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Sunday, March 19, 2006
Duke City Firm Is Developing Devices to Desalinate and Purify 'Produced Water'
By Andrew Webb
Journal Staff Writer
Take a good long whiff of a 250-gallon vat of so-called "produced water" at Altela Inc.'s south Albuquerque office.
That briny, oily smell is the byproduct of the global economy's backbone.
Most modern means of oil and gas extraction produce thousands of gallons of produced water a day, which companies then must truck, at very high cost, to highly regulated disposal sites where the water is injected back into the ground.
Between 5 billion and 18 billion gallons of the stuff are produced nationwide a day, depending on which expert you talk to.
An Albuquerque company may be on the cusp of solving what to do with the hazardous waste.
And along the way, it could just help mitigate shortages of freshwater felt throughout the drought-plagued West.
Altela is developing low-cost devices that desalinate and purify produced water, often using waste energy produced right at the wellhead.
Last September, the company ran water from an oil well near Carlsbad through its device, reducing its contaminants to five times less than what comes out of an average kitchen faucet, said Altela CEO Ned Godshall.
Last month, Altela received state permission to perform a surface discharge of that purified produced water an industry first, Godshall said.
And, the company recently completed a $2.1 million investment round, bringing to nearly $3.1 million the total invested in the firm. It has doubled in size and in number of employees in recent months.
By this summer, Godshall said he expects to begin shipping the first AltelaRain systems, which will be leased to producers around the West and maintained by Altela.
More than a few oil producers and investors are interested in the technology.
Investors include Albuquerque-based Verge Fund, Sandia Capital Partners and Pennsylvania-based EnerTech Capital, which has also invested in Albuquerque-based Advent Solar.
They were joined by Artesia-based Yates Petroleum Co. and Farmington-based Merrion Oil and Gas in the recent investment round.
"We're encouraging entrepreneurs to help solve this problem," said Steve Dunn, drilling and production manager for Merrion.
Merrion, which maintains about 500 gas wells, mostly in the San Juan Basin, disposes of 1,700 barrels of produced water a day either in old, played-out wells or special, wider wells drilled specifically for pumping produced water back where it came from.
Yates Petroleum's Frank Yates was on hand last month with other investors as Altela emptied the first tank of desalinated water onto the ground.
The surface discharge came after months of tests that Godshall says proved the water was nine times cleaner than would be allowable for surface discharge.
The system leaves about 80 percent of the water clean and drinkable, while the remaining 20 percent is superconcentrated with pollutants.
That superconcentrated water is then disposed of by conventional means. In the end, Godshall says, the system eliminates four out of five tanker truck loads of produced water.
The Oil Conservation Division of the state Energy Minerals and Natural Resources Department, confirmed that the state issued Altela a permit in February.
Produced water contains salt, traces of hydrocarbons and even radiological materials, such as Barium.
Oil producers formerly dispensed of this water in large pits, where it would evaporate. But environmental concerns led to that practice being outlawed two decades ago.
Today, Dunn says, the cost of shipping and disposing of brackish water is about $2.50 per 42-gallon barrel. That cost can exceed $5 per barrel, depending on the distance it must be trucked.
Several companies have devised ways of making the water potable, but the energy requirements, maintenance and other costs have proven expensive.
Godshall is a former Sandia scientist and serial entrepreneur whose past projects include hydrogen fuel cell and solar energy-related companies. Two years ago, he licensed Altela's technology, through a third party, from Arizona State University, where it was originally developed.
Unlike conventional desalination and purification methods, which involve pressurized filtering of produced water through membranes, Altela uses a low-energy distillation process that operates at atmospheric pressure, thereby putting less stress on components.
The AltelaRain systems are housed in old cargo containers at its Albuquerque manufacturing space, which is set to soon double in size from 9,000 square feet to 17,000.
Whose water is it?
Once the water is purified, however, drillers can't technically use it to fill stock tanks or irrigate fields.
"The irony is it isn't clear yet just whose water it is," Godshall says.
Dunn says his firm has tried to sell or give away produced water for cooling equipment or and other purposes, but various state permitting offices have complicated its "beneficial use."
"You have to have water rights to put it to good use," he says.
Ownership issues aside, Godshall says desalinating brackish water could help solve what some believe is a looming freshwater crisis in the West.
For now, Altela aims to stick with the oil and gas industry what Godshall calls the "low-hanging fruit."
An office has been set up in Denver to plow through the permitting processes in the company's target areas of Wyoming, Montana, New Mexico and Colorado.
Its administrative offices are in a Lockheed Martin building shared by nonprofit Technology Ventures Corp. Altela will be one of 18 presenters in this year's TVC Equity Capital Symposium.