Development of the world’s shale plays will require millions of gallons of water for hydraulic fracturing (fracking). In many instances, reserves are in areas with “stressed” water supplies, according to the World Resources Institute (WRI). But in the United States — the country that pioneered shale development — the energy industry is also pioneering water reuse and recycling.

“Water risk is one of the most important, but under-appreciated challenges when it comes to shale gas development. With 386 million people living on land above shale plays, governments and business face critical choices about how to manage their energy and water needs,” said WRI CEO Andrew Steer. “This analysis should serve as a wake-up call for countries seeking to develop shale gas. Energy development and responsible water management must go hand in hand.”

On Tuesday WRI released Global Shale Gas Development: Water Availability & Business Risk, which it said is the first publicly available analysis of water availability across all potential commercial shale gas and tight oil resources worldwide.

Seven indicators were used to evaluate water availability and the associated business risks for shale development: water stress, water-supply variation among months of the year, drought severity, groundwater depletion rates, largest water user, population density, and depth of shale reserve.

According to the report, 38% of the world’s shale resources face high to extremely high water stress or arid conditions. The report, which is based upon WRI’s Aqueduct Water Risk Atlas, ranks water stress across the 20 countries with the largest shale resources. In 40% of these countries, future shale production could happen in arid conditions or under high water stress.

It also evaluates water availability for every shale play in the 11 countries either pursuing, or most likely to pursue hydraulic fracturing: Algeria, Argentina, Australia, Canada, China, Mexico, Poland, Saudi Arabia, South Africa, the United Kingdom and the United States. Water availability and shale resources vary from country to country, making hydraulic fracturing’s potential unique in almost every location.

Water demand for drilling and fracking in the United States accounts for one-tenth of 1% of all U.S. water withdrawals, according to the WRI report. “This demand, however, is concentrated around active shale plays, 26% of which are in areas with high and extremely high water stress,” the report said, citing U.S. Environmental Protection Agency data.

“Thus, although the national percentage of water used for fracturing may be low relative to other water demands, the water requirements for share resources extraction in specific locations can be significant and in competition with other water uses,” the WRI report said.

“With many countries already facing arid conditions and high water stress around the globe, this report can help to ensure that there’s enough water available for industries, farms and people, even if shale development advances,” said Paul Reig, a WRI senior associate and lead author of the report. “Thankfully, there are smart and practical steps that countries and businesses can take to help reduce the water risks posed by future shale development.”

The report makes four recommendations to help governments, companies, and civil societies protect water security while minimizing business risks:

Meanwhile, in the oil and gas patch, producers, academic researchers and others are working to see that fresh water is preserved for agriculture, drinking and other uses while brackish water is tapped for well stimulation. Additionally, the oil and gas industry has been ramping up water recycling efforts.

STW Resources Holding Corp. recently struck a partnership agreement with a Texas ranching family to lease brackish water rights and build, own and operate a hybrid reverse osmosis water processing system capable of processing 30,000 barrels of brackish water per day on the family’s ranch in Upton and other surrounding Texas counties 40 miles southwest of Midland.

Under the agreement, STW will pay a 23% royalty to have access rights to the brackish water on several sections of land. Additionally, STW will own and operate the water systems, which are of its own design, to process and deliver water to oil and gas producers for use in drilling and completing wells on and around the family ranch and for use on other fields in the area. There are more than 40 drilling rigs working in and around the ranch, according to STW.

The deal advances the company’s plans to build multiple hybrid reverse osmosis facilities to sell processed brackish water to oil gas producers. These projects will include access to a disposal well for any waste from the operation, ample supply of brackish water for processing, operation of the water reclamation facilities and a loading/unloading depot or extended water pipeline systems for water delivery.

STW plans to process brackish water and sell it to producers at a prevailing rate similar to the current rate they are paying for fresh water, which the company said is about 80 cents-$1.10 per barrel.

“This project is a model for STW as our plan is to continue signing agreements and working with landowners to process and sell the currently unusable brackish water,” said STW Water President Alan Murphy. “It’s good for everyone; the landowners conserve their fresh water, and STW creates revenues further increasing shareholder value.”

STW’s first facility will initially process 30,000 barrels, or 1.26 million gallons, of brackish water per day and deliver about 27,000 barrels, or 1.13 million gallons, of fresh water per day to producers. The STW Proprietary Hybrid RO System can recover about 90% of the fresh water from the brackish water. The capacity can be increased at any time to process up to 50,000-plus barrels per day as demand for water increases.

The first phase of the project has several brackish water wells completed with additional wells to be drilled. A disposal well is planned for the near future. Estimated costs to build the first 30,000-barrel per day system and drill seven brackish water wells is about $2.9 million. The facility is expected to be operable in the fourth quarter of 2014.

Researchers at Houston’s Rice University, which often collaborates with the energy industry, have analyzed the water that is produced during flowback of fracking operations. They believe that better recycling practices for flowback water using more advanced technologies would save water and relieve some fears associated with fracking.

Rice’s Andrew Barron, a professor of materials science, led a study that was recently published in a Royal Society of Chemistry journal.

According to Barron, the amount of water used by Texas drillers for fracking may only be 1.5% of that used by farming and municipalities, but it still amounts to as much as 5.6 million gallons a year for the Texas portion of the Haynesville Shale and 2.8 million gallons for the Eagle Ford Shale. Drawing that much water for the regional operations can strain the water supplies of nearby communities, Barron said.

Besides relatively harmless organic and other minerals, Rice researchers found that produced water contained potentially toxic chlorocarbons and organobromides, probably formed from interactions between high levels of bacteria in the water and salts or chemical treatments used in fracking fluids.

Barron said the oil and gas industry sometimes uses chlorine dioxide or hypochlorite treatments to recycle produced water for reuse, but these treatments can actually enhance bacteria’s ability to convert naturally occurring hydrocarbons to chlorocarbons and organobromides. He said this transition could happen either downhole or in storage ponds where produced water is treated.

“We believe the industry needs to investigate alternative, non-chemical treatments to avoid the formation of compounds that don’t occur in nature,” Barron said.