By Kelly Bennett, CEO, B3 Insight
For decades, asset teams in the Permian Basin focused almost exclusively on maximizing oil and gas production. Water, though ever-present, was treated as a logistical burden—an operational byproduct to be disposed of quietly and cheaply. Disposal availability was a foregone conclusion.
That era is ending.
Today, water is emerging as both a defining constraint and a potential strategic lever in how operators manage production, capital costs, and both regulatory and economic risk.
A Defining Shift
The transformation began in the mid-2010s with the surge of horizontal drilling and high-intensity hydraulic fracturing. While longer laterals and of oil, depending on location and formation.
By the late 2010s, produced water was no longer a routine operational consideration—it had become a production bottleneck. Disposal constraints delayed wells and curtailed output, reshaping capital allocation and development plans. At the same time, environmental, social, and governance (ESG) expectations elevated water stewardship to a board-level priority. Today, water management isn’t just a boardroom topic—it’s a strategic lever, with water teams playing a decisive role in shaping development plans, investment decisions, and operational risk strategies.
According to our most recent data in our The Permian Basin Water Market Trends & Forecast Report, each day, the Permian Basin generates over 21 million barrels of produced water, barrels per day by 2035. Disposal infrastructure has struggled to keep pace, with rising formation pressures reducing injectivity and regulatory constraints tightening in response to seismicity concerns.
An Industry-Wide Reorganization
In response, companies have restructured how water is managed:
- Third-Party Partnerships. Many operators rely on specialized water midstream companies to provide disposal and logistics solutions, securing operational continuity while freeing internal resources for production optimization.
- Integrated Models. Many embed water engineers and planners within asset teams, ensuring disposal capacity and recycling plans are part of the development strategy from inception. In many cases, these teams advise diverse aspects of planning and operations and have an increasing influence on decisions.
- Centralized Water Divisions. Others create standalone water management or midstream groups to design and operate dedicated water infrastructure networks. These teams may be highly siloed in supply chain organizations or commercial teams, while others may coordinate more closely with drilling and completions teams.
Most companies adopt a hybrid approach, balancing capital efficiency with operational flexibility to navigate dynamic regulatory and geological constraints.
There is an ongoing shift in many E&P companies to a more integrated model, whereby irrespective of reliance on water midstream, water-related roles touch more functions in a company. Given the importance of water to operations, this is a very good thing.
Organizational Adaptation and New Skillsets
This evolution is not just about individual expertise; it is driving organizational redesign. Effective operators integrate water management into asset planning, production operations, regulatory compliance, business and corporate development, and capital budgeting workflows. Asset teams are increasingly called upon to:
- Forecast produced water volumes with precision
- Navigate complex SWD permitting, seismicity restrictions, and pressure concerns
- Plan water infrastructure buildouts in alignment with drilling and production schedules
- Manage landownership considerations, surface use agreements, and water rights
- Optimize recycling and reuse strategies to reduce disposal dependence
Geomechanics and subsurface pressure modeling expertise are now essential to ensure safe injection operations and long-term asset integrity, further adding the technical depth needed in water management teams. Predictive water forecasting capabilities, once peripheral, have become central to proactive field development and operational risk management.
Beyond the Permian
While these dynamics are most acute in the Permian, similar trends are emerging in other U.S. basins. Water management is becoming a core operational and strategic consideration across the industry, reshaping how companies plan, develop, and steward their assets.
Looking Ahead
In the Permian and beyond, the future belongs to operators who can anticipate how water constraints shape their production, capital allocation, and regulatory risk—and adapt accordingly. As formation pressures rise and disposal options tighten water management is no longer an ancillary operational concern. It is a strategic factor that will define the next decade of U.S. shale development.
Transforming water from a constraint into a strategic advantage will require data-driven insight, cross-disciplinary collaboration, and predictive intelligence—hallmarks of resilient, forward-looking operators in an increasingly complex energy landscape.
If you’d like to discuss how these dynamics intersect with your operations, reach out to our team.