REDONDO BEACH, CA / ACCESSWIRE / May 18, 2016 / Water is big business and it's growing faster than the U.S. and global economies that continue to struggle at rates below 3%. GE (NYSE: GE) claims the world's water market is worth $360 billion annually and is growing at a rate of six percent, while Bank of America (NYSE: BAC) puts the number closer to $500 Billion and projects a growth rate of 6-7%. By all accounts, the industry is big and the need for water treatment in the U.S. alone spans over 54,000 municipal water systems, plus thousands of large private industrial operations requiring water treatment for a plethora of industries and uses.
Several Industry Sectors In Need of More Cost Effective Water Treatment
Sectors where improved water treatment is critical and slated for high growth are:
- Municipal water systems challenged by aging infrastructure, mounting water safety issues, and EPA requirements
- Oil recovery operations require massive amounts of water. Cost-effective on-site recycling could lower costs substantially by reusing water and then cleaning it reducing discharge back to the earth
- Nutrient removal such as phosphates and nitrates from water treatment plants and agricultural runoff to help reduce hazardous and costly algae blooms that are becoming more prevalent than ever
- Maritime industry may be subject to delayed regulatory requirements by the International Maritime Organization and the U.S. Coast Guard requiring operators to adopt costly Ballast Water Treatment Systems to protect the ocean environment
- Meeting EPA requirements for mining operations
- Any cost-effective recycling technology could lessen the enormous agricultural demand for water that uses about 80% of the available supply and that is becoming scarcer with droughts
- Meeting EPA requirements for nutrients and contaminants from steam power plants
- Livestock operations require clean and safe water for the livestock, and additionally must comply with EPA requirements for contaminated water holding and discharge
- Storm drain recapture and reuse is a growing market opportunity in arid climates like Southern California.
Municipal Drinking Water
A New York Times analysis of EPA data on the quality of drinking water points to a need for improvement of water treatment as suggested by the large number of violations of the Safe Drinking Water Act that have occurred in all 50 states in America. Over the last 5 years more than 20 percent of the Nation's water treatment systems violated key provisions of the Safe Drinking Water Act. In the state of New York, 205 water systems violated the law by delivering tap water that contained illegal amounts of bacteria since 2004.
Oil & Gas
The oil & gas industry is heavily dependent on water for fracking. Steve Mueller, CEO of Southwestern Energy (NYSE: SWN) estimates that water transportation for a single well, primarily trucking, costs around $1.5 million or 25% of the $6 million that an average Marcellus well costs. When oil was trading at 80 to 100 dollars per barrel, there was adequate gross profit to pay for the high cost of water management and still remain profitable, but now that the price has fallen precipitously, profit margins are upside down, and continuing high water management costs are exacerbating widespread industry losses.
Survivors of the most recent industry consolidation will likely face continuing pressure to reduce operating costs to compete. Water management is expensive. The ability to recycle produced water on-site for fracking operations could substantially reduce transportation costs, source water costs, and disposal costs. A cost-effective recycling technology has the potential to slash costs and greatly improve the bottom line for many producers that are now suffering big losses due to low oil prices. Recycling could also greatly reduce the amount of toxic produced water that is injected into disposal wells.
Low Cost Is The Key
At a time when more capital is needed for improving water delivery infrastructure, and to support new technology development, local governments are being severely restrained by tightening budgets. The private sector is also capital constrained as it balances pressure to deliver short-term earnings versus long-term investment in technologies to change the water delivery paradigm. The National Association of Counties reports that 3,143 counties in the U.S. are scaling back or deferring spending to balance their budgets. UV and membrane technology companies continue to introduce improvements, but their high cost is a major barrier to adoption.
Frost & Sullivan Spotlights New High Impact, Low Cost, Clean Water Treatment System
Just a few months ago, Frost & Sullivan named BioLargo, Inc. (BLGO), the winner of their "2015 North American Water Treatment New Product Innovation Award." BioLargo developed and patented the AOS Filter that combines iodine, water filter materials and electrolysis within a water-filter device to provide significant cost reduction and improved performance over existing wastewater treatment technologies. The Company holds a portfolio of patents covering a host of iodine related inventions, including its new AOS Filter.
Seth Cutler, the Senior Industry Analyst for Frost & Sullivan commented, "The AOS Filter generates high levels of oxidation potential across surfaces within the device by converting a typical carbon matrix filter into an electrochemical reactor." "This amplification of the oxidation potential of iodine, a key natural disinfectant, creates different and powerful forms of iodine, greatly enhancing its efficacy." The Frost & Sullivan report referenced a recent study at the University of Alberta in which the AOS Filter eliminated 10 million Salmonella cells within a 2-minute time point. That is 100x more effective [disinfection] and greater than 10x faster, than the industry standard, chlorine dioxide, which eliminates 100,000 cells within 60 minutes.
Less than one year ago, BioLargo, Inc., held its first symposium showcasing its breakthrough AOS Filter at the University of Alberta. A team of researchers revealed data from over 100 studies showing that the AOS Filter achieves unprecedented rates of disinfection to eliminate infectious biological pathogens such as salmonella, listeria and e-coli. The AOS Filter is also effective in oxidizing and removing contaminants like; acids, solvents, sulfurs, pharmaceutical by-products, oil and gas by-products, nitrates, phosphates, mercury, copper, lead, aluminum. Also notable is that the operating cost (based on extremely low energy requirements) of the AOS Filter is only 1/20th of the closest competing technology.
AOS Filter Prototype Delivery Scheduled for August 2016
Last month BioLargo announced that its Canadian subsidiary BioLargo Water, Inc. commenced a project with the Northern Alberta Institute of Technology to develop a commercial prototype for its breakthrough water treatment device. Dr. Richard Smith, President of BioLargo Water, commented, "NAIT's expertise in sensor technology and process scale up is a critical component to a commercial ready AOS filter to showcase at our second annual technical symposium scheduled summer 2016." Demand for a low cost, high impact water treatment technology that works across a wide variety of different industries is enormous, and the AOS Filter appears to be a logical solution. The company reports that the AOS Filter has the potential to impact every segment of the water industry and is not limited to waste water treatment.
BioLargo has been the recipient of multiple grants and financial aid from the Canadian federal and provincial governments totaling over $1 million in 2015 with substantially more in process and in the pipeline.
Compelling Economics For Industry
Veolia Environnement S.A., (OTC: VEOEY) operates a large Water, Waste Solutions, and Energy Services businesses and contracts these services for a number of municipalities and industrial companies. Veolia lists over 260 water treatment technologies on their web site, but a single diverse High Impact, Low Cost water treatment such as the AOS Filter could help provide Veolia customers with better water quality and possibly lower prices if they are passed on.
The maritime industry can also benefit because the International Maritime Organization and the U.S. Coast Guard recently required an estimated 65,000 ships over 400 gross tons to be fitted with Ballast Water Treatment Systems to disinfect seawater. Based on the high cost of UV and electro-chlorination, Global Water Intelligence estimates that these systems will cost more than $750,000 each for a total of $50 Billion. That does not include operating costs and maintenance. The AOS Filter is made of commonly found materials and is expected to save maritime operators billions of dollars in capital outlay. Energy cost for operating the AOS Filter in a high saline environment is less than 1/20th the energy cost of the nearest competing technology.
DryShips Inc. (NASDAQ: DRYS) provides ocean transportation services for dry-bulk and petroleum cargoes, and offshore deep-water drilling services. The company operates a fleet of 39 dry-bulk carriers, 10 tankers, and 13 offshore ultra deep-water drilling units. Navios Maritime Holdings Inc., (NYSE: NM) operates a fleet of 66 vessels.The AOS Filter could save maritime operators billions of dollars in capital and operating costs compared to costly UV and electro-chlorination systems.
The giant oil and gas industry is another large potential customer for cost-effective water purification technology. If companies like Northern Oil and Gas, Inc., (NYSE: NOG) were able to recycle their water and not have to haul it in and out every time they need source water or disposal - especially as low oil prices compress margins, they could slash costs dramatically. The AOS Filter has the potential to save hundreds of oil companies like Northern Oil & Gas very large costs.
Looking Ahead
"Excitement for our AOS Filter's commercial future is expanding as the water industry searches for high performance and cost saving technical solutions to deliver clean water," said BioLargo CEO Dennis Calvert. "Our AOS Technology is transformative and expanding in scope and importance. These next steps in our journey to commercialization will enable us and any of our future partners to begin manufacturing and large scale up efforts as well as to customize the AOS Filter to suit the special needs of larger customers."
BioLargo is a science and technology-company that has developed a portfolio of disruptive technologies to help keep people, animals, and our planet clean, safe, and healthy. The Company is now launching and has already received its first orders from large users for CupriDyne® Clean, a breakthrough odor control product for industrial uses. Its odor products have proven unsurpassed performance and are finding a welcome response from industry. The company is gearing up for Q1 2017 to make FDA application and begin serving the large multi-billion dollar wound care market with its novel advanced wound care products. Its Isan System, licensed to Clarion Water is now preparing for regulatory approvals and a commercial ramp up with a first licensing fee due to BioLargo this summer.
After almost a decade of R&D and high investor expectations, BioLargo appears to be well positioned to experience meaningful sales growth from many of its profit centers beginning in late 2016 and early 2017.
For more information, visit the company's website at www.biolargo.com.
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SOURCE: Emerging Growth LLC
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