Water and Shale Gas DevelopmentLeveraging the US experience in new shale developments 1Global development of shale gas resources has the potential to expand significantly outside the United States. However, there continue to be environmental concerns, particularly with respect to water use. As operators outside the United States explore shale gas, there are many lessons that can be taken from the United States experience. This paper highlights areas that operators of new shale developments should consider. It also includes an analysis of considerations for Argentina, China, Poland and South Africa focusing on water regulation, water use and management, and water movements during shale gas development.21 Introduction 4 Overview of shale gas life cycle activities 81.1 Shale resources outside the United States 9 In Focus: Shale developments in Argentina, China, Poland and South Africa 122 Water regulation 182.1 Regulatory history and the current landscape 192.2 Federal efforts to support regulatory consistency 212.3 Key trends 22 In Focus: Water regulation in Argentina, China, Poland and South Africa 233 Water management 263.1 Water use and production 27 Comparison: Managing produced water: unconventional vs. conventional 303.2 Water management options 31 Primer: Water treatment technologies 333.3 Key trends 34 In Focus: Water use/management in Argentina, China, Poland and South Africa 354 Water movements 424.1 Shale gas development life cycle: logistics requirements 434.2 Significance of water transportation 454.3 Rising to the water transportation challenge 454.4 Key trends 46 In Focus: Water movements in Argentina, China, Poland and South Africa 47 Concept Overview: Basin-wide water logistics management model 495 Lessons learned for new shale developments 52 In Focus: Implications for Argentina, China, Poland and South Africa 576 Implications for operators 60 Overview of the challenges in the shale gas lifecycle 63Contents341Introduction Natural gas production in the United States has grown significantly in recent years as improvements in horizontal drilling and hydraulic fracturing technologies have made it commercially viable to recover gas trapped in tight formations, such as shale and coal. The United States is now the number one natural gas producer in the world and, together with Canada, accounts for more than 25 percent of global natural gas production.1 Shale gas will play an ever-increasing role in this resource base and is projected to increase to 49 percent of total US gas production by 2035, up from 23 percent in 2010, highlighting the significance of shale gas in the US energy mix in the future. Lower and less volatile prices for natural gas in the past two years reflect these new realities, with benefits for American consumers and the nations competitive and strategic interests, including the revitalization of several domestic industries.2 5In its “2012 Annual Energy Outlook,” the U.S. Energy Information Administration (EIA) referred to the “enormous potential” of shale gas, and according to the Institute for Energy Research, the United States has enough natural gas to meet domestic electricity demand for 575 years at current fuel demand for generation levelsenough natural gas to fuel homes heated by natural gas in the United States for 857 years and more natural gas than Russia, Iran, Qatar, Saudi Arabia and Turkmenistan combined.3 As Figure 1 illustrates, US shale gas reserves are vast and broadly dispersed; the EIA estimates that the lower 48 states have a total of 482 trillion cubic feet of technically recoverable shale gas resources with the largest portions in the Northeast (63 percent), Gulf Coast (13 percent), and Southwest regions (10 percent), respectively. The largest shale gas plays are the Marcellus (141 trillion cubic feet), Haynesville (74.7 trillion cubic feet), and Barnett (43.4 trillion cubic feet). Activity in new plays has increased shale gas production in the United States from 11 billion cubic meters (bcm) in 2000 to 140 bcm in 2010.4 Such production potential has the ability to change the nature of the North American energy mix and according to the National Petroleum Council 2011 study, “Prudent Development: Realizing the Potential of North Americas Abundant Natural Gas and Oil Resources,” the natural gas resource base could support supply for five or more decades at current or greatly expanded levels of use.5 Water regulationThis rapid expansion in shale gas production has given rise to concerns around the impact of operations in areas such as water, road, air quality, seismic and greenhouse gas emissions (GHG). The process of hydraulic fracturing (fracking) in a shale gas well requires significant volumes of water and causes additional greenhouse gas emissions compared to conventional gas wells. There is already significant resistance to shale gas development due to these wate