Booms, busts, and the next big thing
Water needs to keep looking beyond the horizon, says Amanda Brock.
Water industry players are eternal optimists with short memories. Looking at the global macroeconomics of water scarcity and infrastructure needs, who can blame us? Any logical person would conclude that there is big money to be made and invested. Consider California – one would assume that opportunities abound for smart water companies and investors. However, while there is growth in certain niche segments, there remain few viable options for the private sector to develop and fund long-term sustainable solutions. Water is not always about logic.
The American Water Works Association just published its 2015 Annual State of the Water Industry Report, which again concludes that infrastructure challenges top the list of concerns, and questions how to finance critical infrastructure. AWWA estimates $1 trillion is needed in investment to replace and expand US water and wastewater infrastructure. The reality, however, is that the municipal market has not developed as hoped, and continues to disappoint private sector investors. While the lack of opportunities has driven certain players to exit the market, the sheer magnitude of investment required is so tantalising that they are quickly replaced by fresh players keen to crack the code.
With the hurdles facing the growth of the municipal sector, many hoped that the “next big thing” in water would be water treatment in the unconventional oil and gas sector. But as rapidly as the market grew, it then contracted. Many water and oil field service companies which made significant investments in the sector are scrambling to redefine their focus. While the energy industry is used to dramatic boom and bust cycles, water players are not, and this sort of volatility has hit them particularly hard.
To compound the problem, the US Environmental Protection Agency has now published its long-awaited draft report on the impact of hydraulic fracturing, concluding that frac’ing has not led to widespread systemic impacts on drinking water sources. This result will further delay investment in water treatment in the unconventional energy sector. Only those companies with strong balance sheets, well-defined channels to market and a diverse product and client base, or those with proven, commercialised technologies that lower costs, will survive in the longer term.
So what now? We do what we always do: try to ignore the disappointments and look for the “next big thing” to get excited about.
Players are now rushing to position themselves in the growing industrial and power sectors, fuelled by the availability of cheap energy. Power utilities now see themselves as the next big water players, capable of taking advantage of their access to the retail market, their own water needs, their ability to co-locate power, water treatment facilities and desalination plants and, most promisingly, delivering behind-the-fence, multi-commodity services to industrial clients. Allete, a Minnesota- based power utility, recently bought U.S. Water Services, an integrated industrial water management company, in order to gain access to the industrial sector, and more M&A activity is predicted.
Desalination is all the buzz in Texas, and companies are arriving in droves touting their references and establishing offices. Curiously, European players are looking to expand into the US and Mexico, while US players are looking to expand globally. Meanwhile, all is not lost in the oil and gas water treatment sector. There is continued growth in water treatment for enhanced oil recovery, smart water injection and produced water treatment, recycling, and waste minimisation, while a mid-stream sector is beginning to emerge.
Overall, we should be cautious and consider the implications of the markets that have not developed as anticipated, and consider lessons learned. Making money and succeeding in the water sector is hard. But what makes us unique in water is the very fact that we have short memories and are always looking forward. As eternal optimists, we remain convinced that we will always be the ones to find the “next big thing.”
Lisa Henthorne, Senior VP and Chief Technology Officer of Water Standard and member of International Desalination Association, is featured on NBC News’ 30 Seconds to Know segment. She educates the public on how desalination works. See Lisa HERE.
Water Standard is proud to announce that Lisa Henthorne has co-authored the article, “State-of-the-art of reverse osmosis desalination pretreatment.” This in-depth look at the current innovative pretreatment technologies for fouling control is published in Desalination Journal and can be accessed for free until January 29, 2015. Visit ScienceDirect – no sign up necessary.
Click HERE to Read Article
HOUSTON, Nov. 4, 2014 /PRNewswire/ — Water Standard (www.waterstandard.com) is pleased to announce the launch of its compact Membrane Deaeration (MDA) product line for use in waterflooding, improved oil recovery (IOR), and enhanced oil recovery (EOR) applications. Water Standard partnered with Membrana as an Original Equipment Manufacturer (OEM) for Liqui-Cel® membrane contactors and successfully piloted the technology in continuous seawater trials resulting in a proprietary system that, relative to vacuum towers, requires 50% less space and weight while providing more efficient oxygen removal.
“We are excited to deliver this state-of-the-art, proven technology to the oil & gas industry. MDA is a superior technology compared to conventional vacuum towers and can be used in multiple applications including deaerating produced water,” said Amanda Brock, CEO of Water Standard.
Lisa Henthorne, Water Standard’s Chief Technology Officer, explains, “The MDA pilot unit produced approximately 5,000 barrels per day of deaerated seawater and operated without chemical oxygen scavenging, scaling or fouling of the membranes for an extended period. The pilot evaluated operating and design parameters such as seawater flow rate, level of pre-filtration, and nitrogen sweep rate. Throughout pilot testing, the MDA unit consistently achieved less than 10 parts per billion (ppb) of dissolved oxygen in the treated water without chemical addition. This compares very favorably to vacuum towers, which normally achieve 50-100 ppb and require additional oxygen scavenging chemicals.”
“When water is viewed holistically across the entire water cycle in the oilfield, the inherent benefit and value of the resource becomes more apparent. Water Standard is focused on maximizing this benefit to the O&G Operator. Costs across the entire water treatment spectrum can be significantly lowered and the opportunities to effectively target specific problems are dramatically enhanced,” Henthorne says. Water Standard is also very focused on reducing footprint and weight of overall water treatment process facilities and can deliver flexible, compact membrane systems for filtration, sulphate removal, low salinity treatment, and deaeration through its C-H2Ocean Spectrum™ technology suite of products.
For more information on Water Standard’s compact membrane deaeration product line please visit http://waterstandard.com/products/, call 713-400-4777, or email email@example.com.
ABOUT WATER STANDARD
Water Standard is a global water treatment specialist and recognized leader in delivering innovative desalination, water-based enhanced oil recovery and produced water solutions to the onshore and offshore oil & gas industry. The company uses proprietary designs and processes employing proven technologies incorporated into mobile offshore facilities or modular onshore customized water treatment systems. Water Standard offers flexible contract options for products and services ranging from specialized engineering and design to turn-key and fully outsourced solutions.
For more information visit: www.waterstandard.com.
There are troubled waters ahead…but if water treatment companies can ride the wave of low oil prices, new growth opportunities will emerge, argues Amanda Brock.
Just as we thought, the last global recession was behind us, we are abruptly reminded how tentative and fragile any perceived economic recovery could be. The global economy appears to be heading toward an uncertain future, and while it is not yet clear what the short- and long-term impact will be on the growth of the water sector, the current volatility in oil prices underscores again how inextricably water and energy are linked.
The International Monetary Fund in its October World Economic Outlook Report downgraded its growth forecast for the global economy for 2014 and 2015, citing an increase of risks, stagnation, low potential growth in advanced economies and a decline in potential growth in emerging markets. This report did not fully anticipate the impact of the recent rapid decline in oil prices, which have plummeted by more than 26% from a high in June. The International Energy Agency (IEA) followed this negative trend, and this month slashed its forecast for oil demand by 22%, citing the weakest growth in five years, while describing this drop in demand as “nothing short of staggering”. At the same time, the IEA highlighted the growing global glut of oil, fuelled largely by the unprecedented growth of US shale production.
Now Saudi Arabia has weighed in, and made it very clear that in order to maintain its market share, it is prepared to lower prices for a year or two, and will not support higher prices with unilateral cuts in production. Other OPEC and non-OPEC nations are following suit in a move analysts say will curb new investments in the US and global shales, and ultra-deepwater projects. Oil prices then suffered the single largest drop in price in over three years on 14 October, rattling global stock markets, with many assuming the worst is yet to come. In a 2013 article in the Telegraph, oil was referred to as both the lifeblood and poison of the global economy, with the unerring ability to play havoc, and that is exactly what oil prices are doing. What, then, does this all mean for the oil and gas water treatment sector?
Over the last few years, as opportunities for real growth in the global municipal water sector remained tepid, the upstream energy sector emerged as a promising new market, and water players rushed in to compete for market share. Among the larger companies, Veolia and Siemens are now firmly entrenched, with GE and Suez Environnement late to the game, but charting an aggressive course to succeed. Numerous smaller companies have also staked their future in the onshore shale markets. However, given the oversupply of hydrocarbons, there will be a fundamental slowdown in the upstream sector as costs are examined, projects delayed or even cancelled, and many shale development opportunities will be reconsidered and possibly shelved until prices and demand rise again. While there is no need to panic, the cyclical upstream water treatment market is not for the faint-hearted.
Sustainable water infrastructure continues to be the focus at many Water and Oil & Gas conferences this year. Come hear Amanda Brock’s thoughts on the subject. Lively discussion is expected during the Water Sustainability: Current Policies and Lessons Learned panel discussion to be held at the SXSW ECO conference in Austin, October 6-8, 2014. Amanda’s panel is scheduled for Tuesday, October 7 at 3:30 pm.
Amanda Brock will deliver opening remarks at the Sustainable Water Management in the Texas Oil and Gas Industry event at the Atlantic Council Headquarters in Washington D.C. on July 29, 2014. The focus will be on the use of water by the Texas oil and gas industry and critically examining the solutions at hand in Texas.
The event starts with a keynote presentation by David Porter, Commissioner of the Texas Railroad Commission and features a panel of experts from the Texas oil, gas, and water treatment industries.
Learn more about the Atlantic Council and this important issue by visiting www.atlanticcouncil.org