As U.S. oil production continues to grow, so will produced water, offering substantial market opportunities as operators look for ways to reuse or dispose of the dirty water, according to Raymond James & Associates Inc.

Overall, the produced water market in the United States may reach 54 million barrels/day by 2025, analysts said. Disposal and treatment costs for water typically run around $1.00/barrel, which means there is a $12 billion market in the Permian Basin alone, the biggest market with more than 60% of the country’s produced water.

“U.S. oilfield water production today is already a whopping 50 million barrels/day,” analysts led by J. Marshall Adkins said in a note Monday. “Given that the U.S. only produces about 15 million bbl of petroleum liquids each day, you can see that oilfield water production outpaces oil production by more than 4-to-1 on a national basis. For scale, this amount of water could cover over 8,000 football fields with a foot of water, each and every day.

“We estimate just under one-half of this water comes from today’s horizontal basins, despite making up close to 80% of onshore crude production…We expect a rising tide of water companies come to markets that allow for public investment in water disposal, with similar economics to traditional midstream,” Adkins and his colleagues said, echoing recent analyses by other firms.

The U.S. Geological Survey estimates that only 4% of all domestic water is used for “mining” activities, which include oil and gas. Digging deeper, Raymond James estimates 15% of the total “mining” water used is specifically for oil and gas fracturing activities.

Produced water is by no means a new problem for the industry. In fact, it remains below the previous peak from the 1970s. However, the produced water segment has grown by about 15 million barrels/day from 35 million 10 years ago.

The question Raymond James analysts said they are asked most is, how much produced water will there be? Because water production has similar type curves to oil production, it makes forecasting comparable.

The Raymond James team expanded its U.S. production by play model to cover produced water for the major onshore basins led by the Permian Delaware and Midland sub-basins, the Anadarko, Denver-Julesburg and Powder River basins, as well as the Eagle Ford and Bakken shales.

Onshore crude-only output from these major basins is forecast to grow to about 17 million b/d by 2030 from around 8 million b/d today.

“While absolute growth rate of water will be dampened by legacy conventional fields declining in production, the concentration of water growth in the Permian Basin and the lack of waterflooding for disposal, mean that spending and logistics on water, particularly disposal, are going to take a sharp ramp upwards over the next decade,” analysts said.

“We project total U.S. water production reaches 55 million barrels/d by 2025, and 60 million barrels/d by 2030.” The Permian alone is forecast to account for the bulk of the produced water, at 32 million barrels/day in 2025 and 38 million by 2030.

New wells in the Permian Delaware are coming online with water-to-oil ratios as high as 10-to-1, a level typically exhibited in old, conventional wells, analysts noted. Across the Permian, water-to-oil ratios of 4-1 or 6-1 are considered “normal.”

In the Midland, Eagle Ford and Bakken, the water-to-oil ratios begin at around 1- or 2-to-1 and expand slowly to 2- to 5-to-1.

“Even taking an impossibly bullish outlook for water recycling (100% of fracture water coming from recycling), we will still need 750 additional disposal wells in the Permian Basin.”

There remains a “large logistical challenge” in delivering water to the oil and gas well sites. However, Raymond James said there are opportunities in dirty water, with a “sustained logistical problem” in how the industry disposes of water produced by unconventional wells.