A growing water crisis in the Permian Basin of West Texas is prompting oil companies to explore unconventional buyers for their byproduct: wastewater. Although traditionally disposed of through underground injection – a practice linked to seismic activity – increasing volumes and stricter environmental scrutiny are driving a search for alternative solutions, including potential sales to the technology sector.
The surge in wastewater stems from the hydraulic fracturing, or fracking, process used to extract oil and gas. Fracked wells produce significantly more water than oil, with the resulting brine being ten times as salty as seawater. Companies like XRI Holdings are expanding infrastructure to manage this flow, recently announcing a 230-mile extension to their existing pipeline network dedicated to transporting wastewater to treatment plants and back. XRI currently manages 1 million barrels of wastewater daily, recycling 800,000, though this remains a little fraction of the total volume produced in the Permian Basin.
The economics of wastewater management are shifting. Matthew Gabriel, CEO of XRI Holdings, explained that the pipeline network is key to making reuse economical, replacing the costly process of trucking water in and waste out. “You open a valve and you can have all the water you need,” Gabriel said. However, even with recycling, complete disposal remains a challenge. A water management industry executive, speaking anonymously to the New York Times, noted, “No one wants to admit it, but at some point, even with reuse of this water, you have to confront the disposal question.”
The composition of the wastewater presents significant hurdles. High concentrations of dissolved salts, fracking chemicals, and minerals make it difficult to re-employ, even as frack fluid, necessitating expensive treatment processes that rarely achieve potable water standards. Halliburton’s global manager for water treatment, Larry Ryan, has stated the goal is wastewater reuse, “not to use the technology to make potable or drinking water.” Greenpeace has highlighted that fracking wastewater “recycling” does not return water to potability and is not occurring on a meaningful scale.
The potential interest from the technology sector arises from the increasing demand for water in data centers and semiconductor manufacturing. These industries require substantial volumes of ultrapure water for cooling and processing, and wastewater, even after treatment, could offer a cost-effective alternative to freshwater sources. However, the feasibility of this market remains uncertain, as the stringent purity requirements of these industries may necessitate further, advanced treatment technologies.
In 2022, a survey by a Texas consortium found that fracking companies were already reusing approximately 30% of their wastewater. Despite this increase, the overall volume of wastewater generated continues to rise, and the long-term solution to the disposal challenge remains elusive. The Energy Mix reported in July 2025 that shortsighted disposal practices were impacting profits.
As of February 2026, no formal agreements between oil companies and technology firms regarding wastewater sales have been publicly announced. The Texas Railroad Commission, responsible for regulating oil and gas operations in the state, has not issued any new guidance regarding the sale of wastewater to non-traditional buyers.
