Global Strains on Water, Carbon Markets, and Trade Pose Risks to Energy Sector

Global energy systems face mounting pressures from water scarcity, the slow commercial scale-up of carbon capture, and disruptions to vital trade routes, according to a series of reports from OilPrice.com. These intersecting issues carry implications for North Dakota's oil and gas sector, from operational costs to market access.

The next major energy crisis could center on water, according to an August 17 OilPrice.com analysis. Power generation accounts for roughly one-third of water use in the United States, and climate change is exacerbating shortages. The report notes the Colorado River's flow has diminished, with Lake Mead at record lows, impacting hydroelectric power from Hoover Dam. In Europe, low river levels are hampering power plant cooling and fuel transport by barge. For energy-intensive operations, including Bakken production and refining, competition for a static or declining water supply could increase costs and operational complexity.

Meanwhile, the largest barrier to scaling carbon capture and storage (CCS) is not technology but commercial viability, a separate OilPrice.com report states. The European Commission aims for at least 50 million tonnes of annual CO2 storage capacity by 2030, but projects are stalled by a "bankability" problem where each participant in the chain—emitters, transporters, storage developers—waits for the others to commit first. The report highlights Norway's Northern Lights project as a new commercial model, selling transport and permanent storage as a service rather than requiring each emitter to build a dedicated chain. Its first phase provides 1.5 million tonnes per year of capacity, with a second phase intended to expand to at least 5 million tonnes per year from 2028.

Global trade routes for energy and key materials are under strain from both conflict and climate, a third report details. The Strait of Hormuz, closed to most ships since early March, is a transit point for 20% of the world's oil and high percentages of fertilizers and other materials. On the other side of the Arabian Peninsula, Houthi forces have closed the Bab el-Mandeb Strait to Saudi vessels, forcing tankers to take longer routes around Africa. Climate-induced drought is also crippling shipping; the Panama Canal now has wait times of 10 days due to low water, and Europe's Rhine River is at its lowest levels since 1880, forcing cargo onto more expensive truck and rail transport.

For Bakken operators, these reports underscore a landscape where input costs for power and water may rise, the pathway to large-scale carbon management remains commercially fraught, and global market access faces increasing friction from geopolitical and environmental stressors.