New Mexico Hub Turns Shale’s Wastewater Into an Asset

Select and Occidental expand Lost Tank, recycling water and cutting freshwater use across the Permian

17 Feb 2025

In New Mexico’s oil patch, water is becoming less a waste problem and more a shared opportunity. Select Water Solutions and Occidental have expanded their Lost Tank recycling hub, transforming the way shale producers handle one of their biggest challenges.

The facility, once a modest recycling site, now treats around 180,000 barrels of produced water a day and can store nearly 1.9 million barrels. When it launched in 2022, capacity was just 60,000 barrels per day. A 13-mile pipeline now connects the hub to Occidental’s Mesa Verde wells, allowing treated water to flow back into operations without fleets of trucks clogging local roads.

Both companies say the results go beyond efficiency. Recycling water cuts costs, eases dependence on freshwater, and improves environmental performance. What used to be a regulatory headache is starting to look like a competitive edge.

The shift also addresses growing community and regulatory concerns over wastewater disposal, especially in regions where deep well injection has been linked to seismic activity. By reusing more water, producers can reduce disposal volumes and keep drilling programs moving.

Still, recycling is no silver bullet. Water chemistry varies by site, and some streams are too saline or contaminated for economical treatment. When drilling slows, so does the need for recycled water, making utilization rates uneven. Building regional networks brings its own challenges, from pipeline permits to land access and coordination among operators.

Even so, the Lost Tank expansion hints at where the industry is headed. Select says it plans to link more producers into the network over time, creating a system where water moves in loops rather than one-way trips underground.

For a sector known for its boom-and-bust cycles, turning waste into value might prove to be the most sustainable innovation yet.