Oil Companies Need Lots of Water for Oil Shale

Exxon Mobil and Royal Dutch Shell are gaining rights to billions of gallons of water from Western rivers in preparation for future efforts to extract oil from shale deposits under the Rocky Mountains. These energy companies are collectively entitled to divert about 7 billion gallons of water a day during peak river flows. The companies also hold rights to store, in dozens of reservoirs, almost 2 million acre feet of water, enough to supply metro Denver for six years. The companies are holdings these water rights for future use in producing oil from shale.

The Center supports coal-to-liquids and extraction of oil from shale, but we oppose expanded offshore drilling.
The energy companies are not currently using most of the water rights, but they are leasing some of it to other users, mostly farmers. They are stocking up on water rights to be sure they will not be caught with sufficient water supplies to produce large quantities of oil. The Colorado River basin provides water to 30 million people from Wyoming to California. It includes dozens of uses, including power generation at the Glen Canyon Dam in Arizona. Under Colorado law, river water is available, free of charge, to any entity that can show the water will be put to a "beneficial" use. Extracting oil fits into that category, as does, for example, growing alfalfa, providing household drinking water and making snow at ski resorts.

Oil companies can get water rights in two ways under the seniority system Colorado uses for appropriating water. For a minimal filing fee, the companies have claimed scores of "junior" rights that allow them to draw water from a particular river after other users have satisfied their needs. The companies have also purchased dozens of "senior" rights from old-time farming families; those rights give them priority access to water, even in dry years. Even if the oil companies use every last drop of their entitlements, there's no risk of the Colorado River drying up. (WSJ, 3/19/09)