Thanks Centsworth. Following the references in that paper back a stage brought me to this paper:
http://www.pnas.org/content/102/48/17337.full
I'll quote the conclusion:
So it seems it is possible for microbes to generate most of their internal water, at least when their metabolisms are running high. It's not a very big leap from there to microbes that can generate all their internal water.
Is naturally occuring liquid water really a prerequisite for life to survive? It might still be needed for life to start, but thereafter perhaps chemical disequilibrium and abundant carbon become more important.