In a landmark move toward sustainable water management, Colorado has introduced new regulations requiring oil and gas operators to reuse at least 4% of produced water, the wastewater generated during drilling and hydraulic fracturing, by 2026. The rule, adopted by the Colorado Energy and Carbon Management Commission, marks the first statewide mandate of its kind in the US and aims to reduce reliance on freshwater resources amid growing drought concerns in the western US.
The reuse target will increase incrementally over time, reaching 10% by 2030 and, after benchmarks provided by the Colorado Produced Water Consortium, 35% by 2038. The legislation follows House Bill 23-1242, which directed state regulators to set enforceable water-reuse standards and implement mandatory reporting on water-sourcing and recycling practices.
Industry reactions have been mixed: some view the rule as a reasonable first step, while others warn of technical and economic challenges, especially in areas lacking the infrastructure to treat and transport produced water. Environmental advocates, meanwhile, argue that more aggressive action is needed to address long-term water scarcity.
The policy is expected to set a precedent for other arid states, balancing energy development with water conservation through a phased, measurable approach.
Colorado’s Subsurface Background
Colorado is home to several active oil and gas fields including:
- Denver-Julesburg Basin: Located in northeastern Colorado, this basin is the source of most of Colorado's crude oil production which comes from the Niobrara Shale Formation within the basin.
- Wattenberg Field: Located in the northern part of the state in Weld County, this field is among the top 10 US oil and natural gas fields based on proved reserves.
- Piceance Basin: Located in the western mountain region, Piceance is a primary crude oil-producing area in Colorado.
Hydraulic Fracturing Water Footprint
As of 2025, Colorado has 123,645 drilled wells, of which 35,259 are currently producing. However, not all of these wells have undergone hydraulic fracturing to enhance production.
Hydraulic fracturing requires large volumes of water, which are pumped into the wellbore at high pressure to fracture the underground rock formation. The volume of water needed depends on the geological characteristics of the formation. According to the USGS, water use per well can be anywhere from about 1.5 million to 16 million gallons.
According to the Colorado Produced Water Consortium, only 0.17% of the state's total freshwater consumption is used for hydraulic fracturing. By contrast, agriculture accounts for 85.2% of statewide water use. This highlights that, while each fracturing job uses a small share of Colorado’s overall water, the cumulative impact grows as the number of wells increases.
Final Thoughts
Colorado’s 4% recycling mandate marks a meaningful step toward sustainable water management in the oil and gas sector. Although the initial target is modest, it establishes a regulatory framework that encourages long-term investment in water-treatment infrastructure and supports a transition to more efficient water use. The proposed increase to 38% by 2038 offers a phased approach, allowing time for operators to adopt and scale up recycling technologies.
From an environmental standpoint, even modest reuse rates help reduce freshwater withdrawals and lower the volume of wastewater requiring disposal, an important factor in conserving groundwater and reducing seismic risks associated with deep well injection. Economically, while some operators may face higher short-term costs, particularly in areas lacking centralized treatment infrastructure, standardizing reuse practices could eventually improve water logistics and reduce operational expenses.
In addition, the new policy is expected to drive innovation in produced-water treatment, especially for high-salinity or chemically complex streams. Colorado’s leadership may also influence other arid, resource-producing states to adopt similar frameworks, advancing a more circular approach to water use across the energy industry.
Overall, this regulation represents a pragmatic step toward aligning oil and gas operations with long-term water-resilience goals.
For Further Reading
Colorado Drillers Must Recycle Fracturing Water Starting in 2026 Under First-In-The-Nation Rules by M. Jaffe, The Colorado Sun.
Colorado Oil and Gas Activity, MineralAnswers
How Much Water Does the Typical Hydraulically Fractured Well Require?, USGS
Initial Availability of Produced Water for Reuse and Recycling Analysis Report, Colorado Produced Water Consortium
