The PowerShares Water ETF
One of the chief ingredients in hydraulic fracturing — as well as one of its chief concerns — is water. To frack a well, millions of gallons of water are needed to adequately crack the shale rock. At the same time, disposing of these used fracking liquids and other waste created in the drilling process is quickly becoming a prime sticking point for legislators and residents living near wells.
One of the major hidden beneficiaries to this demand on both fronts will be the various environmental service companies in the water industry. Water utility Aqua America (NYSE:WTR) CEO Nicholas DeBenedictis recently said there are “growth opportunities provided by the shale drilling industry, as well as the ‘clean water’ aspects of the drilling business.”
To that end, the PowerShares Water Resources ETF (NYSE:PHO) could be a great bet on the “water-energy” nexus. The fund tracks a variety of utilities and firms that produce products designed to clean wastewater. As fracking continues to gain prominence as the No. 1 drilling method, odds are these sorts of water services will follow suit — most likely by legislation.