When I was younger I was in an honor camp for felons taking a culinary program and was taught that you can add water to shortening to make a butter substitute.
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Shortening is all fat, while butter is fat with "other stuff":
Commercial butter is 80–82 percent milk fat, 16–17 percent water, and 1–2 percent milk solids other than fat. Source
Therefore, shortening plus water can provide a somewhat more accurate substitute than plain shortening. Even a major shortening brand recommends adding water when substituting for butter.
If you use shortening, but want an effect closer to butter, add 1 and 1/2 teaspoons water for every 1/4 cup of shortening. Source
To get a mixture that tastes a bit more like butter, you could use milk instead of water.
In most baking applications, the additional liquid can simply be added when other wet ingredients are mixed in.
Alternatively, combining them in advance can be done with sufficient beating, although this will incorporate air and potentially affect texture. See below a picture of shortening whipped with water for a pie crust recipe:
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I wouldn't use shortening + water as a spread on bread, for example; even though they combine well, it's really quite flavorless! – Erica Feb 26 '16 at 11:43
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Shortening is pure fat, while butter also contains milk particles and some water. While they sometimes can be interchanged, shortening doesn't have the same flavor profile as butter, and behaves somewhat differently. Some key properties which differentiate them, listed e.g. here are:
Shortening is 100% fat.
Butter has additional milk and water particles, and is not all fat.
Butter melts faster under heat.
Butter spreads thinner when melted.
Shortening retains a higher flexibility, and retains air, resulting in a higher rise.
Shortening products are softer.
Butter is used for flavor.
Shortening is used as a flavorless base.
Shortening can be exchanged for butter.
Butter cannot usually be exchanged for shortening.
Butter has uses in the kitchen beyond just baking.
While adding water to shortening might make it somewhat softer, fat and water doesn't in general mix well, so I doubt you'd have much luck with the method which was taught you.
Additionally even if you can get the consistency of the shortening similar to butter, it will still lack the milk particles which gives butter its flavor, making it unsuitable for many of the things you use butter for.
eirikdaude
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@Cindy I don't. I also don't think any part of my answer relies on any particular method being used, except that I note that mixing oil & water (well, fat and water) is tricky business? Without him providing more details in his question, it is hard for me to go into more detail in my answer. – eirikdaude Feb 26 '16 at 10:59
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The information in your answer is fine, but the OP is not asking for the differences between butter and shortening, nor is he looking for an equivalent to butter. He's asking about a substitution. – Cindy Feb 26 '16 at 11:08
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Honestly, I'm not quite sure what he is asking. It could be that he is asking about how to make margarine, it could be is asking for a butter substitute, it could be he is asking whether you can add water to shortening to make something to use in place of butter. My answer is to the latter of these, and expounds on why such a substitute won't be ideal in all cases, and that it's fairly tricky to make. @Cindy – eirikdaude Feb 26 '16 at 11:12
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@Cindy I think "the method which was taught you" is just referring back to the question saying "was taught that you can add water" - a general statement, not something about a specific method. And seems like pointing out the differences between the two is a decent way of evaluating the quality of the substitution, although it might help to mention a little more explicitly which of those differences the water addresses. – Cascabel Feb 26 '16 at 12:32