Water management framework

A risk-based, cyclical process for effective

water management

Environment

Advancing environmental
and social performance

www.ipieca.org

Second edition
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Water management framework
A risk-based, cyclical process for effective
water management

The global oil and gas association for advancing environmental and social performance

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Contents

Summary 5 Section 4: The water management framework 15

4.1 Stakeholder and regulatory 17
Section 1: Introduction 6
engagement
Section 2: Water use in oil and gas 9 4.2 Planning 18

Section 3: The water landscape 12 4.3 Implementation and operation 20

3.1 Water scarcity and stress 13 4.4 Evaluation 22

3.2 Regulatory response 14 4.5 Management review 23

3.3 Stakeholder response 14 Related IPIECA resource 24

References 26
Summary
The IPIECA Water management framework is a risk-based,
cyclical process of planning, implementation, evaluation
and review that can be implemented by the oil and gas
industry through the lifecycle of an operational asset from
design and planning, through construction, operation
and decommissioning.
Its application can help companies demonstrate their
contribution to SDG 6, clean water and sanitation
for all, and in particular SGD 6 targets regarding efficiency
in water use and reducing pollution from wastewater
discharge.
5 Water management framework
With the publication of this framework, IPIECA is
encouraging a consistent approach to water management
on the basis of an in-depth understanding of the
hydrological, socio-environmental and regulatory
conditions of a new project or operation.
Application of the framework can be supported by
IPIECA guidance documents on risk management,
assessing appropriate sources of water and routes to
discharge wastewater, water efficiency, water reuse
opportunities and the disclosure of water management
performance metrics.
 Section 1

Introduction
This section introduces the second
edition of the water management
framework and the areas where it has
been updated. It describes how the water
management framework facilitates an
improved and integrated approach to
water resource management, and the
three common approaches to water
management in the oil and gas industry.

6 Water management framework

Section 1
Introduction
The effective management of water is an important aspect
of oil and gas operations. This is particularly important
as the industry contributes to the energy transition, and
the critical role that water plays in alternative energy
production. IPIECA has been promoting the use of good
practices in water management across the industry,
following the publication of the first edition of the Water
management framework in 2013.
This framework was developed to help the oil and gas
sector respond to broader global concerns about water
availability and quality and to enhance the industry’s
efforts to implement sustainable water management.
Since the publication of the first edition of the framework
in 2013, IPIECA has developed a number of guidance
documents and training packages applicable to different
stages of the framework. Similarly, risk identification
and management processes and tools have matured
(IPIECA, 2020; IPIECA, 2014 (a)). Since their publication,
the Water management framework and associated good
practice guidance and tools have formed an important
part of members’ sustainable water strategies.
This update to the framework reflects these changes,
as well as the lessons learnt from IPIECA members in
applying the framework since 2013, and feedback from
stakeholders.
The revised IPIECA Water management framework
remains a risk-based and cyclical improvement process
with four key stages (i) planning, ii) implementation, iii)
evaluation, and iv) review, driven by the identification of
risks and potential opportunities. This framework can
be applied across any local hydrological, environmental,
social-economic and regulatory conditions and is not
limited to conditions of water stress and scarcity.
IPIECA’s water goal
To be the recognised leader in water management
for the oil and gas industry, delivering proactive and
collaborative approaches to meet challenges in the
availability and quality of water at existing and future
operations and as IPIECA members contribute to the
energy transition.
7 Water management framework
The Water management framework facilitates:
• an integrated approach to water resource
management, addressing the multidisciplinary aspects
of water management, both through the lifecycle of an
operation and across the value chain (from exploration
to customer use);
• the adoption, of all or elements, of the framework
within an oil and gas company’s operating
management system;
• a continuous improvement approach to meet the
local hydrological, socio-economic, environmental,
regulatory conditions and future changes in water
management practices;
• the adoption of an approach at a catchment or aquifer
basin level scale to identify risks and opportunities
beyond direct operations;
• the adoption of IPIECA good management practices
and tools; and
• communication with external stakeholders on how the
industry is managing and protecting water resources.
Implementation of the framework can also contribute to
UN Sustainable Development Goal 6 (SDG 6), to ‘ensure
availability and sustainable management of water and
sanitation for all by 2030’. In particular, the framework
contributes to two key SDG 6 targets:
• Target 6.3. By 2030, improve water quality by reducing
pollution, eliminating dumping and minimising
the release of hazardous chemicals and materials,
halving the proportion of untreated wastewater and
substantially increasing recycling and safe reuse
globally.
• Target 6.4. By 2030, substantially increase water-use
efficiency across all sectors and ensure sustainable
withdrawals and supply of fresh water to address water
scarcity and significantly reduce the number of people
suffering from water scarcity.
As a risk-based framework, it is flexible both in how it is
adopted by IPIECA member companies (e.g. as a stand-
alone system or integrated into the company’s operating
management system) and how it can be applied in
different local settings: hydrological, environmental, socio-
economic and regulatory.
Section 1
Introduction

Based on IPIECA member feedback, there are three Water stewardship

common approaches to water management depending
In some settings, a stewardship approach may be more
upon the risks and unique local conditions: compliance
effective, by engaging with other water users, local
management, operational efficiency; and water
regulators and policymakers to develop shared solutions
stewardship1, as described below.
to water resource constraints, whether quantitative and/
or qualitative. Such a stakeholder inclusive process can
Compliance management
be best driven through public-private partnerships. The
In some settings, effective regulations exist to allocate shared solutions arising from stewardship can be the
water resources between different users, including the most effective and long-term approach to managing
environment. These regulations protect water resources catchment-scale risks. IPIECA’s Water management
from over-exploitation and pollution to the benefit of all framework can be used to guide the oil and gas
water users within the local areas, watershed or aquifer company’s contribution to the approach.
basin. In these locations risk reduction is likely to be
related to maintaining compliance and working with the
regulatory bodies to influence public policy position, an
approach that can be effective through applying IPIECA’s
Water management framework.

Operational efficiency
In some areas, the risk assessment may identify
constraints in water resource availability, either existing
and/or in the future as demand increases or supply
lowers. In these cases, risk management could involve
seeking to lower demands on the freshwater resource,
by avoiding freshwater use, reducing use and/or
recycling water. This could be combined with motivating
other operators to improve their operational efficiency,
including recycling water between users to lower the
overall demand on the freshwater resource. This could
be achieved directly or through engaging with local
stakeholders and policies which promote environmental
performance. IPIECA’s Water management framework
can be used to improve operational efficiency by
providing guidance throughout the operation lifecycle.

2
Water stewardship - the use of water that is socially and culturally equitable, environmentally sustainable and economically beneficial, achieved through a
stakeholder-inclusive process that includes both site and catchment-based actions (A4WS, 2020, www.a4ws.org/about).

8 Water management framework

 Section 2

Water use in oil and

gas
This section provides an overview of how
water is used and managed throughout
the value chain of oil and gas operations.

9 Water management framework

Section 2

Water use in oil and gas

The oil and gas industry withdraws fresh, brackish and
saline water, including sea water, for numerous activities
throughout upstream exploration and production
and downstream refining, chemicals production and
marketing. The industry also manages large volumes
of produced and wastewaters. Water and wastewater
management uses in the oil and gas industry are
summarised in Figure 2. In terms of global freshwater
volumes withdrawn, the oil and gas industry is a relatively
low user of water. The International Energy Agency (IEA)
estimated that oil and gas production accounted for
<3% of energy sector withdrawals and the energy sector
accounts for around 10% of total global freshwater
withdrawals (Figure 1). However, at a local level the
proportion of withdrawals can be much higher, particularly
where there is a high concentration of oil and gas
activities.

Figure 1: Freshwater withdrawal and consumption in power generation and primary energy production (IEA, 2016)

Power: renewables
2%

Power: nuclear
28% Coal 3%

Natural gas 2%

Primary energy Oil 2%

productions
12%
Power: fossil fuels
Biofuels
58%
7%

Total withdrawals: 398 bcm

10 Water management framework

 Figure 2: Water use across the oil and gas value chain

11
Section 2

Boiler feed, cooling waters, washdown,

Drilling
Hydraulic fracturing
All qualities of water
hydrostatic testing, firewater, pressuring Primary water use
oil reservoirs and enhanced oil recovery
Water types used
Limited freshwater
Sea water and other non-freshwater sources
Water use in oil and gas

Recycled produced water Primary wastewaters

Drilling fluids
Flowback water1 Waste process and cooling waters Wastewater management
Produced waters2 Storm water runoff

Water management framework

Produced water2
Variable degrees
of treatment for Treatment before discharge back to
recycling, third party environment, injection to pressurize oil
use and disposal reservoirs or injections in deep formation

Hydrostatic testing Cooling water, boiler feed, Washdown, hydrostatic

of pipelines and washdown, hydrostatic testing, firewater
storage vessels testing, firewater
Fresh and saline waters
Freshwater Reclaimed water (e.g. (sea water)
treated sewage effluent)
Wastewaters
Wastewaters Desalter effluent and other Storm water runoff
process effluents
Storm water On site wastewater
Treated for discharge treatment and/or
or re-use Wastewater treated for third-party treatment
recycling (internally and
externally) and discharge
back to the environment

EXPLORATION OIL AND GAS TRANSPORTATION REFINING AND TERMINALS

PRODUCTION CHEMICALS AND RETAIL
 Section 3

The water landscape

This section describes how a number of
factors have changed the water landscape
over time. These factors have resulted in
increasing water stress and scarcity, which
in turn lead to a change in regulatory and
stakeholder response.

12 Water management framework

Section 3
The water landscape
Industrial water management practices have evolved in recent years. This has primarily been in response to changes in
water availability in many locations, caused by factors such as population growth, urbanisation, industrial development,
climate change, food security and water degradation. All these factors combine to increase the extent of water scarcity
and stress across a number of regions of the world.
3.1 WATER SCARCITY AND STRESS
Global demands on fresh water are increasing, and water
is an unevenly distributed resource. For the ninth year
in a row, the World Economic Forum’s Global risks report
highlighted the water crisis as a top-five risk in terms of
impact, while companies have reported water scarcity,
flooding, drought and water stress as the top water-
related risks (CDP, 2017). Non-renewable or fossil water
resources are also often exploited and, in many cases at
an increasing pace (Scheierling and Treguer, 2016).
The reliability of water supply in terms of availability,
quality (affected by pollution) and accessibility (allocation,
competition and conflict) are key to the continued and
successful functioning of the industry. The implications
of a water crisis are of concern to water-consumptive
industries, creating pressures to innovate and find
technological solutions.
In areas of water scarcity and stress, the human right to
fresh water and sanitation is often unmet. By 2050, 40%
of the world’s population is projected to live under severe
water stress (UNESCO, 2020). Water scarcity and stress
can also be a potential source of conflict for communities
and countries.
Water availability and quality may become more
unreliable as the climate changes. Food security, human
health, urban and rural settlements, energy production,
industrial development, economic growth and thriving
ecosystems are all water-dependent and thus vulnerable
to the impacts of a changing climate. In some areas this
unreliability may aggravate water stress and scarcity,
causing water stress and scarcity in additional regions in
the future, while there could be an increase in water
13 Water management framework
• Water scarcity is defined as a lack of availability
in water due to either a physical shortage, a lack of
access due to the failure of institutions to ensure
a regular supply and/or due to a lack of adequate
infrastructure (UN Water, 2020).
• Water stress is defined as the ratio of total water
withdrawals to available renewable surface and
groundwater supplies (WRI, Aqueduct, 2019).
availability in other areas (WRI Aqueduct, 2021). In some
locations, water-related hazards may also become more
frequent and severe. In addition, the quality of freshwater
bodies is likely to vary more (e.g. temperature, dissolved
oxygen and chemical concentrations) impacting water
treatment requirements for public water supply and
industrial use.
While it is essential for water management to adapt to
climate variability, from countering the effects of floods
to addressing increasing water stress for agriculture
and industrial use, water management can also play an
important role in mitigating climate variability. Water
efficiency measures have a direct effect on energy
savings, which can lead to the reduction of greenhouse
gas emissions (GHGs) (UNESCO, 2020). Without proper
water governance, there is likely to be increased
competition for water between sectors and an escalation
of water crises of various kinds, affecting a range of water-
dependent sectors. Water is also at the heart of adaptation
to climate variability, serving as the crucial link between
the climate system, human society and the environment
(UN Water, 2019).
Section 3
The water landscape

3.2 REGULATORY RESPONSE The shared nature of water challenges means that
no single company, industry, government or sector of
In many countries, water regulations are changing in
society can ensure a water-secure future on their own.
response to acute issues such as droughts, increased
Coordinated and collective action at the watershed level
long-term demand and declining water quality. These
is needed to find new, sustainable ways to ensure access
regulations are generally developed at a local level, with
to water in a changing world. Over the coming decades,
limited consistency between regions and countries. In
companies will need to build the case for increased
response to this tendency, different regions of the world
investment in innovative technological and business
are increasingly working together and influencing each
solutions (e.g. seeking to gain competitive advantage,
other’s approaches. One recognised example of this
using water valuation, or engaging in water stewardship).
collective effort is in offshore discharges regulations.
If successful, the outcome can deliver significant financial,
The increasing concern over the marine environment,
social and environmental benefits. Where appropriate,
can potentially strengthen discharge regulations as
water stewardship can offer a unique collaboration
revealed in the 2019 IPCC special report on the ocean and
opportunity for local users. This includes companies
cryosphere in a changing climate. (IPCC, 2019).
reducing risks, mitigating impacts and ensuring business
continuity, while at the same time contributing to water
It is anticipated that changes in water stress and
security through collective action with governments, the
scarcity, regulations and societal expectations could
industry and civil society.
add constraints to oil and gas operations. The risks of
demand outweighing supply will vary in severity by region
depending on current and future water pressures, as well
as the capacity of the region to adapt. On a global scale,
the SDGs and other international initiatives2 are focused
on improving access to reliable water supplies, protection
of the marine environment and management of water
resources at government, industrial and consumer levels.

3.3 STAKEHOLDER RESPONSE

Stakeholders including governments, non-governmental
organizations (NGOs), industry, academia and civil society
are increasingly demanding that the human right to
clean water and sanitation be met, first across company
operations, then across supply chains. Stakeholders have
also increased expectations on businesses to engage
in water stewardship, develop collective actions and
disclosure regarding how they manage water risks and
contribute to improving water availability in areas of water
scarcity and stress. Investors are now including water and
wastewater management metrics to their environment,
society and governance (ESG) rating indices (MSCI, 2020;
Sustainalytics, 2020). Some governments, NGOs and
industries are also conducting natural capital assessments
to understand the value of impacts on the environment,
including water withdrawals and discharges (Natural
Capital Coalition, 2016).

2
e.g. The UN High Level Panel on Water. Convened by the UN Secretary-General and President of the World Bank Group and consisting of 11 sitting heads
of state and government and one special adviser, to provide the leadership required to champion a comprehensive, inclusive and collaborative way of
developing and managing water resources and improving water and sanitation related services.

14 Water management framework

 Section 4

The water
management
framework
This section outlines the key principles of
the water management framework, and
discusses each step of the framework
in detail; stakeholder and regulatory
engagement, planning, implementation
and operation, evaluation and
management review.

15 Water management framework

Section 4
The water management framework
IPIECA’s water management framework is based on the
following five principles:
1. Risk - The framework follows a risk-based approach.
Water risk is defined as the potential for current and
future water-related challenges to impact people, the
environment, and/or business viability, arising from
a company’s activities and environmental and social
externalities (IPIECA, 2020). These risks can be physical,
regulatory, geopolitical, financial or reputational and
are a function of the likelihood of a specific water-
related challenge occurring and the severity of its
impact. The severity of the impact depends on the
intensity of the water-related challenge, and the
environmental, social and business vulnerabilities.
2. Flexible - The framework is flexible to meet the most
appropriate tailor-made water management approach
to mitigate the local water risks and opportunities
identified. Furthermore, it provides the flexibility to
adapt as water risks emerge and are identified, and it
can be customised to suit different sizes of projects.
3. Collaborative - A collaborative approach to address
water-related risks and opportunities leads to more
efficient mitigation strategies for current, future and
emerging water risk at a watershed level. The intent
is to build on the responsible approach already
taken by the industry and extend it further through
identification and understanding of the potential
impacts on ecosystem services and the needs of
other users. Similarly, the promotion of collaboration
within the industry can lead to progressive industry
partnerships and greater efficiency of water use.
4. Holistic - A holistic view across the value chain,
from exploration, through production and refining to
product development and retail, can be taken. This
includes identifying and understanding potential
synergies and trade-offs with social and environmental
aspects. These aspects include, but are not limited to,
GHGs, climate change, energy demand, air emissions,
waste management and regulatory aspects.
5. Continuous improvement - The framework follows
a standard management system approach (similar
to ISO MS 9001 and ISO MS 14001), considering a
continuous improvement cycle in which lessons learnt
are used to improve the water management approach.
Furthermore, by following the standard management
systems it is easily translatable into a company’s
management system.
16 Water management framework
The framework focuses on three main operational
aspects; water sourcing, water use and efficiency; and the
management of produced water, wastewater and other
effluents. However, the framework is not limited to the
operational aspect but is designed to cover other aspects
of water management, based on the five principles set
out above.
Sources of water
The appraisal, selection and use of water resources
by the oil and gas industry needs to consider
sustainability factors (quality impacts and quantity
constraints), and adopt measures that consider and
respect the rights and needs of other local water
users, as well as considering the net environmental
effect (e.g. energy use, waste generation and air
emissions) of different options.
Operational use and efficiency
Efficiency can include replacing freshwater use
with non-freshwater sources, reducing water
consumption, and the reuse and recycling of water
need to consider their net environmental effect.
Water efficiency within oil and gas operations can be
optimised using technology and other management
practices that are appropriate to the local social,
environmental and economic conditions. Processes
and reuse/recycle initiatives to optimise water use
are also opportunities for freshwater conservation
and efficient water use across industries and
operations.
Produced water, wastewater and other
effluents management
Identification of treatment options for untreated
discharges should consider similar sustainability
factors, and the net environmental effect as
outlined for water sourcing. The reuse and recycling
opportunities, either internally within the operation
or externally with third parties, should be recognised
and assessed, and where possible prioritised, by
balancing technical, social and economic factors
with the net environmental effects. This will ensure
that the desired reuse and recycling of water does
not come at other environmental costs (e.g. high
levels of emissions, increased energy expenditure or
other detrimental effects from treatment, increased
land footprint, increased risk of spills etc.).
Section 4
The water management framework

Figure 3: The Water management framework

W
EVIE
NTR PL
AN
E

M
• Risk

NI
GE assessment

NG
NA
• Review • Water sources
MA

performance and routes for

• Set direction discharge or
for next cycle disposal
• Governance • Watershed
level approach
• Monitoring systems
STAKEHOLDER
AND
REGULATORY
ENGAGEMENT

• Water data • Operational water

ON
reporting efficiency
• Risk opportunities

ATI
management • Water synergies

ER
review and trade-offs

OP
• Monitoring
EV

• Supply chain
AL

D
AT

AN
U

IO N
N IO
AT
E NT
IM PLEM

4.1 STAKEHOLDER AND REGULATORY • The stewardship approach is undertaken jointly

ENGAGEMENT
Stakeholders are any individuals, groups of individuals or
organizations that can affect, or are potentially affected
by, an organization or its activities (e.g. local communities,
other water users in the watershed, regulators, local
and international NGOs). Stakeholder engagement is
central to the Water management framework. It takes
place throughout the process, with different aspects
of engagement being undertaken at each stage.
Engagement is about communicating with stakeholders
to develop a common understanding and seek
agreement on solutions to issues of concern. The level
of engagement depends upon the local environmental,
social and economic conditions as identified through the
risk assessment:
• The compliance approach requires engagement
mainly with regulators.
• The operational risk management approach
seeks to develop a consultation strategy with
financial stakeholders belonging to the water
management sector.
with external parties (such as other industries, local
government and communities within the watershed)
with the aim to advance collective action and
sustainable water management for the watershed.
Important factors that should be taken into account
when planning stakeholder engagement include the
regulatory environment within which activities are taking
place, water governance in the local jurisdiction, and
the project’s geographic and social sphere of influence.
Stakeholder engagement also overlaps with other
IPIECA focus areas, for example, social responsibility and
human rights3 (IPIECA, 2021, 2013, 2015). The early
involvement of interested parties is crucial for successful
water management, and the company should adopt
an appropriate strategy for stakeholder management,
including engagement level definition, mapping, action
plan development and review.

Further information on community engagement and Indigenous Peoples can be found on the IPIECA website: www.ipieca.org/our-work/people/
3

working-with-local-communities/

17 Water management framework

Section 4
The water management framework
4.2 PLANNING
Although this section focuses on risks, the sources
of water, watershed understanding, and valuation
and monitoring, the planning of all aspects of water
management is essential. In all planning activities, it is
important to consider the full system and the synergies
and trade-offs as outlined in Section 4.3.
Risk assessment
In the oil and gas industry, water risks are a function of the
likelihood of a specific water-related challenge occurring
and the severity of its impact, which in turn depends on
the intensity of the challenge and the vulnerability of the
exposed elements.
To identify, evaluate, understand and respond to water-
related risks, IPIECA developed the Water risk in the oil
and gas industry: an overview (2020). The document
defines water risk, identifies key requirements of a
water risk tool, and reviews publicly available water
risk tools from the perspective of oil and gas industry
requirements, considering the need for both climate
variability adaptation and mitigation. A three-step process
is recommended to estimate and respond to local water
and financial risks:
• Step 1— water risk screening: screen for
environmental and social externalities and prioritise
assets within a company’s portfolio that have a high
dependency and impacts on water.
• Step 2— local water risk assessment: for priority
locations, evaluate the physical, regulatory and
reputational risk pathways and probabilities of events
leading to potential financial losses at the local level.
• Step 3— develop action plans: to prevent, mitigate or
adapt to the different water risk pathways.
Water sources and routes for discharge
For an oil and gas development, it is important to identify
the potential sources of water and the approach to be
taken for the management of effluents required for the
operation. IPIECA developed the Identifying and assessing
water sources guidance (2014). Although this guidance
was written to identify and assess water sources for new
oil and gas developments, the same principles can be
applied to existing operations potentially looking to adjust
current water sources and for projects to identify and
assess the most suitable means of managing effluents
(wastewater and produced water).
18 Water management framework
The scale of the water source assessment should be
appropriate for the environmental setting of the particular
operation and the assessment should identify any adverse
impacts so that they may be mitigated to ensure the
sustainability of the water source.
Water source assessment can cover the following
processes, as shown in Figure 4:
1. Water demands and wastewater volumes:
- Building a water demand profile and quality needs
of the water.
- Wastewater volumes and quality.
- Early assessment of water efficiency and withdrawal
reduction strategy.
- Regulatory standards for withdrawals and
discharges.
2. Identification of water sources and discharge routes
for treated wastewater in the project area:
- Conceptualizing the drainage basin and/or aquifers,
contributing drainage basins, demands from other
users, the current level of water stress and climatic
variability (precipitation/evaporation).
- Identifying potential sources of fresh, brackish
and saline water (e.g. surface water, groundwater,
rainwater and municipal water supply), together
with potential alternative sources of low-quality
water (e.g. municipal wastewater, produced water).
- Identifying potential uses of wastewaters, within
the operation or potentially with third parties, and
discharge or disposal routes.
- Assessing the area of influence for both the
potential water withdrawals and discharges or
disposals.
3. Identification of current and future water status:
- Screening for water availability and stress, using the
water risk tools outlined in Water risk in the oil and
gas industry: an overview (IPIECA, 2020).
- Assessing baseline conditions.
- Understanding future variations, including how the
demands may change throughout the lifecycle of
the operation, as well as changes in both the oil and
gas development and other factors like population
growth, industrial growth and agriculture. This
can also include the projected impacts of climate
change.
Section 4
The water management framework

4. Assessment of impacts, risks, opportunities and Watershed level approach

uncertainty of exploitation on the available sources,
taking into account other factors that may affect
the sustainability of the water source, including:
- Potential cumulative effects.
- Effects of changes in population and economic
demands in the area of influence.
- Uncertainties associated with climate
considerations of ecosystem services, which may
be impacted by both withdrawal and discharge.
5. Water source selection:
- An options appraisal, which aims to identify the
technical aspects of how each alternative source
could be developed, evaluates the financial costs
associated with developing each alternative source,
and identifies the environmental trade-offs related
to developing each alternative source (including
other drivers such as energy consumption, air
emissions, land footprint and waste management).
Figure 4: Water source and discharge route assessment
Define water demands and
wastewater volumes
• Water uses and quality
• Wastewater volumes, effluent quality
and standards for discharge or disposal
REFINEMENT AND RE-APPRAISAL AS NECESSARY
A watershed level approach is broadly understood as
water management ‘beyond the fence line’ i.e. outside
a company’s operational area. It takes into account the
range of stakeholders, domestic and industrial activities,
processes and factors that play a role in determining the
availability, quality, distribution, management and use of
water within a watershed. This includes hydrology and
land use, as well as broader political, economic, social
and ecological factors. In some cases, it also extends to
understanding the importance that different stakeholder
groups, individually and cumulatively, place on water
in each of its competing uses (e.g. irrigated agriculture,
hydropower, fisheries, industry, municipal use, transport
and shipping and habitat for wildlife).
In order to minimise their impacts on the water
environment and other water users, one of the first steps
that companies can take is to characterise the watershed
in terms of water availability (i.e. identifying the alternative
sources and their respective yields) and water demands
(i.e. identifying key water users and their respective needs,
including the needs of wildlife and the environment). This
is not prescriptive but appropriate to the nature of the
operation and operational environment.
Moreover, in a given watershed, companies need to
consider not only the competing demands on supplies,

STAKEHOLDER AND REGULATOR ENGAGEMENT

but also the impacts of activities and how these may affect
Identify potential water sources and
routes for discharge or disposal
their societal licence to operate, their reputation among
• Conceptual model shareholders and customers, and their ability to retain or
• Area of influence and stakeholder map attract investor confidence.

Identify current and future water status As a result, implementing a watershed level approach is
• Baseline conditions beneficial to oil and gas companies as it helps: to better
• Water availability, including future
understand impacts and dependencies on water supplies;
projections
the risks and opportunities of competing demands from
Assess impacts, risks, opportunities
other water users; regulatory compliance (and anticipating
and uncertainties future changes in regulation); and as well as maintain
• Quantification or promote reputation among both shareholders and
• Appropriate mitigation measures customers. The adoption of such an approach is useful to
the implementation of the water stewardship approach,
Options appraisal and business which is intended as shared resource governance at
case development catchment scale.
• Benefits, costs and non-monetary
benefits assessment
• Reporting

19 Water management framework

Section 4
The water management framework
Monitoring systems
In order for continuous improvement of water
management and to meet the expectations of investors,
reporting standards and other stakeholders, it is important
that adequate monitoring of water is included in any
water management planning. The fifth edition of the
IPIECA-API-IOGP Sustainability reporting guidance
(2020) provides guidance on the types of water use and
discharge monitoring necessary for new projects and
existing operations in order to allow effective application
of the Water management framework.
4.3 IMPLEMENTATION AND OPERATION
The implementation and operation stages are key aspects
of any water management plan. During these stages, it
is important to apply and review the risk management,
water efficiency, watershed and supply chain
management assessments and measures identified in the
planning phase. Routinely monitoring these measures is
important to understand water and wastewater demands,
within and outside operational boundaries, and how
they are likely to change over the lifecycle of an oil or gas
operation.
Operational water efficiency opportunities
With increasing local demands on both the availability
of water resources and the ability of the environment
to assimilate wastewater discharges, the need to
optimise the efficiency of water use in oil and gas
operations is essential. Improving efficiency is also a key
contributor to SDG 6 and target 6.3 to improve water
20 Water management framework
use efficiency. To achieve this, a comprehensive and
detailed balance of water use at the site level should
be assessed, and water efficiency opportunities should
be identified and appraised. This includes following an
appropriate mitigation hierarchy (Figure 4), potentially
including collaborative action within a water stewardship
programme. It may also involve replacing fresh water
from a particular process, for example, the use of low-
quality water for hydraulic fracturing and enhanced oil
recovery, or the use of treated effluent as cooling tower
make up water in manufacturing sites. Water reuse or
recycling should be evaluated in the same context as
other sources, with similar consideration of the associated
technical, economic, social and environmental factors.
The appropriateness of different treatment systems, the
volume and quality limitations and cost constraints all
need to be considered when assessing the technical and
financial viability of reuse/recycling. The effects of water
efficiency initiatives should be accountable and monitored
through dedicated performance metrics.
Research and development plays a fundamental role in
the identification of new water efficiency opportunities.
Information on existing and emerging technologies for
improving water efficiency can readily be shared among
industry users via IPIECA. Water efficiency processes
will vary based on the geographical and environmental
settings and the type of oil and gas activity. These
processes should take into account a lifecycle evaluation
of the overall environmental and energy consumption
aspects that may be influenced by water efficiency
implementation.
 Section 4
The water management framework
Figure 5: The water mitigation hierarchy
AVOID
Take steps to avoid use of water in a process
REPLACE
Change to a non-freshwater source or alternative
wastewater/produced water discharge/disposal
REDUCE
Lower freshwater demands
Adopt water conservation measures across asset
REUSE AND/OR RECYCLE
Reuse and recycle water within operation
Transfer used water for third party use
REPLENISH
Return water to the catchment through collaboration
activities within the catchment
Water synergies and trade-offs
The design, location, configuration and distribution of
energy and water assets and facilities is an important
aspect of water management. Appropriate management
measures should not be delivered in isolation but could
incorporate a lifecycle approach, including an assessment
of the energy use, GHG and air emissions, and waste
management from water and wastewater management
systems, in addition to the economic valuation required4.
By taking a systems-based approach, it is possible to
develop water efficiency opportunities with co-benefits
such as GHG emission reduction and reduced impacts to
biodiversity.
Examples include:
• Use of renewable energy sources or recoverable ‘free’
energy from waste heat and geothermal sources
to power water treatment and water recycling
opportunities.
4
IPIECA (2014) Identifying and assessing water sources, includes a monetary and non-monetary appraisal methodology for evaluating water opportunities.
21 Water management framework
• Cogeneration solutions for energy production utilising
bioenergy within wastewater treatment systems to
generate fuel and energy.
• Use of energy recovery from heated cooling waters.
• Reduction of water transportation through planning
and co-location of facilities.
• Use of reed beds to treat wastewater, that creates
biodiversity and GHG co-benefits.
Oil and gas water treatment systems produce by-products
that include large volumes of brine, salt, hydrocarbon,
wastewater sludges and/or other concentrated
contaminants in waste streams, both in liquid and solid
waste forms. Waste minimisation and beneficial reuse
of waste is a developing area in the management of
the impacts of waste disposal. A key point in waste
management is that increased reuse and recycling results
in an increased solid waste volume and concentration of
contaminants to manage. Managing and handling waste
also needs to be viewed in the wider context of responsible
water management and protection so that the social,
environmental and economic implications may be fully
understood.
Monitoring
In order to aid in reporting and performance management,
companies can monitor and collect data associated with
water withdrawals, discharges and consumption, in line
with the IPIECA-API-IOGP Sustainability reporting guidance.
Supply chain
Companies can have a direct impact on water
management in their own business, as well as an
indirect impact on their supply chain by encouraging
and facilitating suppliers’ actions to improve their water
management performance. Supply chain risk can include
exposure to water stress or scarcity, contamination of
local water resources, freshwater-intensive manufacturing
processes and their water risk management procedures.
The UN Global Compact CEO Water Mandate recommends
encouraging suppliers to improve their water conservation,
quality monitoring, wastewater treatment and recycling
practices through:
• building capacities to analyse and respond to
water risk;
Section 4
The water management framework
• encouraging and facilitating suppliers in conducting
assessments of water usage and impacts;
• sharing water sustainability practices – established
and emerging – with suppliers; and
• encouraging major suppliers to report regularly on
progress achieved on water goals.
4.4 EVALUATION
Water data and reporting
An understanding of the volumes and quality of water
withdrawn and the volumes and quality of waste, process
or produced water managed during the project or asset
lifetime, from the design stage to decommissioning,
is necessary to make water management decisions.
Water performance data are required as an input for
risk assessment, assessment of goals or targets and for
sustainability reporting.
Aggregated, company-level, non-financial performance
data can be informative for comparing relative
performance among different companies, such as
benchmarking exposure to water stress or scarcity. A
company can use such comparisons to evaluate its
performance relative to peers and identify areas for
potential improvement. Lack of water performance data
reporting and poor-quality information can negatively
affect how stakeholders perceive the industry.
The process of determining the quality of data or
information is referred to as assurance. Assurance is an
assessment of the quality of reported information and can
confirm application of general reporting principles. Many
companies have their own internal assurance processes.
External assurance can improve the quality and credibility
of data and information. This type of assurance tends
to either be audit-based verification or a third-party
commentary providing an external assurance statement.
IPIECA, in conjunction with API and IOGP, have published
the Sustainability reporting guidance for the oil and gas
industry, a guidance document on voluntary sustainability
reporting, which is periodically reviewed and updated to
ensure it remains current and relevant (IPIECA-API-IOGP,
2020). Sustainability reporting reflects the governance
and management of a company’s climate, environmental
and social impacts arising from oil and gas exploration
and production. Other well-established frameworks that
are frequently used by investors and investment rating
agencies include:
22 Water management framework
• Global Reporting Initiative (GRI) - a well-established
non-profit organization that has developed
sustainability reporting guidelines, now published
as a set of global standards. They feature a modular,
interrelated structure covering a range of economic,
environmental and social topics.
• Task Force on Climate-Related Financial Disclosures
(TCFD) - established in 2015 by the Financial Stability
Board, the TCFD was tasked with developing voluntary,
consistent climate-related financial disclosure
recommendations that would be useful to investors,
lenders, and insurance underwriters in understanding
material risks.
• Sustainability Accounting Standards Board (SASB)
an independent non-profit whose mission is to
establish industry-specific disclosure standards across
environmental, social and governance topics that
facilitate communication between companies and
investors about financially material, decision-useful
information.
Improved transparency through the disclosure of water
metrics enables the oil and gas industry to track water
management performance and to enable communication
of these efforts to address stakeholder concerns. For
example, investors are seeking greater transparency on
exposure to water-related risks such as water stress or
scarcity, performance data to enable peer comparison,
and commitments, goals or targets related to the
reduction of freshwater consumption or intensity.
In addition to water data reporting, the distribution of
good practice guidance documents presenting case
studies as examples of good practice in action can be an
effective way of communicating and demonstrating water
management performance. This can also help to drive
improvement in water management across the industry
through knowledge sharing.
Risk management review
A key aspect of the evaluation stage is to review
potential water management risks. This will require data
collected from operations along with data from other
users within the watershed or aquifer basin. An updated
risk assessment provides evidence on whether the risk
management mitigation and adaptation measures have
achieved the level of risk reduction required and how
water use, availability and quality have changed within the
wider environment.
Section 4
The water management framework

4.5 MANAGEMENT REVIEW Governance

Governance provides the structure and processes through
Review performance
which the water management objectives for a company
Management review helps to evaluate if the water are set, progress against performance is monitored and
management actions taken address water-related results are evaluated. Governance describes the decision-
business risks, and if mitigation and adaptation making and accountability hierarchy from subject matter
measures are appropriate to reduce the consequence, experts, senior leadership, executive leadership to a
severity or likelihood of occurrence for identified water company’s board. Senior and executive management
risks to acceptable levels. This is based on the risk and responsibilities in assessing and managing water-related
data evaluation described in Section 4.4 Risk risks and opportunities and broad oversight of material
management review. risks is part of a company’s governance process. The role
of senior management can include accountability for
Set direction for next cycle the corporate water strategy and approval of corporate
processes including risk management standards, long-
The use of standard reporting and consistent data
term planning and public water performance reporting.
collection supports management review and
assessment of performance and allows benchmarking
against other operations both internally and across the
industry. A management review process that integrates
feedback from corporate function managers as well
as site, project or asset managers enables improved
alignment and continuous improvement of the water
management strategy.

23 Water management framework

 Related IPIECA
resources

24 Water management framework

Related IPIECA resources
Efficiency in water use
The guidance presents a systematic process for the
onshore oil and gas industry to identify and assess
potential measures to improve water efficiency via
incorporating the principles of water stewardship,
integrating water resource management and risk
assessment throughout the life of an operation.
Identifying and assessing water sources
A systematic process for the onshore industry to select
water sources that best meet project needs within the
broader context of local or regional water management.
The guide is applicable to both new projects and existing
operations and uses case studies to provide practical
examples of the process stages outlined.
Reuse of produced water from the onshore
oil and gas industry
A fact sheet evaluating the opportunities and challenges
of reusing produced water for the onshore oil and gas
industry.
25 Water management framework
Sustainability reporting guidance for the
oil and gas industry
The Sustainability reporting guidance for the oil and
gas industry is a key tool to help companies shape the
structure and content of their sustainability reporting.
Published in partnership with the American Petroleum
Institute (API) and the International Association of Oil
& Gas Producers (IOGP), it brings together the collective
wealth of technical expertise from the membership of
the three associations.
Water risk assessment in the oil and gas sector
A high-level overview of how companies in the oil and
gas sector can define, assess and respond to water risks,
presenting an approach to assessing and responding to
water risks that builds on current industrial practices and is
applicable at portfolio and site levels.
Visit the IPIECA website for further information and
resources: www.ipieca.org
 References

26 Water management framework

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IOGP, 2014, Recovered water management study in shale
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IOGP, 2020, Risk based analysis for produced water,
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27 Water management framework
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projections-data
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