The following appeared in Forbes
As U.S. shale gas resources and hydraulic fracturing, or fracking, have entered the national consciousness, protests from nearby residents, then regulation, have followed. Yet rather than being bad for business, this regulation is actually spurring a new market in water technologies, according to a comprehensive report by Artemis Water Strategy, a specialist consulting practice.
In particular, author Purabi Thakre and editor Laura Shenkar believe the rich Marcellus “play” — the gas industry term for large deposits — and its location under heavily populated New York and Pennsylvania are creating a vast market opportunity. “The Marcellus Effect: Building Momentum for Advanced Water Technology Solutions” says, “Experts estimate that shale gas drilling will grow sevenfold over the next 10 years in the Marcellus Shale…. The resulting market for wastewater disposal and treatment in this region alone will exceed $3 billion per year, according to the banking firm Boennings & Scattergood. In addition, Shenkar expects that water technology innovations created for shale plays will find markets in other industries.
An expert on corporate water strategy and water technologies, Shenkar founded Artemis Water Strategy, a consulting firm that advises corporations on water strategy and supports technological innovation in water management. Each year the Artemis Project sponsors the Top 50 Water Companies Competition to identify emerging technologies and investment opportunities in the water sector. This year, 10 of the 50 companies were innovating new technologies to clean up fracking wastewater.
Fracking has been around for decades, but new technology innovations and a higher price for natural gas have recently made it economic to employ it more widely. But Congress, pushed by Vice President Dick Cheney, exempted gas drilling from EPA Clean Water Act regulations in 2005. So as fracking has ramped up, particularly close to where people live, environmental concerns about water quality have emerged. Perhaps the image that best captures people’s concerns is video footage of a man setting his tap water on fire in the documentary film Gasland.
Since that film debuted last year, a scientific report has linked fracking to methane contamination in nearby aquifers. Pennsylvania officials fined Chesapeake Energy more than $1 million for contaminating the water supply in Bradford County. New York recommended a ban on drilling in the watersheds for New York City and Syracuse. In June Texas became the first state to require disclosure of fracking chemicals, which were previously considered to be intellectual property. Just this month, a federal panel recommended greater disclosure and monitoring of fracking’s environmental effects.
Fracking is a water-intensive process. According to “The Marcellus Effect,” a typical frack well uses about 4 million gallons of fresh water over its lifetime. The fracking process dirties the water both with the proprietary chemicals used and by its exposure to elements deep in the earth that are not found in surface waters. The industry calls its wastewater “produced water.”
According to the report:
“Produced water is often high in naturally occurring total dissolved solids, chloride, sulfate, and metals (such as iron)…. Produced water may also contain naturally occurring radioactive material or petroleum compounds (such as benzene, toluene, and xylene). The produced water might also contain remnants of the fracturing fluids [which contain secret recipes of chemicals]…. An individual well in the Marcellus Shale is estimated to create approximately 15,000 gallons of produced water per year.”
Historically the industry has disposed of produced water by injecting it underground in “disposal wells.” But the Marcellus region’s geology does not permit construction of disposal wells, and its undulating terrain makes it difficult to pipe water long distances. In the Marcellus area, some companies have been recycling wastewater to use again but sell the byproduct, a salty, contaminated sludge, to communities for de-icing roads or suppressing dust. Companies have also paid to haul wastewater to sewage plants, which aren’t designed to adequately treat it. Tainted water is then dumped into rivers, a particularly pernicious problem in Pennsylvania, where the Department of Environmental Protection is beginning to impose more stringent regulations.
All this attention has been uncomfortable for the gas companies, but it is forcing them to deal with their wastewater in a more substantial way. In particular, energy companies are interested in onsite water treatment options.
“We predict that the integrated wastewater appliances that emerge in Marcellus will replace off-site disposal as a predominant practice in shale gas drilling,” says the Artemis report.
Water technology companies smell opportunity, and several big companies that have historically handled wastewater disposal in central treatment locations are working on new strategies. They are naturally well positioned to exploit this opportunity as they have standing relationships with the oil and gas companies. However, emerging companies have a unique opportunity right now, says the report:
“There is an urgent need for a reliable water management solution, which has created a game-changing vacuum…. The unique situation in Marcellus has opened a window of opportunity where technology and innovation trump the positions held by established companies, allowing these emerging companies to gain access to end customers. Until the bigger players that are the gatekeepers “crack the code” and establish strong onsite water treatment solutions for shale gas drilling, promising young technology solutions companies have a chance to commercialize their solutions and attain sustainable profitability by deploying quickly.”
The report also says that several emerging companies have received interest, funding, and support for product testing and validation from gas companies.
Shenkar told me she expects to see turnkey solutions, the equivalent of a PC or other end-user product. “These products offer a company operating in a remote location a portable solution that will give them the ability to precisely execute the several processes required to clean the water and to validate the results by testing it afterward,” she said. “We believe Marcellus will demand that, and technology can do that better than humans.”
In particular, Shenkar believes companies may be motivated by the Sarbanes–Oxley Act of 2002, which set new accountability standards for public companies in the United States.
“Under the act, a CEO could theoretically be thrown in jail for failing to clean up the water to accepted standards,” she said. “The validation component of these turnkey solutions, in particular, is likely to be in demand as industry standards come into focus.”