State and federal officials hope to finalize by year’s end a draft proposal about how arid New Mexico can better use oil and gas wastewater.

With assistance from the U.S. Environmental Protection Agency (EPA), the state earlier this month published a white paper showing how streamlined regulations could enable more wastewater, which totaled more than 38 billion gallons last year, to be treated and reused.

With a drilling boom ongoing in the Permian Basin of southeastern New Mexico, the amount of industry wastewater is only expected to keep growing.

In July, New Mexico’s Energy, Minerals and Natural Resources Department and EPA signed a memorandum of understanding (MOU) to find ways to reuse and recycle oil and gas wastewater “for the economic benefit” of the state.

New Mexico Energy Secretary Ken McQueen said at the time that as the nation’s third largest oil producer, the state has ever larger quantities of produced water. “Clarifying the state and federal regulatory frameworks associated with its recycling and reuse is of the utmost importance,” McQueen said.

The goal of the MOU was to “synthesize” the existing regulatory framework under state and federal law in New Mexico and identify treatment and reuse opportunities.

State Engineer Tom Blaine said reuse of the wastewater “makes absolute sense,” adding that appropriate applications have “the potential to relieve the growing demand on our ground and surface water sources.”

A spokesperson for the New Mexico Oil and Gas Association told reporters that some operators already reuse and recycle wastewater for their own purposes, but a revamp of the regulations is needed to encourage other applications.