By Christopher Gasson, publisher of global water intelligence.
The water-energy nexus has been one of the key themes in the water industry over the last four years. But what has it done for us? On the face of it, no one is doing that well in the water industry at the moment. The French and the Spanish are struggling. Xylem has just lost its CEO. Siemens Water is on the block.
There is one company which is quietly doing rather nicely: GE Water. It also happens to be the company which is best positioned to take advantage of the water-energy nexus. Its suite of membrane and thermal technologies is ideally suited to the opportunities arising from the oil and gas industry, and its water treatment chemicals business ensures it is a key player in the power sector.
Six years ago everyone was laughing at GE because it just didn’t seem to be able to make sense of the acquisitions of Ionics and Zenon. Most of the action was on the municipal water side and GE seemed to be pussyfooting around, complaining about risk and margins. It is a different story today. GE is suddenly positioned in all of the best markets. It is a fair bet that the company is showing a faster growth rate this year than any other water company with revenues over $500 million.
But this could just be the beginning of something much bigger. There is a potentially huge unmet need for water treatment in the energy sector – if we can get the technology right.
For example, there are very strong prospects in the produced water market, but the current technologies on offer are just not right. The water treatment industry struggles with the huge variation in produced water quality, and we are not used to addressing hardness and dissolved solids in the presence of hydrocarbons. The result is that producers prefer to truck and reinject produced water rather than treat and reuse it. The shale revolution has benefited the water treatment industry very little to date.
We need to develop technologies which are not just cheaper, but are also better adapted to the concerns of oil and gas producers. If we can do that, we could open a market for water treatment and reuse which is perhaps 100 times the size of what we currently see in the oil and gas sector.
In fact, water recycling technologies could become a key enabler of future growth in the oil and gas market. Without the ability to make greater use of produced water, the environmental constraints facing the oil and gas industry will become increasingly severe.
Similarly, better water technologies could make a huge difference to the power industry. Coal, for example, should be a cheaper source of power than gas, but it is dirty. Water technology could make it greener, cleaning up the waste from flue gas desulphurisation and from the coal gasification process, but the technologies currently on offer tend to involve thermal evaporation, and they are very expensive. They just add to the reasons not to invest in coal.
We have just published our Water for Power market report, and although it makes clear that the best opportunities are on the wastewater side (both conventional and high-recovery), it seems to me that the market could be a lot bigger if there was a cheaper way of dealing with the nastiest coal waste.
Although much of the dialogue surrounding the water-energy nexus seems to focus on the fact that you need energy to make water and water to make energy, most of the business opportunities seem to lie in the premise that as we move towards the twilight of the fossil fuel age, that industry’s wastewater challenges are getting greater and greater. If we can get the technologies right, carbon’s difficulty will be water’s opportunity.
Source: Global Water Intelligence