Produced water is fluid that is an incidental byproduct from drilling for or the production of oil and gas. Most produced water is naturally occurring, highly saline water that is recovered during oil and gas production. Produced water may also include fluids that were used during drilling, such as hydraulic fracturing fluids. (NM House Bill 546)

In 2021, New Mexico's oil and gas industry generated approximately 60 billion gallons of produced water, over 160 million gallons per day, equal to New Mexico's total daily municipal water consumption.

Treated produced water has the potential to augment or substitute for fresh water in many fit-for-purpose uses in a time of long-term climate aridity and declining freshwater availability in New Mexico.

New Mexico Environment Department (NMED) and New Mexico State University (NMSU) entered into a memorandum of understanding in September 2019 to create a produced water research consortium to support NMEDs implementation of House Bill 546, the 2019 Produced Water Act.