Because getting US oil and natural gas out of the ground requires billions of gallons (liters) of water a year, “oil companies are the largest water companies in the world,” Amanda Brock, CEO of the water treatment company Water Standard, told a conference on water investment and technology.
Energy companies don’t seek the limelight in this area, Brock said, but they are effectively in the water business. The oil and gas industry needs water and water services for drilling and hydraulic fracturing, as well as help in storing and transporting water used in energy extraction.
Environmental advocates have taken aim at oil and gas companies for what they see as profligate use of water in extraction processes, along with the use of chemicals the advocates see as health hazards or substances where health effects are unknown.
Opponents of hydraulic fracturing to get at natural gas maintain the process can contaminate ground water, a claim the energy industry denies.
The key is using and re-using every bit of water as efficiently as possible, given global pressures on the water supply, said John Lucey of the Heckmann Corporation, which provides pipelines and disposal wells used in the drilling technique known as fracking.
“What we want you to do is wear out a drop of water,” Lucey said at the American Water Summit. Heckmann, founded less than two years ago, had third-quarter earnings this year of about $38 million, up from $2 million in the same quarter in 2010, he said.
Investors see the potential for growth, but have been wary because traditionally, the water business has operated on a scale of decades, not years, and has been slow to adopt new methods.
James Collet of NLM Capital Partners of Irving, Texas, said most of his clients are natural resource investors, and the water industry has similar characteristics that make it attractive to them.
“Over time, it’s probably going to be OK, but it’s probably going to take a lot longer because the momentum to make change in this industry is typically less than in other industries,” he said.
That slow pace is because US water systems are generally built to last 50 to 100 years, Collet said. Now aging infrastructure is wearing out, spurring the need for new investment. And the older systems are prone to waste and inefficiency, which new technologies are designed to remedy.
A dominant theme at the water summit was the industry’s need to re-invent itself, or at least to raise its profile.
“For the average person, for the average politician, we do not exist,” said Debra Coy, a principal at Svanda & Coy consulting.
The US water industry is seen as fragmented, without a recognizable voice to the powerful in US government, as contrasted with the energy sector, Coy said.
A subtext at the summit was the expectation that global water supplies will be stressed as world population grows. Climate change and the increasing collective thirst of the developing world will add to the pressure.
That too offers opportunity, said Randall Hogan, CEO of Pentair, a global water systems business.
Unlike the US, Hogan said, China, India and countries in the Middle Easet are investing in new water technologies.
“They take a different approach in thinking about water. They will fund it. They have to fund it, because of the growth in wealth and population ... and the kind of pressure that puts on energy, food and infrastructure,” Hogan said.
His task now, he said, is to ensure that his most talented staff, now located primarily in the US and western Europe, are available to take advantage of “the opportunities at hand, which are in the new, new world.”
