A report from San Francisco-based CERES says the energy industry needs to scale up its use of recycled water and non-freshwater resources, and undertake better water management techniques, if shale energy is to grow as projected.

The report notes nearly 47% of the wells are developed in water basins with high or extremely high water stress. Extreme water stress means more than 80% of available water is already being allocated for municipal, industrial and agricultural use.

Much of the hydraulic fracturing activity in the US is occurring in Texas and Colorado, both of which are going through protracted periods of drought.

In particular, the report highlights the competing uses of water and the increasing fracas between fraccing activities and other water supply needs.

The report is based on well drilling and water use data from FracFocus.org and water stress indicators from the World Resources Institute with the research stemming from data on 25,450 wells in operation from January 2011 through to September 2012.

Water use in hydraulic fracturing in some Texas counties accounted for more than 20% of the total water use, while 70% of the wells monitored in Pennsylvania were medium to high water stress.

“Given projected sharp increases in shale oil and gas production in the coming years, competition over water should be growing concern to energy companies,” CERES says in the report.

It points out that hydraulic fracturing is likely to double in the next few years.

“Shale energy development cannot grow without water, but in order to do so the industry’s water needs and impacts need to be better understood, measured and managed.” it says.

The report recommends the industry follow a comprehensive mandatory disclosure of how much freshwater, non-freshwater and recycled water is being used for operations and that they be categorised region by region.

It also set up a requirement for companies to set quantifiable water use targets and ensure that companies and regulators put in place water management plans.

The CERES report comes even as the US Geological Survey upped its estimate of oil and gas potential at key shale formations in North Dakota, South Dakota and Montana.

The USGS said the Bakken and Three Forks Formations were estimated to contain a mean of 7.4 billion barrels of undiscovered, technically recoverable oil.

The two formations are also thought to contain an average of 6.7 trillion cubic feet of undiscovered technically recoverable gas and 0.53 billion barrels of natural gas liquids.