Downhole water sink (DWS) technology controls bottomwater coning by draining water with a second completion placed under the oil-water contact. The technology has been studied theoretically with analytical, numerical and physical models, showing an increased rate of oil production and recovery. Also, improved wells' productivity with DWS has also been demonstrated in several field implementations. However, downhole drainage in DWS wells requires independent lifting of considerable volumes of water that necessitates using either two tubing strings (for water and for oil) or one tubing and the tubing/casing annulus - for water and oil, respectively. Also, extensive water drainage in the systems with weak bottomwater drive may cause a reservoir pressure drop and the need to return the produced water from the surface to the aquifer for pressure maintenance using designated injection wells. DWS well completion with the downhole water loop (DWL) offers the benefit of re-injecting the drainage water back to the same aquifer in the same well without lifting the water to the surface. This could be achieved by designing a DWS well with three completions: the top (oil) completion, the middle completion for water drainage and the bottom completion for water injection. Despite mechanical complexity of the triple well completion, there are two limitations of the DWL system - the drained-and-injected water must be free from oil and the pressure interference between the two water completions must be minimized. In this work, a well performance (nodal) analysis model has been developed for a DWL well completed in an oil reservoir underlain by water layer of known thickness. In the model, the positions (depths) of the three well completions and the rates of production and drainage/injection are design parameters, while all other properties are reservoir system properties. The model has been used to find the operational range of DWL for a given reservoir system and to compare DWL wells with conventional wells, single-completed at the top of the oil layer. The results show that for each DWL system, there is such a combination of the top production rate, bottom drainage-injection rate and drainage-injection distance (D/I spacing) that would result in water-free oil production. There is a minimum value of D/I spacing above which the detrimental effect of pressure interference between the two water completions is practically eliminated and the beneficial effect of water drainage on well performance is strong - a two-fold increase of water drainage rate would increase the critical oil rate by 80%. Also, because the minimum D/I spacing is relatively small, DWL wells may be installed in reservoirs with thin layers of bottomwater.