There are three possible scenarios here:

a) Bees in water tank within water heater

b) Bees in insulation area between tank and
   skin of water heater

c) Bees in both areas mentioned above.


If the bees are entering/exiting one of the water
pipes that lead into the water heater, then the
bees are clearly in the tank itself, and you could
have a large colony.  If not, they may have set up
shop in the area that should be filled with insulation,
and you are likely looking at a smaller colony.

If the bees are not exiting/entering a pipe, then
I'd remove the skin of the water heater to expose
the situation, as either the bees are in the insulation
void, or the tank is rusted out, and they are entering
the tank through the rusted-out hole in the tank
skin.  Heck, they could be in both areas if the tank
has rusted out.

If the bees are in the water tank, and blindly slicing
through the entire water heater with a saws-all
(available at any tool rental yard worthy of the name)
is less elegant an approach than you'd like, open up
and remove the "skin" of the water heater, so you only
have to cut through the wall of the (inner) water tank itself.

Every water heater I've ever seen has a simple
one-piece sheet metal top and bottom, and a sheet
metal body that can be removed without too much
trouble.

The top and bottom are most often held on by screws
that run around the circumference of the tank,
which can be removed (or drilled out, if rusted away)
and pried off the main body.  The main body "skin" is
held on by several more screws, leaving a single seam
running from heater top to bottom that can be pried apart
with a flat-bladed screwdriver, a hive tool, whatever.

Once the outer skin is off, one can take a saws-all,
reciprocating saw with a hacksaw blade, or even a
plain old hacksaw and slice open the water tank itself
for a normal removal of bees and comb from the tank.

Clearly, the hive would be built from the top
of the tank down (depending on which way is up in the
current orientation of the tank, so slicing off the
bottommost area of the tank first would be advisable
for a neat and tidy removal.  You gotta "play her as
she lies", but I would not hesitate to invert or reorient
the water heater to make disassembly and cutting easier.

Here's a generic diagram of the parts layout for a
typical water heater:
http://www.waterheaterparts.net/exp_elec.cfm

-- Visit www.honeybeeworld.com/bee-l for rules, FAQ and  other info ---