Water-recycling boom in the Permian

New laws could pump billions into rapidly growing industry

Whether by pipeline tanker, truck or hose, more water is moving around the arid Permian Basin than crude oil at any given moment.

Water has become the lifeblood of the modern energy industry, with hydraulic fracturing using a high-pressured slurry of water, sand and chemicals to unlock oil and gas from shale formations in Texas and across the country. In the arid Permian Basin, the nation’s

most productive oil field, drilling and fracking operations consume more than 195 million gallons of water per day — enough water to fill nearly 300 Olympicsize swimming pools.

This has made water and water management in the Permian a big business that’s only expected to get bigger, following the recent enactment of three laws in Texas and New Mexico, the two states encompassing the sprawling oil basin. The laws, which essentially clarify water rights issues and encourage the reuse of water, could pump billions more dollars of investment into the region’s rapidly growing water-recycling industry.

At least a dozen water-recycling companies operate in the Permian Basin, according to the Houston research firm Simmons Energy, and they are attracting increasing interest from private equity firms and other investors. In December, Houston oil field water company WaterBridge Resources secured up to $800 million in private equity money to add more water pipelines and disposal facilities.

So far this year, companies have made more than $2.5 billion of water-related mergers, acquisitions, private equity investments and other deals in the oil field, according to the global energy research firm Wood Mackenzie.

Those deals are only expected

XRI Water recycling in the Permian Basin is attracting interest. Midland oil field water company XRI, above, for example, bought the water-treatment and -recycling division of Dallas-based Fountain Quail Energy Services in April.