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Eoin Treacy's view Major deposits have also been discovered in parts of the U.S., such as Eagle Ford in southern Texas, the Bakken shale in North Dakota and the Marcellus shale in Pennsylvania.

The number of horizontal rigs active in the U.S. has climbed to 1,151 from 337 at the end of 2006, data compiled by Bloomberg show. The rigs drilled about 6,000 wells that were completed with the fracking process last year, a more than sixfold jump in five years, according to research firm IHS Cera.

With the boom in fracking, water usage has increased as oil companies employ higher-powered pressure pumps to inject chemically treated slurry into dense shale rock to open wells.

Water used by energy companies will almost quadruple to as much as 15 billion gallons each day by 2035 from 4.3 billion gallons a day in 1995, according to an estimate by Mike Hightower, a researcher at Sandia National Laboratories, who was on the team hired by the U.S. Energy Department for a 2006 study on the relationship between energy and water.

Groundwater Contamination
“The development of shales and fracking is growing rapidly and water goes hand-in-hand with the development of shale fields,” Robert Brown, a Minneapolis-based analyst for Craig- Hallum Capital Group LLC, said in a telephone interview.

It has also raised environmental and public-health concerns over the possibility that the fluids may be leaking into the water supply. The EPA's Dec. 8 draft report linked fracking for natural gas to groundwater contamination for the first time.

The agency's three-year study followed complaints from residents about the smell and taste of their water. Samples taken from two deep water-monitoring wells near a gas field in Pavillion, Wyoming, showed synthetic chemicals such as glycols and alcohols “consistent with gas production and hydraulic- fracturing fluids,” the EPA said.

The report bolstered calls for tighter regulation of air and water quality in oil and gas production, which may lead to more demand for expertise in water treatment, transportation and disposal. That may boost the industry's growth and consolidation, according to Citigroup's Trauber.