Ten Desalination Start-ups Focused on Oil and Gas

This is an extract from the LEIF Brief on Water Innovation in Oil and Gas, in association with Global Corporate Venturing, which will be presented on October 15th at a round table event in London, and published soon thereafter by Global Corporate Venturing. Click here to download an executive summary of the LEIF Brief, which is sponsored by Veolia.

If you’re an innovator or an investor in this area and you’d like to contribute to the LEIF Brief, sponsor it and /or attend the round-table, please contact tom.whitehouse@london-eif.com

“Produced water is as varied as the geology of our planet. It is drawn from far, far greater depths than potable groundwater for public supply,” says Christopher Gasson, publisher of Global Water Intelligence. “It is contaminated in elaborate and unexpected ways. No two samples are the same, and even the same sample can exhibit different characteristics between the time it is taken from the oil field, and the time it is subjected to analysis in the laboratory.”

Produced water is certainly varied and complex, but you can usually be sure of one thing: it either contains a lot of salt or a hell a lot of salt. This is true of produced water across conventional and unconventional oil and gas, and in all regions of exploration. There are typically restrictions on the discharge or disposal of high salinity water and it cannot be re-used without dilution. Robust and inexpensive desalination (desal) technologies are therefore top of the oil and gas industry’s water-tech shopping list.

Shortly before and after LG acquired NanoH2O, the low energy desal former Standford spin-out, earlier this year, there has been a flurry of investments in desalination and its sister technologies, brine concentration, evaporation and crystalisation. It’s a hot sector.

Degremont, a subsidiary of Suez Environnement, announced in August 2014 that it had “taken shares” in Evatherm, a Swiss engineering company specialised in evaporation and crystallization technologies. The two companies say they have a common goal to “deliver high value-added solutions to the oil and gas, chemical, power and mining industries.”

In May 2014, Saltworks, the Vancouver-based desalination and chemical recovery business, announced that the US oil and gas major ConocoPhillips had joined Canadian energy giants Teck Resources and Cenovus as the company’s third corporate venture capital investor.

In an interview with Global Water Intelligence, Saltworks CEO Ben Sparrow said that ConocoPhillips invested because it “wanted robust, reliable technology for their businesses and they’re happy to see us sell widely in oil and gas and mining because owning water technology is not part of their fundamental business.”

In April 2014 venture capital unit of German engineering giant Bilfinger announced that it has led the Series A financing round of Klaren International, the Netherlands-based evaporator technology company. Klaren has developed and is commercializing a proprietary self-cleaning heat exchanger technology that can be used in thermal seawater desalination and produced water brine concentration applications. Klaren also announced that it has signed a joint cooperation with Bilfinger Deutsche Babcock Middle East to market its MSF/Fluidized Bed Evaporator (FBE) technology in the Middle East region.

At the end of 2013, Massachusetts-based forward osmosis specialist Oasys Water raised $15 million in a Series B funding round, led by Chinese engineering, procurement and construction firm Beijing Woteer. The company later announced that it had signed a two-year licensing agreement with US oilfield services company National Oilwell Varco (NOV).   NOV will hold exclusive rights to use Oasys’ pre-treatment system and FO-based brine concentrator for all upstream oil & gas applications – including the treatment of flowback and produced water at fracking sites.

2013 also saw EREN SA, a Paris-based investment vehicle founded by Pâris Mouratoglou, invest €2m in French evaporator technology business TMW Technologies.

Pentair Inc joined Unilever Ventures and Rabo Ventures as an investor in Voltea, the Dutch electro-chemical desalination technology company, in a $4.5m round in 2012.

Desalitech, a US-based, Israel-born, closed circuit desalination technology

announced a $13 million fund-raising from Liberation Capital and other investors.

Memsys, the Singaporean-German membrane distillation technology, announced new licensing agreements with Dwiputra Sumber Sukses PT, an Indonesian engineering services business, to pursue seawater desalination for remote islands and communities and brine concentration for targeted industrial applications. It announced also a pilot trial arrangement for a coal-to-chemical (CTX) project in China with Horizon Environmental Technology Ltd, a leading water and wastewater technology company.

Gradiant Corporation, a US carrier gas extraction technology, was awarded “Industrial Water Project of the Year” by Global Water Intelligence, for its work on shale explorer Pioneer’s water recycling plant in Texas.

Earlier stage technologies raising funding include High Voltage Water, a spin-out of the Dutch research institute Wetsus, which raised an undisclosed sum from Dutch VC Icos Capital for the development of its ‘electro-spray’ technology for markets which include wastewater treatment, oil and gas industry, and drying processes.

The technologies mentioned here all promise significant improvements on the ‘industry standard’ desalination technology of reverse osmosis (RO), which has been a hugely disruptive innovation in desalination markets over the last thirty years. Incremental improvements in RO often centre on the membrane through which produced water is pushed in order to remove salt and other impurities. There is very broad array of new membrane technologies in development from most of the large water service businesses. Start-ups focused on new membrane technologies include Houston-based Lance Energy Services, which is backed by ConocoPhillips and which uses nanotechnology to make its ceramic membranes more organophobic, i.e. more capable of dealing with the severe gunk in produced water. Lance raised an undisclosed sum from ConocoPhillips in 2013. Another company focused on innovation in ceramic membrane technology is Canada-based Filterboxx, which raised $14.7m from investors that included its current shareholder XPV Capital, the Canadian specialist water investor.

Switch it off at source

Something that oil and gas companies would all love to do is to simply reduce the volumes of produced water they have to desalinate. This is the basic idea behind Inflow Control, a Norwegian technology business run by a former Statoil executive that raised an undisclosed sum from Saudi Aramco Energy Ventures in 2013.  Water is less viscous than oil, which means that in maturing oil fields sooner or later more water is produced than oil. Inflow Control’s innovation is to “almost completely” switch off the water production with its proprietary Autonomous Inflow Control Valve, while leaving the production of oil unaffected.

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