This past February, McDonald Hopkins hosted a seminar on the implications of water supply and use on shale energy. Last week, Barron’s had an interesting article that reviewed 4th quarter data from 2012 and then discussed the boom in natural gas. Simon Gottelier of Impax Asset Management notes in the article that, "We could be about to witness a modern-day equivalent of selling shovels during the gold rush."
Impax has invested in a number of companies that supply and treat water used in fracking. Those companies include: Aqua America, American Water Works, Heckmann, Veolia Environment, Xylem, and Gorman-Rupp. Heckmann was on of the headliners at our February event along with Consol Energy. While Consol is an active driller in the Marcellus and Utica, they are also developing their own water resource division and are extremely forward thinking and acting in their water activities.
The Barron’s article indicates that “Fracking, or hydraulic fracturing, pumps chemically treated water through rocks to extract oil and gas. Roughly 70 billion to 140 billion gallons of water are used in the 50,000 U.S. wells each year, enough to fill 150,000 Olympic-size swimming pools, and all that water must be transported, treated, recycled, or disposed.” Impax clearly is looking to be very active in this space. "Some of the best investment opportunities are in the suppliers helping the industry to operate more efficiently, reducing pollution, and meeting increasingly strict environmental controls."
I am not picking any stocks here! But, I do know Consol and Heckmann and the level of activity in this space is very significant.
Click here to view a replay of our water seminar.