With hydraulic fracturing, or “fracking”—the use of high-pressure water to help extract previously inaccessible shale gas—eager to replicate its success outside the U.S., the market for water treatment will grow nine-fold to $9 billion in 2020, according to a new report by Lux Research. This expansion will spur technology innovation and novel thinking about water disposal and reuse, but the field is rapidly growing overcrowded, creating significant risk for new entrants, Lux Research says.

Fracking requires between 4,000 m(3) and more than 22,000 m(3) (25,000 bbl to 140,000 bbl) of water per well and produces toxin-laced brine that can be more than six times as salty as the sea. Its growth has energized the water industry, inspiring a bumper crop of new water treatment startups vying to treat the highly challenging flowback water, Lux Research says.

“Fracking represents a significant water treatment challenge—hydrocarbons, heavy metals, scalants, microbes, and salts in produced and flowback water from shale gas wells represent a water treatment challenge on par with the most difficult industrial wastewaters,” said Brent Giles, Lux Research analyst and lead author of the report titled, “Risk and Reward in the Frack Water Market,” in a prepared statement. “While the opportunity is large, only a few companies are really positioned to profit. Meanwhile, nearly every start-up we talk to is going after frack water, regardless of their technology, and many of them are going to come to grief.”

Lux Research positioned key companies on its “Lux Innovation Grid” based on categories of Technical Value and Business Execution. Companies that were strong on both axes reached the “Dominant” quadrant. Lux Research also assessed each company”s maturity, to provide an overall “Lux Take” rating. Among its findings:

  • WaterTectonics has technology and alliances. WaterTectonics” high-energy electrocoagulation technology addresses heavy metals, biological matter, and hydrocarbons, but leaves salt in place, meaning its use is restricted to areas where salt levels are moderate. Still, with its long-term alliance with Halliburton, WaterTectonics reaches the Dominant quadrant.
  • EcoSphere and AquaMost lead in oxidation technologies. EcoSphere combines ozone, cavitation, and electrochemistry, and the $9 million company leads in the dominant quadrant. AquaMost, an early-stage startup, uses catalyzed UV to achieve many of the same results, but also removes metals. It ranks as “High potential” with strong technical value.
  • GasFrac is poised to disrupt the industry. GasFrac, with technology licensed from Chevron, uses high-pressure propane, rather than high-pressure water, to fracture gas wells. Its technology is being tested by Shell, Blackbrush, Husky, and Chevron, among others, Lux Research says. With 300 employees, revenues of $300 million, and $50 million on hand, the profitable company outstrips every water start-up in the lineup, positioned in the “Dominant” quadrant and earning a “Strong Positive” Lux Take.

“Risk and Reward in the Frack Water Market” is part of the Lux Research Water Intelligence service. For more information, visit luxresearch.com.