CARRIZO SPRINGS, Texas—Water has always been a concern for 65-year-old Joe Parker, who manages a 19,000-acre cattle ranch here in South Texas. "Water is scarce in our area," he says, and a scorching yearlong drought has made it even scarcer.

What has Mr. Parker especially concerned are the drilling rigs that now dot the flat, brushy landscape. Each oil well in the area, using the technique known as hydraulic fracturing, requires about six million gallons of water to break open rocks far below the surface and release oil and natural gas. Mr. Parker says he worries about whether the underground water can support both ranching and energy exploration.

Darrell Brownlow, another cattle rancher, says that if the economically depressed region has to choose between the two, the choice should be simple.

Mr. Brownlow, who has a Ph.D. in geochemistry, says it takes 407 million gallons to irrigate 640 acres and grow about $200,000 worth of corn on the arid land. The same amount of water, he says, could be used to frack enough wells to generate $2.5 billion worth of oil. "No water, no frack, no wealth," says Mr. Brownlow, who has leased his cattle ranch for oil exploration.