How energy companies do (and don't) manage their water footprints

[Editor's note: Today is World Water Day; in addition to this article on how energy companies manage their water footprints, be sure to also read Robert Kropp's article about the growing flood risks coastal cities face from climate change.]

"If climate change is the shark, then water is its teeth," declares Paul Dickinson, CEO of the Carbon Disclosure Project. He paints a grim but appropriate picture of the linkages between water and carbon, and, less obviously, water and energy.

In a prior article, we explained why water should be integrated with energy strategies. Here we explore how different organizations, particularly oil and gas companies, have approached this.

Rocking the boat

In addition to the Carbon Disclosure Project, which released its second annual Water Disclosure report last year, other NGOs have tried to improve business water practices. The World Economic Forum Water Initiative promotes public-private collaboration, while Ceres, the national investor-advocate coalition, recently introduced a tool to help investors evaluate water risk management.

Corporate responses to such activities vary, but overall they have grown increasingly sophisticated as IT advances have enabled more data-driven insights. IBM and the King Abdulaziz City for Science and Technology are partnering to research solar-powered desalination in Saudi Arabia, where water-related spend constitutes 8.5 percent of the national budget (according to a senior Saudi official).

Merck quantified operational linkages between its water and energy consumption (cooling heat-intensive production processes consumes over 50 percent of its global water usage, accounting for 40 percent of total energy costs). Siemens is piloting an energy-generating wastewater treatment facility in Singapore, home of its new, water-focused global R&D team. The major biofuel company POET is patenting a "Total Water Recovery" process to improve ethanol production rates.

Oil and water

Meanwhile, most oil and gas companies remain silent when it comes to developing integrated, long-term water strategies. Only 47 percent of oil and gas companies responded to the 2011 Water Disclosure report, the lowest response rate of any sector. Notables such as Chevron, ConocoPhillips, ExxonMobil, and Total SA did not publish their responses or declined to participate.

Silence shouldn't be mistaken for ignorance. Among those that did respond, 72 percent acknowledge their exposure to water-related risk compared to the Global 500 average (59 percent), an encouraging sign for those following players like Anadarko, BP, Encana, Hess, Occidental, or Statoil.

Perhaps unsurprisingly, the energy sector embraces a quantitative approach to water management: 72 percent of respondents can report water consumption data, and 44 percent even receive external verification. Last year, ExxonMobil and BP both began expanding their operational assessments to include ecosystems impacts in local watersheds.

While some oil and gas companies recognize what's at stake, their efforts don't appear integrated with their corporate strategies.  At a basic level, their extensive data collection does not consistently translate into performance management: 84 percent of those respondents set water targets, but only 44 percent have quantitative ones.