater flow that discharges into the surface-water body under natural conditions, or by increasing the rate of water movement from the surface-water body into an aquifer. A related effect of groundwater pumping is the lowering of groundwater levels below the depth that stream side or wetland vegetation needs to survive. The overall effect is a loss of riparian vegetation and wildlife habitat. In many cases, the loss of the wetland vegetation adds to surface water contamination as these areas are natures way of “cleaning the water” before it enters into the streams and lakes.

Deterioration of Water Quality

One water-quality threat to fresh groundwater supplies is contamination from saltwater saltwater intrusion. All of the water in the ground is not fresh water; much of the very deep groundwater and water below oceans is saline. In fact, an estimated 3.1 million cubic miles (12.9 cubic kilometers) of saline groundwater exists compared to about 2.6 million cubic miles (10.5 million cubic kilometers) of fresh groundwater (Gleick, P. H., 1996: Water resources. In Encyclopedia of Climate and Weather, ed. by S. H. Schneider, Oxford University Press, New York, vol. 2, pp.817-823). Under natural conditions the boundary between the freshwater and saltwater tends to be relatively stable, but pumping can cause saltwater to migrate inland and upward, resulting in saltwater contamination of the water supply.

Where Does Groundwater Depletion Occur in the United States?

Groundwater depletion has been a concern in the Southwest and High Plains for many years, but increased demands on our groundwater resources have overstressed aquifers in many areas of the Nation, not just in arid regions. In addition, groundwater depletion occurs at scales ranging from a single well to aquifer systems underlying several states. The extents of the resulting effects depend on several factors including pumpage and natural discharge rates, physical properties of the aquifer, and natural and human-induced recharge rates. Some examples are given below.

Source: Groundwater Depletion in the United States (1900-2008), USGS Scientific Investigations Report 2013-5079.

Atlantic Coastal Plain – In Nassau and Suffolk Counties, Long Island, New York, pumping water for domestic supply has lowered the water table, reduced or eliminated the base flow of streams, and has caused saline groundwater to move inland.

Many other locations on the Atlantic coast are experiencing similar effects related to groundwater depletion. Surface-water flows have been reduced due to groundwater development in the Ipswich River basin, Massachusetts. Saltwater intrusion is occurring in coastal counties in New Jersey; Hilton Head Island, South Carolina; Brunswick and Savannah, Georgia; and Jacksonville and Miami, Florida.

West-central Florida – Groundwater development in the Tampa-St. Petersburg area has led to saltwater intrusion and subsidence in the form of sink hole development and concern about surface-water depletion from lakes in the area. In order to reduce its dependence on groundwater, Tampa has constructed a desalination plant to treat seawater for municipal supply.

Gulf Coastal Plain – Several areas in the Gulf Coastal Plain are experiencing effects related to groundwater depletion:

  • Groundwater pumping by Baton Rouge, Louisiana, increased more than tenfold between the 1930s and 1970, resulting in groundwater-level declines of approximately 200 feet.
  • In the Houston, Texas, area, extensive groundwater pumping to support economic and population growth has caused water-level declines of approximately 400 feet, resulting in extensive land-surface subsidence of up to 10 feet.
  • Continued pumping since the 1920s by many industrial and municipal users from the underlying Sparta aquifer have caused significant water-level declines in Arkansas, Louisiana, Mississippi, and Tennessee.
  • The Memphis, Tennessee area is one of the largest metropolitan areas in the world that relies exclusively on groundwater for municipal supply. Large withdrawals have caused regional water-level declines of up to 70 feet.

High Plains – The High Plains aquifer (which includes the Ogallala aquifer) underlies parts of eight States and has been intensively developed for irrigation. Since predevelopment, water levels have declined more than 100 feet in some areas and the saturated thickness has been reduced by more than half in others.

Pacific Northwest – Groundwater development of the Columbia River Basalt aquifer of Washington and Oregon for irrigation, public-supply, and industrial uses has caused water-level declines of more than 100 feet in several areas.

Desert Southwest – Increased groundwater pumping to support population growth in south-central Arizona (including the Tucson and Phoenix areas) has resulted in water-level declines of between 300 and 500 feet in much of the area. Land subsidence was first noticed in the 1940s and subsequently as much as 12.5 feet of subsidence has been measured.

Land Subsidence

The basic cause of land subsidence is a loss of support below ground. In other words, sometimes when water is taken out of the soil, the soil collapses, compacts, and drops. This depends on a number of factors, such as the type of soil and rock below the surface. Land subsidence is most often caused by human activities, mainly from the removal of subsurface water.

Below is a map of the U.S. showing some of the areas where subsidence has been attributed to the compaction of aquifer systems caused by groundwater pumpage. From “Land Subsidence in the United States“, USGS Fact Sheet-165-00, December 2000.

US Map Land Subsidence

But here we are once again with dated data…this through the year 2000. Compare to the shale finds shown in the previous maps which are driving this current US energy boom and you can see the overlap.

Really, only the gulf coast is an area where land subsidence and shale mining overlap…as of 2000…this obviously is different today.  The bulk of newer shale mining is in areas that up until the year 2000, or certainly before the year 2008, had minimal subsidence issues. But the pace of the mining is truly mind boggling. We need more current and accurate data on this before much longer so we can make informed decisions…but you certainly must see the potential risks.

The next graph may surprise you…it did me.

Ground Water Depletion ChicagoChicago-Milwaukee area – Chicago has been using groundwater since at least 1864 and groundwater has been the sole source of drinking water for about 8.2 million people in the Great Lakes watershed. This long-term pumping has lowered groundwater levels by as much as 900 feet. The above map shows contours of water-level declines, in feet, in the Chicago-Milwaukee area from 1864 to 1980. The rivers in downtown Chicago, Lake Michigan…wow.

Many of us have known for some time that much of the West Coast agricultural production is heavily dependent on irrigation. This is not news. Has there been depletion out there which has resulted in any Land Subsidence that we might learn from?




irrigation picture

The desert areas of the world are requiring more and more water to support growing populations and agriculture.

The photo below is a picture of the San Joaquin Valley southwest of Mendota in the agricultural area of California. Years and years of pumping ground water for irrigation has caused the land to drop.

The top sign shows where the land surface was back in 1925! Compare that to where the man is standing (about 1977).

Land Subsidence CaliforniaThis has resulted in the entire valley sinking an extraordinary amount. It has been argued that there is little consequence to land subsidence in a wide, flat agricultural basin since the settlement is more uniform.  However, the large scale change like that in the San Joaquin Valley has greatly changed the hydrology of the area and it is hard to believe there are not some negative impact that will show up sometime in the future.




Unfortunately, not all groundwater-related subsidence is benign.

land-subsidence-mexico-cityIn Mexico City the buildings interact with the settlement, and cause cracking, tilting, and other major damage. In many places, large sinkholes open up, as well as surface cavities.

Closer to home, damage from Hurricane Katrina was exacerbated due to coastal sinking associated with groundwater withdrawal.


Damage from Hurricane Katrina was exacerbated due to coastal sinking, associated with groundwater withdrawal…did you know that? When this terrible disaster happened, do you remember any serious discussions about this? Other coastal areas of the world are having the same problems…Bangkok, Thailand for example. These areas have become so large that often the settlement and potential impacts can only be measured by surveys and GPS measurements.

In Your Back Yard

Things change when the problems appear in our back yards.

The Minneapolis – St. Paul 7 county metro area is home to a number of lakes. We are the cities of lakes in the land of lakes not to mention the beginning of the Mississippi as well as other large rivers like the Minnesota River and including the St. Croix, which is our border in the metro area between Minnesota and Wisconsin before it dumps into the Mississippi just to our South. I know I have taken this for granted. Take a look at the next graph:

water use minneapolis st. paul

Do you see what has been happening? From 1941 through 2010, we have been servicing the metro’s growing water needs more and more from ground water and less and less from surface water…i.e. Mississippi, Minnesota, St. Croix Rivers…lakes, etc.. What is below all those water towers you see all over the metro area? Wells of course!

Is This the Future?

White Bear Lake: This metro lake is in serious danger. Many households have invested a great deal to give their families the opportunity to live every day “on the lake”. No need for a second house – cabin. In the last couple of years, their lakeshore has receded by hundreds of feet. Docks 200 to 400 or more feet long eventually take you to a miniature version of the lake they live on. Until if and when it ever gets fixed, their equity is ruined.

White Bear Lake Water graphic

There are discussions of possibly diverting some of the Mississippi a few miles to help resurrect their lake. This has happened in many other areas around the US and it looks to me that the rate at which this happens if we do not make some very serious changes, this will become a growing problem requiring a great deal more money to hope to affect a lot less results. Are we nearing a  “tipping point”? Although I could not say we are on a global or even national scale, we definitely are in certain areas. It is my opinion that, like I always say, these kinds of big changes show up first around the fringes of our attention but should be a signal to us to look closer. That is what I am suggesting here…we all need to look a little closer.

Are you adding all this up?

Back To Investing – Follow the Money

Recently, a widely read energy blogger Eli Hinckley wrote that perhaps three factors around water resources will soon affect the prices of our energy. In a piece which appeared in The Christian Science Monitor, Hinckley noted prolonged droughts and overuse may prompt a reconsideration of the three real issues around water, fresh water, that would impact energy producers:

  1. Access
  2. Treatment
  3. Transport

Okay, stay with me; we are on the home stretch.

With fracking, about one gallon of water is required for each million BTUs (equal to 1,000 cubic feet of gas).

The most reliable estimates I have seen puts our country’s expected shale gas production via fracking at 87 billion cubic feet per day by 2020…seven years from now. So 87 billion cubic feet per day divided by 1,000 is 870 million gallons of water per day. Now just hold that thought.

Today, the US generates over 40% of its total electricity via coal powered power plants. Coal powered electricity generation uses one gallon per kilowatt hour, an average home uses 2000 to 3000 kilowatt hours per month. This would suggest that by consuming 2000 to 3000 KwH per month of coal generated power, we are also consuming 2000 to 3000 gallons of water per month to light your homes and run your air conditioning. Fair enough.

Nuclear power plant generation requires much, much more. This is why you almost always see both types of plants near large water resources. In the central US, that is usually rivers. To locate these power plants in location where the only water resource would have been underground fresh water was known to be impractical 30 to 50 years ago when many of these plants were built…30 to 50 years ago.  Near coasts, especially nuclear, they use the ocean of course, (Fukishimi Japan, etc..). As already mentioned, large cities are often also located on these same rivers and rely on them for human consumption.

If we move back and take a broader look, agriculture production accounts for about 70% of annual water usage worldwide. Drilling and mining needs are included in global industrial usage of about 23%. However, these figures are pre- 2008 and do not take into account the accelerated usage with shale gas and oil fracking procedures which I have now beat to death.  70% plus 23% is 93%…and ALL remaining needs must be covered by what remains.

Many investment analysts believe that at this point, for now, there is no need to panic. I have read some though who note that there are indications that rising demand from all areas may begin to outstrip water supply by 2030 and that some of those studies have put the deficit as high as 40%.

Access: Local authorities are making accessing water more expensive

Some of this may be genuine reactions to imbalances for water uses from other areas, maintaining adequate water pressure to provide everything from residential and commercial use to fire hydrants and public safety, e.g. White Bear Lake

There is no question that the issue of water in many communities is becoming a political issue. Large population centers in areas from California, Phoenix, Las Vegas and even Atlanta have all had scares of depleted water supplies. At a minimum we all should be paying attention to the activity around water and energy. As I have said before…large scale issues almost always show up at the fringes first. If not acted upon, the “recovery” time can be so long as to leave little to no real solutions that don’t affect the larger group in much more aggressive and expensive ways.

Treatment: What to do with the flowback – tailings, etc…

As the volume of shale gas and “tight” oil increases, so also does the problem of what to do with the contaminated water that comes back up the pipe with the gas and oil… (think Canada earlier in the article). IN the industry, the liquids retrieved as part of the fracking process is referred to as flowback. It contains tailings (rock shavings and other drilling residue), the chemicals put down the hole in the fracking process, and the hydrocarbons themselves.

I am not confident of if and when we will get a detailed list of the chemicals used in this process any more than we ever got the list of the chemicals dumped in massive quantities by BP to make the billions of gallons of oil magically disappear from the Gulf of Mexico. But follow me for a minute. Everyone knows that even light grease like that which often a result in cooking does not get removed easily by water alone. Detergents are used to more or less “grease” the oils so they can be more easily removed. Now consider the amount of money and effort required to drill these huge wells, much if it horizontal, then apply vast amounts of pressure to force the gas and oil out of the porous rock and fissures produced by the process in those less porous areas. Now, for those who have worked with heavy oils and fuels know, it is not just any compound that works to remove these heavy and sticky substances. Would you ever spend the money to force the water down there and not leverage all the “help” you can get to harvest every drop?

The good news is that the companies behind these efforts are not stupid. I know that new advances in fracking that are less reliant on harmful chemicals are being introduced and research into this area is high on their list. There has even been mention of non-water fracking attempts…one suggested carbon dioxide and propane. Propane? Also, when they can, water is currently re-used for later drilling in most locations but all agree that sooner or later this flowback cannot be returned to the environment. We saw one method for these waters which are treated and sit in large holding ponds…like the examples in Canada. As discussed earlier, what seems to be the order of the day for the U.S. however is to treat these water and permanently inject them into deep disposal basins underground. There has been talk that suggests that in some areas, before we run out of fresh water for fracking, we may exhaust the capacities of these underground “water basis”.

Transportation: At this point hauling the water away is about all that is left and that additional cost would have to greatly affect the delivered price of fracked fuels. If it isn’t the added cost to truck hazardous water away, there is always the threat that fresh water resources will become depleted or fouled in some way where the only option would be to truck the water in as well. Similar efforts, same results.

The expectations are that the U.S. will see hundreds of thousands of new (fracking), wells coming online within the next ten years or so.

Of course we have not even touched on some local issues around fracking like all the angst around the ongoing sand mining issue around our state and the Midwest. I have read where local authorities along the Mississippi have battled local enterprises who are extracting a huge amount of sand which they sell and ship off to the shale mining areas for the fracking process.


We require the energy that only these companies are in a position to deliver. Utilities are in the same position. There is no way we could survive near term with anything close to our current standard of living without the mining, processing and delivery of these fuels and the electricity they produce. Additionally, the utilities are required to have in arrears enough extra capacity to handle huge demand swings during frequent “peak use” times.

Do you understand that these high demand peak times are often “covered” by utilities with generation they can fire up quickly then let sit idle when not used? Diesel generators were the norm although natural gas generators are slowly replacing them as they wear out and are in need of costly maintenance. This “peak usage” generation capacity is a costly mandate for utilities. Its like having a couple of extra fully insured cars with full fuel tanks sitting in your driveway for friends and relatives to use. They show up a lot during the summer for mid afternoon and early evening drives…sometimes every day for weeks – really like long drives during hot weather, then are gone for days, or even a week or two. It is a tough business.

earth in waterWhere is the hope? My hope is that there is consistent monitoring and pressure to devise less harmful methods to continue to supply us the energy we demand. And I think that we all need to play better together. It will require change from all of us. This change is coming regardless of what we do or don’t do in my opinion. I heard it said once that it is not change itself that causes us pain, but the effort we expend fighting change. It is the fear of change, and yet, life is change.

The truth? There will be more than enough business to keep all mining companies rolling along and the utilities will continue to supply the power at a profit. It will be messy at times but even the most aggressive mandates to add renewables to this picture are not affecting any sizable generation. In most of the US, renewables account for 1% to 2% of existing energy production. I think many that fight this are doing it for fear of these solutions growing exponentially and causing widespread displacement of revenue…which can be a legitimate concern…although it doesn’t have to. The amount of time it would take for that to happen is more than adequate, many decades to a generation or so, to allow all the players the ability to figure out how best to migrate some of the economically and environmentally obsolete technologies and integrate solar, hydro and wind…while working on all other possibilities at the same time. We should be aggressive towards all clean energy while this fracking revolution plays out under continued scrutiny.

These mining companies and utilities represent the “systems” we have in place to placate our collective demand. It is easy for people in the renewable sector to demonize them…and in a case or two, what I have seen helps support those labels. However, the bulk of our dealings with these companies reveal organizations struggling to deliver what we all demand with increasing pressures on dramatically changing how they do that. This is hard stuff. I think the pressures being applied in the end are healthy for everyone. Change is required. At scale, it cannot happen overnight. There are companies that are embracing these changes, and there are companies that are fighting them at every turn. In my opinion, those that embrace the change will come out of this clean energy transition even stronger, and those that continue to fight will one day get on board but likely too late to become “less” than they could have.

You and Me: Alone, these problems are overwhelming…way too big we think. This of course is a lie. So, we bring it back home and do what we can do, knowing that if most of us just do that, it will get done.

Finally, A Shameless Plug for Our Company

Did I mention that we at Dragonfly Solar are experts at designing and installing clean commercial solar facilities? Did I also point out that the energy our systems produce are often very closely aligned with the highest usage (peak), times for companies and industry?

Dragonfly Solar


Give us a call if we can help.




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