Since 2005, U.S. production of natural gas has increased exponentially, from a negligible amount to almost 7.5 trillion cubic feet in 2011. The U.S. is now the largest producer of natural gas in the world.

The new-found supply of this energy source has also had a significant effect on public policy. Domestic energy production, and natural gas in particular, is caught in a battle between proponents of sustainable sources of energy such as wind and solar, the interests of traditional coal-fired plants, national security interests in reducing dependence on foreign energy sources, environmentalists and proponents of natural gas.

The epic increase in the supply of natural gas has come from the effectiveness of hydraulic fracturing. In the hydraulic fracturing process, water mixed with chemicals and sand is injected into a well at ultra-high pressure to shatter and hold open the rock below and release the gas. According to the U.S. Department of Energy, the hydraulic fracturing fluid is composed of approximately 95% water, 4.5% sand and .05% different chemicals. These chemicals can number up to about 65 and include benzyne, glycol-ethers, toluene, ethanol and nonphenols. All of these chemicals have been linked to human health disorders when exposure and concentrations are too high. Because the percentages are by weight, it is estimated that approximately 20 tons of chemicals are added to each million gallons of water. A typical hydraulic fracturing procedure involves 4-7 million gallons of water so about 80-140 tons of chemicals. Each well requires millions of gallons of water (which separately is leading to confrontations over water supply in drought-stricken states). Some of the water comes back up immediately, along with additional groundwater. The rest returns over months or years.

A major issue is how to deal with the wastewater. The amount of water is significant. In most cases, the contaminated water is pumped into disposal wells, but this is not without risk. The wells and pumps can leak, allowing disposal water to contaminate existing aquifers.  In Texas alone, the amount of wastewater increase is significant. According to The New York Times, the state has more than 8,000 active disposal wells. The amount of wastewater being pumped into those wells has increased to approximately 3.5 billion barrels in 2011 from just 46 million barrels in 2005. A recent study dealing with the Marcellus Shale formation, which stretches from New York to Virginia, indicates that wastewater disposal from hydraulic fracturing could soon overwhelm the general wastewater treatment infrastructure of the formation. So cleaning this wastewater is important and represents a significant economic opportunity.

Insurers who write coverage on these environmental risks acknowledge that premiums are favorably impacted by the presence of effective technologies to clean the wastewater.

Water technology is a rapidly growing industry. Global Water Intelligence estimates the global water industry is $483 billion/year and growing by several percentage points annually. Water technology hubs are emerging to encourage and facilitate economic development, notably in Milwaukee, Singapore, Ontario and Israel.

Technologies are already being developed to treat wastewater from hydraulic fracturing. A new desalinization process developed at MIT can scrub the contaminants from the wastewater, uses significantly less energy and is less complicated than other desalinization techniques. The technique is called a carrier gas process in which water is sprayed onto warm air. The water vaporizes, and the water vapor, which contains only pure water, is bubbled through cool water and the vapor then condenses. Researchers at the University of Minnesota have developed a process of creating centimeter-sized silicon beads that have chemical-degrading bacteria inside them. The beads are porous so the chemicals can enter but not porous enough for the bacteria to leave. These represent just two of the developing technologies to treat the wastewater. This alone will become a multi-billion dollar industry in the coming years.

Private equity and venture capitalists should take note. There is a distinct need for this technology and a rapidly increasing, lucrative market. The economic and societal benefits of cheap, plentiful natural gas cannot be denied. Hydraulic fracturing makes it happen. And hydraulic fracturing requires billions of gallons of water annually which need to be treated and/or disposed of.