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New Mexico, the No. 2 state for oil production behind Texas, is looking to its energy sector and water-intensive fracking as a potential source of treated water for industrial applications — and to offset water demands that are depleting freshwater aquifers amid drought.

“We need to protect our fresh groundwater supplies not only from degradation or contamination but from overuse,â€� said John Rhoderick, director of the water protection division at the °µÍø½ûÇø Department. “We need to do everything we can to maintain those supplies because they’re not being replenished.â€�

He said initially rules would only allow for “closed loop� projects involving treated oil-field water, with no discharge.

“Although this identifies and encourages pilot projects and demonstration projects, they have to be non-discharging," Rhoderick said. "We feel that’s the safest way to do it.�

In a related legislative proposal from Gov. Michelle Lujan Grisham, New Mexico would underwrite by buying treated water that originates from oil and natural gas drilling. The governor is seeking a $500 million appropriation by the Legislature for the project.

That initiative doesn't aim to provide potable water but rather a supply of treated water for emerging businesses ranging from microchip manufacturers to hydrogen fuel producers that separate the element from water in an energy-intensive process. Critics fear the plan might only spur more drilling for petroleum.

Rhoderick said New Mexico communities already reuse about 40% of residential wastewater after treatment and purification to irrigate city parks, playing fields, landscaped roadway medians and more. But broader reuse options are needed to ensure economic and population growth in the future, he said.

“We felt the need to give some clear direction and certainty to industry because we need them to invest in the technologies and the science,� said Rhoderick.

The proposed rules are an outgrowth of 2019 state legislation that encourages the oil and natural gas industry to favor water treatment, reuse and recycling over reliance on natural aquifers. Concerns about water overuse include depletion of the vast underground Ogallala Aquifer that sustains communities in eastern New Mexico and extends to the Dakotas and Wyoming.

Collaboration on the proposed rules included a public-private research consortium anchored by New Mexico State University. Private consortium sponsors include energy conglomerates Chevron and ExxonMobile, oil services provider NGL Energy Partners and infrastructure firm Tallgrass Energy, a developer of hydrogen ventures in New Mexico.