Texas just handed oil companies control of produced water in new court ruling

Who actually owns the massive volumes of produced water generated during drilling?

By Brammhi Balarajan, Trending News Reporter  July 1, 2025

In a landmark decision, the Texas Supreme Court ruled that drilling companies—not surface landowners—hold ownership rights to produced water, the wastewater generated during oil and gas extraction.

The ruling, issued in Cactus Water Services v. COG Operating, resolves a key question: who actually owns the massive volumes of produced water generated during drilling?

At the core of the Reeves County court battle, as first reported by Inside Climate News, was whether produced water is classified as oil and gas waste, which would render it the property of drillers, or groundwater, which Texas law deems the property of the surface owner. 

"We hold that a deed or lease using typical language to convey oil-and-gas rights, though not expressly addressing produced water, includes that substance as part of the conveyance whether the parties knew of its prospective value or not," Justice John Devine wrote in the ruling. 

If a surface owner wishes to maintain ownership of produced water, that must be agreed upon and contracted beforehand, the Court ruled. 

 "That being so, if the surface owner actually wants to retain ownership of constituent water incidentally and necessarily produced with hydrocarbons, the reservation or exception from the mineral conveyance must be express and cannot be implied," Justice John Devine said in the ruling. 

Disposing of produced water has historically been one of the costliest burdens on oil and gas companies. However, as new potentially lucrative avenues for produced water have opened up—the question of ownership has become more contentious. 

In Texas, which generates more produced water than any other state in the U.S., companies have long been scrambling to find a solution for the massive amounts of produced water. Texas' Permian Basin generates about half a billion gallons of produced water per day. 

Companies have typically injected the water back underground, before concerns of earthquakes caused tighter regulations on their ability to do so. 

As oil and gas companies look for ways to repurpose the water, some solutions that have cropped up include retreating and selling fracking wastewater, or reinjection for further oil recovery.