A system includes a downhole rotary separator located within the well formation and configured to generate a hydrocarbon rich stream and a first water stream from a well fluid obtained from a production zone. The system also includes an electrical submersible pump disposed within the well formation and operatively coupled to the downhole rotary separator, wherein the electrical submersible pump is configured to transfer the hydrocarbon rich stream to a surface of the earth. The system further includes a surface separator located on the surface of earth and operatively coupled to generate oil and a second water stream from the hydrocarbon rich stream. The system also includes a hydraulic motor disposed within the well formation and operatively coupled to the downhole rotary separator, wherein the hydraulic motor is configured to drive the downhole rotary separator using a drive fluid comprising the hydrocarbon rich stream or the second water stream.