"Wastewater treatment in the Marcellus Shale alone will likely exceed $3 billion/year in less than ten years as drilling in this massive (natural gas field) accelerates," Boenning & Scattergood water-stock analysts Ryan M. Connors told clients in a report today, citing a study by Penn State..

It takes up to six million gallons of water to use hydraulic fracturing ("fracking") to drive natural gas into production from a single well in the Marcellus rock formation in Pennsylvania and nearby states. Drillers contemplate tens of thousands of wells; Boenning expects 3,300 Marcellus wells by 2020, pumping water at 14 cents a gallon.

"Most of this water returns to the surface in the form of a contaminated liquid," containing "chlorides and sulfates as well as heavy metals," and other caustic compounds, " the disposal of which presents yet-to-be-fully resolved challenges for gas companies," Connors writes.

Exxon is so afraid stricter water-quality legislation could derail shale-gas drilling that the company "inserted a protection clause allowing it to walk away should new laws restrict the company from fracking" in its $41 billion deal to buy Marcellus driller XTO Energy earlier this month.

What to do with all the contaminant? In Texas and Louisiana shale fields, where water-quality laws are relatively lax compared to Pennsylvania, West Virginia and other Eastern states, drillers just truck it across the plains and dump it down thousands of dry oil wells; their big concern is water supply and recycling. But in upstate PA, where water laws are stronger and roads are mountainous, wastewater disposal is expensive.

Some frackers send the water to municipal treatment facilities, but those "are designed to treat biological, not chemical, wastewater."

The best solution, Connors and Roomberg write, is to boil the water away (with natural gas burners), leaving the bad stuff as industrial solids. They urge investors who want to exploit the industry to consider mobile water-treatment unit makers, including small firms like Canada-based Aqua-Pure and Ecosphere Tech; larger, region-sized boilers are made by Siemens, General Electric and other big manufacturers.