The 2011 drought caused record-breaking conditions throughout much of Texas. Farmers, ranchers, and others whose livelihoods depend on reliable sources of water are feeling the effects of the water shortage first-hand. Aside from being subject to locally imposed water-use restrictions, ordinary residents have also noticed receding water levels in Texas lakes, rivers and streams.

Unfortunately, Texas’ water problems are not expected to improve any time soon. The state’s most recent water study projects declining water availability well into the future while also predicting an increased demand for water. 

The growing thirst for water will partially come from the dramatic increase in the state’s oil and gas activities. Within the last decade Texas has become an epicenter of the shale gas revolution. Over 850 active rigs dot the Texas landscape across three major shale plays. Each of these rigs drills deep into rock formations with the help of thousands of gallons of water. Most of these wells are subsequently hydraulically fractured (‘fraced’), requiring additional water usage but yielding increased production of oil or gas. These developments in oil and gas production have revitalized domestic energy sources, created thousands of new jobs and will likely shape future policy discussions on many levels of government. 

With the rise of water intensive drilling in a state parched for water, the resulting conflict is evident. In fact, the first skirmishes are being fought in what many anticipate will be a long battle over water rights. At least one Texas town has already banned the use of its municipal water for hydraulic fracturing purposes. Other cities are imposing fines on drillers who export water from city boundaries. With oil and gas drilling expected to increase, such limitations on water usage will likely escalate. 

The growth in domestic oil and gas production from fracturing shale formations has been rapid and largely unexpected. As a result, laws regulating fracing are still in their early stages at the federal, state and local levels. At the federal level, large scale studies have been commissioned to examine the environmental impact of fracing while agencies battle for their share of regulatory jurisdiction. Likewise,state and local governments are scrambling to develop policy reactions to fracing activity within their borders.

Presented at the South Texas College of Law 25th Annual Energy Law Institute for Attorneys and Landmen, August 29-30, 2012.