Texas produces nearly six million barrels of oil every day — but alongside it comes roughly 30 million barrels of produced water.
So what happens to all that water?
On this episode of The Crude Truth, Rey Treviño III welcomes back Texas Railroad Commissioner Jim Wright for an in-depth conversation about one of the biggest challenges facing the state’s oil and gas industry: produced water.
Commissioner Wright explains how the shale revolution dramatically changed the way Texas handles produced water, why deep-well injection has contributed to seismic activity in parts of the Permian Basin, and how increasing underground pressure is creating new operational and economic challenges for producers.
The conversation also explores a potential solution: treating produced water so it can be safely reused for irrigation, industrial applications, data centers, and potentially other water needs across drought-stricken areas of Texas.
Jim also discusses the regulatory questions surrounding the Railroad Commission and TCEQ, the need for clearer authority between agencies, and why Texas must move quickly to develop practical, economically viable solutions.
With growing demand for water, expanding energy production, and new industries like AI data centers coming to Texas, produced water may no longer be something the state can simply dispose of.
It could become a resource.
Watch the full episode to hear Commissioner Jim Wright explain what Texas is doing now — and why the decisions being made today could have a major impact on the future of the state’s energy industry, water supply, and economy.
Key Points Summary
1. The Produced Water Crisis in Texas
The central issue is that Texas oil and gas operations produce approximately 30 million barrels of water daily alongside 6 million barrels of oil. The ratio is about 5 barrels of water for every barrel of crude oil produced. This massive volume of produced water has become a critical challenge with no clear disposal solution.
2. The Shale Revolution and Its Unintended Consequences
The technological breakthrough around 2008 that enabled horizontal drilling into tight rock formations (the “shale revolution”) dramatically increased oil and gas extraction. However, it also created the water disposal problem because water can no longer be injected back into the same formation where it was extracted without compromising production efficiency.
3. Seismic Activity and Injection-Induced Earthquakes
Deep injection of produced water into lower formations has triggered seismic activity, particularly in the Permian Basin and Delaware play. The Railroad Commission established “seismic response areas” (SRAs) that restrict deep injection, forcing operators to use shallow injection (0-10,000 feet), which creates over-pressurization issues and increases drilling costs by approximately $1 million per well.
4. Regulatory Challenges and Jurisdictional Confusion
There’s ongoing tension between the Railroad Commission and the Texas Commission on Environmental Quality (TCEQ) regarding authority over produced water treatment and discharge. Commissioner Jim Wright testified before the Senate Natural Resources Committee seeking clarity on where each agency’s authority begins and ends.
5. Produced Water Reuse and Treatment Solutions
The podcast explores innovative uses for treated produced water, including:
Irrigation and agricultural use (successful pilot programs showing tree growth in West Texas)
Municipal water supply (treated to drinking water standards)
Industrial cooling for data centers
Desalination to create usable water sources
6. Water Scarcity in West Texas
Communities west of the 98th Meridian (Corpus Christi, Midland, Odessa, Laredo, Del Rio) face severe drought conditions. Developing new water sources is critical for economic survival, as water costs are projected to increase from $3.90 to $22 per thousand gallons without alternative sources.
7. Economic and Competitive Implications
The discussion emphasizes that:
Without solving the water problem, Texas could exit the oil and gas business within 5 years
Texas has the potential to become the “next OPEC” but needs to remove impediments like the water crisis
Improved relationships with Canada (for crude blending) are essential for market access
Economic solutions must avoid burdening taxpayers
8. Public Perception and Data Communication
Commissioner Wright emphasizes the importance of educating the public that treated produced water is safe and comparable to other water sources already in use (municipal water treatment, desalination, recycled water on cruise ships). The key is presenting data and facts to overcome public skepticism.
Thank you, Commissioner Wright, as there is a reason Texas leads the US in energy dominance, and the Railroad Commission is critical to the United States' exports! - Rey.
Reach out to Rey on his LinkedIn here: https://www.linkedin.com/in/reytrevinoiii/
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