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(CNN Business) —  

America’s oil industry faces a number of challenges, including low oil prices, the rise of electric vehicles and proposals to limit fracking. But one of its biggest problems: The industry is running out of water.

The US oil boom is being driven mostly by the growth of fracking — injecting water into shale formations to free up deposits of oil and natural gas that were never economically accessible before.

But much of that oil and natural gas is found in the most arid parts of the country, where water is scarce.

“We’re in the middle of desert,” said Jerry Morales, mayor of Midland, Texas, ground zero for the fracking boom. “And two years ago we came out of a seven-year drought.”

But water use by the oil and gas industry in the Permian Basin, an area of West Texas and New Mexico that is at the center of the fracking boom, has shot up from only 1 billion gallons in 2011 to 84 billion gallons last year, according to data from University of Texas senior research scientist Bridget Scanlon.

The growth of fracking has also caused a massive jump in population, putting a strain on water resources in the region. That has left the oil companies scrambling to find the water they need.

The towns of Midland and neighboring Odessa, Texas, are now selling most of their municipal waste water to oil companies for use in their injection wells. Pioneer Natural Resources (PXD), one of the leaders in the field, agreed to spend $130 million to upgrade the waste water treatment facility of Midland, Texas, in return for the right to buy its waste water for up to 40 years. The company is using about 5 million gallons a day of municipal waste water to help it reach the up to 21 million gallons of water it uses every day.

A pump station in the water infrastructure system that supports Pioneer Natural Resources fracking operations in Midland, Texas.
A pump station in the water infrastructure system that supports Pioneer Natural Resources fracking operations in Midland, Texas.
PHOTO: Pioneer Natural Resources

“Having that source of water definitively sets us apart from our competition,” said Dennis Lithgow, vice president of infrastructure development & operations for Pioneer in the Permian Basin.

The 21 million gallons of water Pioneer uses on a typical day would be enough to fill 42 Olympic-sized swimming pools. Lithgow said very little of the water it uses is fit for human consumption. Besides the waste water, most of the well water it uses comes from deep aquifers that produce a brackish water not suitable for drinking.

During the collection of oil and gas, Pioneer collects about 21 million gallons of water. That water is even more contaminated than deep aquifer or waste water. In the past, the oil industry has not been able to reuse much of that water, but recently Pioneer has started to learn how and is reusing about 5 million gallons of water a day.

Most of the water captured as oil and natural gas are collected can’t be used for anything and must be disposed of in wells nearly a mile or more deep, far below the aquifers used as a source of water.

Human water supplies could be threatened by the industry sending so much water into the Earth’s shale layers as part of the fracking process or disposal wells, according to Amy Mall, senior advocate for the Natural Resources Defense Council.

That’s because that water use is disrupting what is known as the “water cycle” through which water naturally circulates between land, atmosphere and bodies of of water in order to become drinkable once again.

“But with fracking, that is water that is taken out of the water cycle. In Texas water is increasingly in short supply. There’s growing demand for increasingly scarce resource,” said Mall.

But the University of Texas’ Scanlon said that fracking’s demand for water still trails what is used by agriculture. And she agrees with the industry’s position that much of the water being used in fracking wouldn’t be available for anything else.

“Treating this water does not seem viable at this point,” she said.