New Mexico is teaming up with the U.S. Environmental Protection Agency to explore ways the wastewater that results from oil and gas operations can be reused or recycled.

The state and the federal agency announced the signing of a memorandum of understanding Thursday.

Ken McQueen, who oversees New Mexico’s Energy, Minerals and Natural Resources Department, says the state is one of the largest oil producers in the U.S. and that production is accompanied by even more wastewater.

He says clarifying the state and federal regulatory frameworks associated with its recycling and reuse is important, especially as New Mexico follows up year in which it produced a record 470,000 barrels of oil a day.

As part of the agreement, a workgroup will outline existing state and federal regulations and identify treatment and reuse opportunities.