Summary
- GE, Veolia, Dow and
American Water Works are selling billions in water treatment technology.
- All their water
treatment technologies work or they wouldn't be selling.
- In spite of effective
water treatment technologies, the global water crisis persists.
- The problem is the high
cost of current technologies, therefore the answer lies in lower cost.
- Promising new ultra-low
cost and highly effective water treatment technology recently revealed.
The global water crisis is enormous. Today there are
over
one
billion people without clean water and the number is soaring as water
shortages spread globally, including to
developed nations like the United States.
If you are reading this article, you are fortunate
that you are probably relatively insulated and unaware of the magnitude of this
problem and most likely have not experienced the harsh reality of living
without adequate clean water.
Insatiable global demand for potable water is fuelling
big sales and high growth in the
$360 billion water treatment industry. There are a
large number of water treatment companies selling a large number of different
water treatment technologies, yet our global population is still facing
the
most serious water shortage in history; and the
quality of water even in developed nations is declining and posing serious
health hazards.
A few leaders in water treatment are General Electric
(NYSE:
GE), Veolia (NYSE:
VE),
Dow Chemical (NYSE:
DOW) and American Water Works (NYSE:
AWK). A few examples of commonly
used water treatment technologies are: Advanced Oxidation Process, Reverse
Osmosis, Membrane Filtration, Ceramic Filtration, Ultrafiltration, Carbon
Filtration and more.
If these technologies are being sold for billions of
dollars they must work. If they work, why is there still such an enormous
problem?
The answer is very simple and can be explained with
just one word - "Cost"!
These technologies all work, but they simply cost too
much. Demand for clean water may be "off the charts", but supply is
unable to keep up because significant investment capital is required, and
operational costs are high.
An example of the high cost just for capital
investment comes from the small community of Oceanside, California, where they
are exploring replacement of an older water treatment facility that was built
in 1949. Replacement today is estimated at close to $100 million. And that does
not include the high cost of energy for operation and maintenance.
One
example of the high cost of energy for operating water treatment is
quoted from the American Council For An Energy Efficient Economy,
"municipal water supply and wastewater treatment systems are among the
most energy-intensive facilities owned and are operated by local governments,
accounting for about 35% of energy used by municipalities."
It's logical that a more cost-effective solution is
required to have any meaningful impact on the water crisis. Because they are
the only options for solutions, current high-cost technologies will remain in
big demand and will generate large sales, but they will not solve the lion's
share of the problem. The fact that the magnitude of the unsolved problem is
still so enormous; and that so many technologies are offered by so many
companies; is a strong statement that they cannot solve the global water crisis.
The Global Water Picture Today
Eighty percent of infectious diseases are caused by
contaminated water. Five million people die each year from lack of water or from
contaminated water. One
quarter of the world population has little or no clean water. By 2020,
it is estimated that 76 million people will die from lack of water or from
contaminated water.
China has 22% of the world's population, but only 7%
of the world's fresh water.
Similar
problems exist in Africa, India and the Middle East. Droughts combined
with water pollution from agriculture, oil recovery, mining and industry are
straining available fresh water in the United States, Europe and other
developed nations and are constraining economic and social development
worldwide.
Global Pollution Sources
Agriculture is the largest user of water swallowing
up
70% of all available fresh water. Runoff water from
agriculture is
massive on a global scale and is known to pollute the groundwater,
rivers and lakes with nitrates and pesticides. An
example of what nitrates can do is the recent drinking
water scare in Toledo, Ohio when it was discovered that nitrates were leaking
into Lake Erie and causing toxic algae blooms to grow and contaminate the
drinking water supply. Nitrate problems are expected to become widespread and
more apparent as monitoring devices to measure for contaminants become more
effective and in wider use.
The
U.S
Geological Survey Water Schoolclaims, "Before the mid-1970s, it was
thought that soil acted as a protective filter that stopped pesticides from
reaching groundwater. Studies have now shown that this is not the case.
Pesticides can reach water-bearing aquifers below ground from applications onto
crop fields, seepage of contaminated surface water, accidental spills and
leaks, improper disposal, and even through injection waste material into wells."
Oil sands production creates the majority of oil but
requires about
four gallons of water to extract each gallon of oil
from the sand. The wastewater, "produced water", from oil sands
recovery becomes contaminated with toxins and is often stored in tailings ponds
until a solution can be found to treat the water to safe standards. In Canada,
there are over 170 square kilometres of "tailings ponds" containing
about one billion gallons of wastewater. There have been
reports of significant leakage from these tailings
ponds back into the water supply raising concerns about safety. The large water
requirements and produced wastewater are becoming serious constraints on oil
sands production.
Fracking requires an average of
4.5 million gallons of water per well and there are
several hundred thousand wells. The wastewater from
fracking called "flowback", is toxic and is often injected back into
deep disposal wells that are below the ground water table. According to
an
article in Scientific American, "Records from
disparate corners of the United States show that wells drilled to bury this
waste deep beneath the ground have repeatedly leaked, sending dangerous
chemicals and waste gurgling to the surface or, on occasion, seeping into
shallow aquifers that store a significant portion of the nation's drinking
water." The difficulty obtaining the necessary water requirements and
safely managing the toxic flowback wastewater are becoming serious constraints
on fracking.
Mining operations require large amounts of water for
recovering targeted minerals from ore and the wastewater tailings are also very
toxic. Typically, these wastewater tailings are placed into tailings ponds
where they remain for years with the potential to leak into the groundwater and
rivers. Massive toxic spills into the water supply were recently reported
in
Canada,
Mexico, and
West Virginia.
Electric power plants are one of the largest users of
water, and depending on the nation, coal-fired power plants contribute anywhere
from
41% to 93% of electricity worldwide.
Coal fired power plants have been under scrutiny for
decades due to the heavy carbon emissions they release into the atmosphere.
They are required to use air scrubbers to clean the air, but the water used to
clean the scrubbers picks up the toxic contaminants and carries them to the
water supply.
According to the NY Times, Coal fired power plants are
the
biggest producers of toxic waste. Every year, they release
millions of pounds of pollutants, including toxic metals like arsenic, boron,
mercury, cadmium, lead and selenium, into rivers, streams, and lakes.
Current Water Treatment Technologies In Use
GE offers a number of water treatment methods that
produce 1.7 billion gallons of potable water every day. ZEEWEED ultrafiltration
membrane technology for oil refineries allows them to reuse up to 95% of their
water from recycling. GE's membrane water treatment recycles 100 million
gallons of wastewater every day for agricultural irrigation. GE's
"EDR" technology turns raw water into drinking water for metropolitan
water systems. This video clip by GE explains their role in water treatment.
Referring to the high cost of operating any water
treatment technology, Yuvbir Singh, General Manager engineered systems at GE
Water and Process Technology, said, "Over the last couple of years we've
been really focused on reducing energy consumption in out wastewater treatment
systems, because on a lifecycle basis, that's a big part of operating cost for
our customers." In spite of high investment and operating costs, demand
for GE water treatment products is expected to remain very strong because the
need is so great.
GE is a giant conglomerate with diverse interests
across a broad spectrum of the economy and the water division is not expected
to significantly impact the company's overall, revenues, profits and valuation.
Veolia is a world leader in delivering drinking water
solutions to municipalities. Veolia uses basically the same technologies as
their competitors to treat water with their Berkal, Actiflo, Multiflo,
Spidflow, Filtraflo and membrane technologies. Veolia's Opaline membrane
filters are used to remove pesticides, total organic carbon, endocrine
disrupters, and micro-organisms. Veolia's water treatment technologies serve
over 150 million people with technologies that are similar to the competition,
therefore, capital and operating costs are running high. In spite of the high
costs of their products, demand for Veolia water treatment is expected to
remain very strong because the need is so great. Veolia's overall business is
focused on the water treatment industry and therefore will experience
substantial changes in revenues, profits and valuation from its activities in
this industry.
Dow Chemical Water Division is estimated to treat 15
million gallons per minute. Dow's technologies include Reverse Osmosis, Ultra
Filtration, Fine Particle Filtration, Ion Exchange, Adsorbent Resins, Bio
Chromatography and Electro-Deionization. Dow also delivers Reverse Osmosis
Filtration for Desalination. In spite of high operating costs for their water
treatment technologies, demand for DOW water treatment products is expected to
remain very strong because the need is so great.
Dow Chemical is a diversified chemical company with
broad interests in many sectors of the economy. Because Dow is not focused on
water treatment, the company is not expected to experience large variations in
revenues, profits and valuation resulting from water equipment sales.
American Water Works offers water and wastewater
services to approximately 1,500 communities in 16 states. It operates
approximately 80 surface water treatment plants; 500 groundwater treatment
plants; 1,000 groundwater wells; 100 wastewater treatment facilities; 1,200
treated water storage facilities; 1,300 pumping stations; 87 dams; and 47,000
miles of mains and collection pipes.
American Water Works offers traditional filtration
systems that have no significant competitive advantage over the competition.
High operating costs for their water treatment technologies will be a
constraint on sales, but demand is expected to remain very strong because the
need is so great.
American Water Works is focused on water treatment and
is expected to experience significant changes in revenues, profits and
valuations from water treatment sales.
Promising New Technology May Offer Solution
An exciting new technology surfaced recently when an
emerging company, BioLargo, Inc. (OTCQB:
BLGO)
announced a breakthrough in water treatment. This
short video clip demonstrates
the AOS Filter (actually an electro-chemical reactor and filter) that has been
validated by the University of Alberta and proven to decontaminate water from
recalcitrant contaminants in seconds versus hours required by current
technologies, and at only 1/20th the cost of the closest competing technology.
On January 21, 2014, BioLargo issued the
press release: "BioLargo Successfully Concludes Proof
of Concept and Progresses to Pilot Phase for Its Oil Sands Decontamination
Project With University of Alberta"
On May 15, 2014 BioLargo issued a second
press release: "BioLargo's Patented AOS Filter
Receives Additional Validation for Use in Water Treatment" Dennis Calvert,
BioLargo's president, stated: "BioLargo's AOS Filter has been shown to
reduce total acid-extractable organics in water at a rate never before
demonstrated commercially. Based on proof of claim there is a belief BioLargo
may have the lowest cost sustainable solution for the oil sands
process-affected water. Having tested our technology, the esteemed University
of Alberta is entering the AOS Filter industrial pilot-scale-testing phase,
which we expect to confirm its commercial viability to treat oil sands tailings
ponds and then eliminate the need for them on a go forward basis. Oil sands are
commonly considered one of the most difficult water contamination situations.
As such, this pilot project is expected to provide the groundwork for
additional water treatment applications, including refining, fracking,
remediation, agriculture and industrial waste among others."
Cash is always a big issue with all microcaps and
BioLargo is no different. The company
reported that cash increased from $92,457 on December
31, 2013 to $373,373 on March 31, 2014. Current Assets increased from $126,146
on December 31, 2013 to $446,459 on March 31, 2014. Current Liabilities
decreased from $732, 157 on December 31, 2014 to $508,652 on March 31, 2014.
The number of shares outstanding increased from 71,357,532 on December 31, 2013
to 76,409,578 on March 31, 2014 indicating the company may have raised capital
in that period.
The company has multiple profit centers and is not
reliant on the AOS Filter and has already reported beginning sales with the
U.S. government that could become significant.
Risk tolerant investors will find BioLargo attractive
because they have the potential to offer a game-changing solution that is
needed to help solve the enormous global water crisis. If they are successful,
the rewards could be enormous.
Conclusion
The current water treatment technology offered today
by the world's largest companies cannot solve the global water crisis because
their technologies are not cost-effective. The global leaders of water
treatment have all of the tools they need to deliver massive scale to meet the
massive global needs, but their high capital investment and high operating cost
is holding them back. The industry yearns for low cost solutions.
In spite of the high costs of their products, Veolia,
and American Water works are strong buys because their technologies are the
only ones available and serve the purpose well enough to sustain strong and
fast growing sales in a world desperate for clean water. GE and DOW are large
conglomerates that will benefit to a lesser degree, but are very sound
financially. BioLargo is a compelling investment consideration for
risk-tolerant investors because the newly announced AOS Filter has the
potential to revolutionize the way wastewater is treated and reward investors
with exceptional returns.
BioLargo's new AOS Filter technology may be able to
solve the global water crisis to a much higher degree than today's technologies
because it is so much cheaper and cost-effective.
Disclosure: The author has no
positions in any stocks mentioned, and no plans to initiate any positions
within the next 72 hours. The author wrote this article themselves, and it
expresses their own opinions. The author is not receiving compensation for it.
The author has no business relationship with any company whose stock is
mentioned in this article.
