Large quantities of water are associated with the production of coalbed methane (CBM) in the Powder River Basin (PRB) of Wyoming. The chemistry of co-produced water often makes it unsuitable for subsequent uses such as irrigated agriculture. However, co-produced waters have substantial potential for a variety of beneficial uses. Achieving this potential requires the development of appropriate water management strategies. There are several unique characteristics of co-produced water that make development of such management strategies a challenge. The production of CBM water follows an inverse pattern compared to traditional wells. CBM wells need to maintain low reservoir pressures to promote gas production. This need renders the reinjection of co-produced waters counterproductive. The unique water chemistry of co-produced water can reduce soil permeability, making surface disposal difficult. Unlike traditional petroleum operations where co-produced water is an undesirable by-product, co-produced water in the PRB often is potable, making it a highly valued resource in arid western states. This research project developed and evaluated a number of water management options potentially available to CBM operators. These options, which focus on cost-effective and environmentally-sound practices, fall into five topic areas: Minimization of Produced Water, Surface Disposal, Beneficial Use, Disposal by Injection and Water Treatment. The research project was managed by the Colorado Energy Research Institute (CERI) at the Colorado School of Mines (CSM) and involved personnel located at CERI, CSM, Stanford University, Pennsylvania State University, the University of Wyoming, the Argonne National Laboratory, the Gas Technology Institute, the Montana Bureau of Mining and Geology and PVES Inc., a private firm.