Of all of America's shale gas plays, the Marcellus formation (located in Pennsylvania, New York, West Virginia, and Ohio) is by far the most impressive. This gas formation is estimated to contain 410 trillion cubic feet of recoverable natural gas and expected to produce some of the lowest cost gas in the world for 110 years.

Gas production from the Marcellus has increased from one billion cubic feet/day (Bcf/d) in 2007 to 14 Bcf/d in 2014 and may hit 20 Bcf/d by 2017-2018.

This prolific growth in gas production is expected to fuel two major export booms: liquefied natural gas (LNG) and natural gas liquids (fuels and chemical feedstocks such as ethane, butane, and propane).

These exports will raise the price of both LNG and NGLs and create continued demand for further production growth in the decades to come. Income investors have many great ways to cash in on these megatrends, and this article is designed to highlight one of the best "pick and shovel" providers of this latest gold rush.

CARBO Ceramics (CRR) is one of a handful of fracking proppant suppliers who has seen demand for its products triple between 2009 and 2012.

Fracking proppant is a material that is blasted down into oil/gas wells (along with high pressure water that fractures shale) to "prop" the fractured rock open and allow more oil and gas to escape to the surface. 

CARBO, unlike competitors Hi-Crush Partners, US Silica Holdings, and Emerge Energy Services, specializes in ceramic proppants while its peers produce high-quality, low-cost fracking sand. The difference between the two materials is that sand is cheaper but ceramic has a more uniform, circular shape which is more effective at increasing the yield per fracked well. The investment thesis for CARBO consists of three parts.

First, the company is a technological leader in its field and has superior products. Its newest ceramic offering, Kryptosphere, is designed to be the strongest and most conductive proppant ever designed (100% more conductive of oil/gas than its competitor's products), even under the most severe conditions. Competitors' products such as traditional fracking sand can only withstand 25% of this pressure.

Foreign competition, mainly from cheaper Chinese, Russian, and Brazilian frack sand, is a potential threat to the company, however, the company has numerous reports that their products result in 20%-100% better production per well. With the average well costing $8 million to drill, the company's highly trained sales force is not having any difficulty convincing oil and gas companies to avoid cutting corners when such drastic production increases can be attained -- the higher cost of CARBO products pays for itself in just two to six months.

The second part of the investment thesis is the company's incredible ceramic manufacturing capacity growth. Over the last 13 years it has increased output by 10.1% CAGR and the company will increase it by another 57% by the end of 2014.

With the best technology and strong production growth the company has managed to grow its dividend for 14 consecutive years at a 13.7% CAGR and has achieved 14.8% CAGR dividend growth over the last 18 years.

With no debt, a payout ratio of just 31%, and such strong competitive advantages CARBO is likely to continue to grow its dividend at a torrid pace for decades to come.

A quick note regarding the valuation is in order. With a current P/E of 35.4 investors may be concerned that CARBO, despite being an amazing company, may be simply to expensive to make a good income investment. This is a valid concern, and though I believe this company represents the best of breed in its industry, investors might wish to place this company on a watch list and wait for a better price in the future. Alternatively, one can purchase a small, initial position and wait to buy on future weakness. 

Foolish takeaway
During the California gold rush some of the most prosperous participants were those selling picks, shovels, and other mining equipment to gold seekers. CARBO ceramics represents a similar play on the current fracking gold rush that is sweeping America. Its superior state of the art products and stellar dividend growth history make it a very attractive long-term income investment. When combined with the company's aggressive growth plans and the epic scale of the fracking megatrend, patient investors can expect decades of market-beating performance out of what is one of the most promising dividend growth stocks in America.