There are two (halves of) water tunnels. I encountered Kreztik in the southern one of the two. Location was -356, 90, -560 and it was roaming.
This is not to say it doesn't spawn in the northern half, but i does (at least) spawn in the southern one).
edit: Just killed him in the northern half. So, it would appear it'll spawn anywhere the Velium Crawlers do.
Edited, Jan 28th 2023 2:26am by theBammer