The oil and gas industry needs new technologies to solve its mounting water problems, according to a new report by the London Environmental Investment Forum.

The 2014 LEIF Brief on Water Innovation in Oil and Gas, sponsored by Veolia Water Technologies, notes that the market for water technology is growing globally and so is investment appetite in the sector. As a result, entrepreneurs are responding with innovative new solutions. Yet when new water technology start-ups face the oil and gas industry there is a clash of business cultures. This needs to be overcome if innovation is to succeed and water problems are to be solved.

The industry's spending on water management solutions and services is expected to reach $38 billion in 2014 and is forecast to grow at a rate of 6 percent annually through 2020.

North America is the fastest growing region, with annual growth at an estimated 14 percent, because of the boom in shale extraction in the United States and oil sands development in Canada.

In the East Asia/Pacific region, coal seam gas in Australia accounts for a significant proportion of growth. Advanced treatment technologies, including reverse osmosis, are already being employed, the report said. And there are plans for additional water treatment plants to cope with the produced water volumes from Australia's CSG-to-LNG export projects.

Meanwhile, in the Middle East and North Africa, projected increases in production in Iraq will require substantial investments in produced water treatment. At the same time, more efficient management of produced water will be necessary to maintain production levels in the Gulf Cooperation Council (GCC) countries.

With produced water from all regions having a high salt content, desalination technology is considered a "hot sector" along with its sister industries, brine concentration, evaporation and crystallisation. New technologies in chemicals and in separation and recovery are also attracting investor attention.

The LEIF report quotes Global Water Intelligence, which said earlier this year that the oil and gas industry is increasingly becoming a water management industry.

"By 2020, the industry will generate over 500 million barrels of produced water a day. With effective management this water can be a source of value, as disposal options become limited and environmental regulations tighten," GWI stated.