Water management has become a defining factor in the economics of U.S. oil and gas production. From sourcing and transport to treatment and disposal, its role now extends beyond operations to shaping drilling strategies, infrastructure investments, and energy security.

According to a new Insight Report by Bluefield Research, the U.S. midstream water market for oil and gas is projected to total US$156 billion between 2025 and 2030, averaging more than US$26 billion per year at a 2.1% compound annual growth rate. The expansion is being driven by strong energy demand in the U.S. and abroad, particularly in fast-growing sectors such as data centres and new export markets in Europe and Asia.

“For exploration and production companies, midstream water has shifted from a secondary concern to a priority for operational performance,” said Sophie Washington, senior analyst at Bluefield Research. “As operators face increasing water volumes and seismic risks, more efficient water management strategies will be key to reducing costs and ensuring reliable production.”

Midstream water—including supply, transport, storage, treatment, and disposal—plays a central role in oil and gas well completion. Transporting water, whether freshwater for operations or produced water from extraction, accounts for 43% of operators’ total water-related costs.

Due to rising transport costs, higher freshwater prices, and tighter disposal regulations, recycled produced water is expected to supply over 75% of the hydraulic fracturing demand in the U.S. by 2030.

“A 1,500% surge in seismic events in the Permian Basin between 2017 and 2022, combined with growing volumes of produced water, has made investments in reuse and pipeline infrastructure far more compelling than a decade ago,” Washington added. “These shifts underscore water’s role as a critical input shaping longer-term operational and investment decisions.”

The Permian Basin is set to lead U.S. midstream water spending, accounting for US$101.8 billion through 2030—nearly two-thirds of total market value. It is projected to require an average of 46.5 billion gallons of water annually for new well completions during the forecast period.

Secondary basins such as Eagle Ford (US$14.1 billion) and Bakken (US$13.0 billion) will also contribute to market growth, while the Appalachian Basin remains vital for natural gas production and U.S. liquefied natural gas exports. Regional characteristics—such as topography, transport logistics, and disposal options—will continue to shape basin-specific opportunities for midstream water operators.

Over the next five years, US$16 billion in capital expenditure is expected for water-related infrastructure. This includes pipelines aimed at reducing reliance on trucking, recycling facilities to enable large-scale reuse, and disposal wells under increasing regulatory scrutiny.

These investments reflect a broader shift toward efficiency, positioning operators to secure long-term cost advantages while meeting environmental and compliance requirements. The rise of more water-intensive drilling methods, including longer horizontal wells, is also influencing infrastructure needs. The average horizontal well now extends 12,000 feet and uses 7.8 million gallons of water, with some supermajors pushing beyond 20,000 feet—nearly four miles—setting new benchmarks for water demand.

Energy market volatility has accelerated consolidation and vertical integration in the midstream water sector. Since 2020, 32 mergers and acquisitions have reshaped the landscape, as firms pursue scale and integrated service models.

Leading operators include Select Water Solutions, Aris Water Solutions—recently acquired by Western Energy Solutions—and WaterBridge, which debuted its initial public offering on 17 Sep 2025. Together, they manage over 14,000 miles of pipelines and hundreds of produced water treatment facilities, positioning themselves as basin-specific leaders through partnerships with major exploration and production firms.

“The market’s maturation is reflected in the greater strategic and financial discipline shown by companies after years of volatility and consolidation,” said Washington. “With just over a decade of large-scale shale development behind it, the sector’s next chapter will increasingly be defined by more deliberate and innovative water strategies.”