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Colorado Water Fracking Sensitivity Spills Over in Auction

Although some farming and environmental representatives have raised red flags, water used by the oil/gas industry in hydraulic fracturing (fracking) is not going to cause shortages for the agriculture and local municipalities in the state, a state water district official told NGI's Shale Daily Monday.

"There is plenty of water for farmers," said Brian Werner, a spokesperson with the Northern Colorado Water Conservancy District, which completed an auction of excess supplies the end of last month.

The Colorado Oil & Gas Association (COGA) says that a relatively small amount of the state's overall water supply is used for fracking and the industry generally strives to reuse and recycle much of the water used.

"We always strive to reuse and recycle as much water as possible and are constantly looking to improve our water efficiency," said Tisha Schuller, CEO at COGA. "There is a long history of the agricultural community and oil/gas working very closely on both water and other development issues."

Reports in local news media focused on the late March auction as an example of farmers and local governments in the Front Range area of northeastern Colorado having to compete with oil and natural gas drilling operators in the Niobrara Shale who need a lot of water, sand and chemicals in fracking new wells. But Werner and earlier reports from state officials have noted that the fracking still accounts for a small fraction (about 0.08%) of the state's water.

Nevertheless with possible drought conditions plaguing Colorado again this year, and the snowpacks being below normal, farming and environmental representatives have raised concerns about oil/gas operators taking even just 8% of the recent auction supplies.

Some 84% of the auctioned supplies went to farmers in late March, and there was only one farmer in the bidding who didn't receive any water, Werner said. "That means he bid under the lowest successful bid of $11.13/acre-foot you needed in order to get some water." Another way of summarizing the auction is that 92% of the water went to cities, industry and agriculture, the rest went to oil/gas operators.

Werner said there is no water quantity problem for the state involving fracking, although he acknowledges there are legitimate environmental issues related to potential contamination of groundwater supplies.

A second misconception that Werner said has arisen is that the oil/gas sector is driving up the price of water. In reality, he said the price has actually come down.

By any measure, this year's auction had lower prices, compared to two years ago -- highest bid ($40 vs. $44 in 2010), average successful bid ($25.77 vs. $28.86), and lowest successful bid ($11.13 vs. $22.12), according to Werner.

"We have had enough water available that our board has made this excess supply available the last three years," Werner said. "We don't have a water quantity issue, although some people are trying to make it that."

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