The Business Brew James Davolos - Liquid Assets: Water’s Role in Oil’s Future
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Aug 6, 2025 James Davolos, a specialist in water solutions at Horizon Kinetics, dives into the crucial role of water management in the oil and gas sector. He discusses the rising significance of produced water, particularly in the Permian Basin, and how market misunderstandings can create investment opportunities. Davolos also explores unconventional investment strategies, behavioral investing, and the shifting dynamics in competitive landscapes. He emphasizes the need for innovative technologies and strong water management capabilities as essential for future energy success.
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Markets Are Driven By Behavior
- James Davalos argues markets are driven by human emotion rather than textbook finance models.
- Recognize behavioral investing to stay convicted through noisy, random market moves.
Produced Water Vastly Outscales Oil
- Produced water massively exceeds oil volumes and needs large transport, treatment, and disposal infrastructure.
- The Permian generates tens of millions of produced-water barrels daily, creating sustained demand for water services.
Produced Water Is Extremely Saline
- Freshwater has about 1,000 ppm total dissolved solids while produced water can reach ~150,000 ppm.
- Produced water contains sulfides, metals, hydrocarbons and far exceeds ocean salinity, so it requires heavy remediation.