The move to tap petroleum-rich shale reserves in some of the country’s driest regions, including Colorado, may be setting up a battle between oil and water.

The water is needed for hydraulic fracturing, a process that pumps millions of gallons of sand and water into a well to crack the hard shale and release oil and gas.

Nearly half of the 39,294 reported “fracked” wells drilled in the U.S. since 2011 are in regions with high or extreme water stress, according to a report by Ceres, an investor and environmental-advocacy group.

In Colorado, Ceres found that 97 percent of the wells are being drilled in highly or extremely highly water-stressed areas, such as the Denver-Julesburg Basin.

In 2013, two-thirds of the 1,839 new wells in Colorado were drilled in Weld County, the heart of the DJ Basin.

“Fracking isn’t using a lot of water yet, but it is a new use,” said Gary Wockner, director of the Save the Colorado River Campaign. “If it gets embedded in the economy, other uses won’t be able to compete.”

The water demands for fracking — a process used since the 1940s — have soared with the advent of horizontal wells, which can stretch 2 miles underground.

A vertical well in the DJ Basin uses about 350,000 gallons of frack water; a horizontal well uses about 10 times as much, according to industry data.

“Hydraulic fracturing is happening in places that are already facing high competition for water,” said Monika Freyman, senior manager of the Ceres water program.

Steps are already being taken in Colorado to address the potential conflict, industry representatives and regulators say.

More than a year ago, the state began requiring operators to identify water volumes used in fracking individual wells, and the amount of recycled water involved, said Matt Lepore, director of the Colorado Oil and Gas Conservation Commission.

“There are things being done to resolve the friction with this new water user,” said Ken Carlson, head of the Center for Energy and Water Sustainability at Colorado State University.

These include water and fracking-fluid recycling, utilizing water that can’t be used for drinking or irrigation and centralizing facilities to be more efficient.

“But there is no doubt there are some winners and losers in the DJ Basin,” Carlson said.

The CSU center, which has received financial backing from the industry, is working with companies on the use and management of water and ways to increase recycling.

In the gas-rich Piceance Basin, Encana Corp., one of the top operators, recycles 90 percent of the fluid and water from its wells, said company spokesman Doug Hock.

But in the DJ Basin, Encana has not been able to achieve those rates because of geological and economic factors, Hock said.

“Every basin is different, and in the DJ, where they are drilling for oil instead of gas and using heavy gels, recycling is harder,” Carlson said. “Less than 10 percent of the water is being recycled.”

Ceres based its study on company drilling reports filed with FracFocus.org and federal data on groundwater depletion and drought.

In Colorado, the DJ Basin on the Eastern Plains and the Piceance Basin on the Western Slope were areas of drilling activity and water stress.

The Eagleford and Permian basins in Texas had the most acute water problems, the report said.

“What happens as drilling expands and population grows — there has to be a better accounting of what’s going on,” Ceres’ Freyman said.

The Ceres report recommends getting better data on the sources of fracking water, more recycling and technology improvements and closer cooperation among all the water users in shale basins.

“What is needed is more state oversight and regulation of fracking water resources,” said Deb Nardone, director of the Sierra Club’s Beyond Natural Gas Campaign.

In Colorado, the two largest operators in the DJ Basin — Noble Energy and Anadarko Petroleum — are taking steps to better manage water, company officials say.

Houston-based Noble is getting 85 percent of its water from supplies that do not compete with drinking-water resources, said company spokesman Jonathan Ekstrom.

For example, Noble is looking at drilling wells as deep as 1,000 feet to water that is too salty for municipal or farm use, CSU’s Carlson said.

Anadarko is adding multiple treatment systems in the basin, piping instead of trucking water and using “closed-loop” systems to better manage fluids, said company spokeswoman Robin Olsen.

Anadarko, based in The Woodlands, Texas, is also looking for new hydraulic-fracturing chemicals that are more easily recycled, Olsen said.

Encana and Noble have also been developing centralized drilling facilities where drilling and recycling can be done more efficiently, Carlson said.

Still, the state oil and gas commission is projecting that demand for fracking water will grow by 35 percent between 2010 and 2015 to 6.1 billion gallons.

That still represents about one-tenth of 1 percent of all the water used in the state.

“The statewide number is deceiving,” Carlson said. “In the DJ, you have farmers who may have trouble finding water.”

In Colorado, 86 percent of the state’s water is used by agriculture. Municipalities and industry use 7.4 percent.

While oil and gas companies have created a small market for water, it hasn’t had a major impact on farms, said Bill Midcap, a spokesman for the Rocky Mountain Farmers Union.

“There are cases where companies have bid up water to more than farmers can afford, but it is in a few cases,” Midcap said.

In 2012, the Northern Colorado Water Conservancy District held an auction of excess water.

For the first time, two oil-service companies were among the bidders, said Brian Werner, a conservancy spokesman.

Still, all 91 bidders, mostly farmers, got water, and the average price was $28 an acre-foot, Werner said. (An acre-foot is generally believed to be enough to serve the needs of two families of four for a year.)

Several water utilities are also selling water under long-term contracts.

The city of Aurora has a five-year contract to lease Anadarko 1,500 acre-feet of effluent water a year for $9.5 million.

Water prices have, however, soared on the so-called rental market, where municipal water utilities sell excess water. An acre-foot has fetched as much as $1,500.

“That is too pricey for a farmer,” Werner said.

Mark Jaffe: 303-954-1912, mjaffe@ denverpost.com or twitter.com/bymarkjaffe

High amounts and dry regions

U.S. counties with the highest water use for fracking in drought-stressed regions in 2012:

Garfield (Colorado)

1.9 billion gallons

Karnes (Texas)

1.7 billion gallons

Weld (Colorado)

1.3 billion gallons

Gonzales and Glasscock (Texas)

0.9 billion gallons Source: Ceres’ “Hydraulic Fracturing & Water Stress”