Two and a half million gallons sounds like a lot of water, and producers can use that much and more to stimulate a well with hydraulic fracturing (fracking), but other uses consume a lot more, ExxonMobil CEO Rex Tillerson told an audience on the Council on Foreign Relations Wednesday.

“If you look at the water consumption per unit of energy that’s provided, shale gas development is one of the lowest water consumptions of any form of energy we can provide you,” he said. “If you look at the water consumption around coal [and] the water consumption around a lot of other conventional sources of energy, it is much higher.

“When we say we’re going to pump, you know, two and a half million gallons of water down this well to hydraulically fracture it, that…sounds like a lot of water when you look at your monthly water bill. In the grand scheme of water consumption, it’s actually pretty low.”

While some worry that fracking contributes to water scarcity, Tillerson said there is plenty of water. It’s not a scarcity problem; it’s a distribution problem. “It’s just not in all the right places.

More water flows out — freshwater — flows out of the mouth of the Hudson Bay in eight seconds than all the water we used to hydraulically fracture all the wells last year. That’s how much water is available. It’s a question of how we use it.”

While fracking is a relative new concept to those outside the energy industry, producers have been doing it for years. What’s more, the concepts around water handling that apply to frack water also apply to produced water, something the industry has been dealing with even longer, Tillerson said.

“…[W]e have been handling and managing that water system for decades in terms of how we clean that water up, separate the things that are useable to us out, take the waste product water and dispose of it, either dispose of it through reinjection or dispose of it through reuse or clean it up in other ways and then, through permits, dispose of it through surface disposal,” he said.

Regulating the water use and handling activities related to fracking is best left to the states rather than the federal government, Tillerson said. “They’re responsible for land management…[T]hey know those issues in their state better than anyone else does. And they’re not the same from state to state. So much of it is a function of geology, topography, the climate that you’re operating in — harsh, not harsh. So…writing a federal standard to apply across a whole range of these conditions we don’t think is the most efficient way to go about it.”

Fracking technology usually gets half the credit for the shale gas renaissance, with the other half going to horizontal drilling. However, the shale gas renaissance usually gets most if not all of the blame for natural gas prices that have been in the basement for some time now.

Tillerson said he agrees with the assertion that cheap natural gas can help rebuild the American economy, just not gas as cheap as it is today.

“…[C]heap is in the eye of the beholder…It will be supplied at whatever its cost to supply will be. And what I can tell you is the cost to supply is not $2.50,” he said. “We are all losing our shirts today. You know, we’re making no money. It’s all in the red. And so right now we’re enjoying the overhang…the system is so enormous, the price supply-demand signals are always slightly out of sync.”

Today’s low natural gas prices are due to the fact that the industry “overshot when we had those $6, $7, $8, $9 prices, and we overdeveloped the supply…”

In some cases, producers are “getting by on cash,” Tillerson said. “I can tell you it’s negative earnings, by and large, and some people — or it’s negative on cash for them, depending on how efficient they may be. So today’s price is not sustainable to deliver that [U.S.] energy security.”

What, exactly, the right price to ensure stability of supply and producer viability is, Tillerson didn’t say. “…[T]he market will seek it and it will find it,” he said. “It’s not $9, I can tell you that…[I]f you’re thinking about what others are paying for natural gas and those that are importing LNG, liquefied natural gas, it will be substantially below the cost of that to maintain a secure supply.”