Monday, 17 October 2016

Why BioLargo’s “Lowest Energy Highest Impact” Water Treatment System Will “Clean Up” In $50 Billion Ballast Water Treatment Race

In order to halt the worldwide spread of invasive harmful marine species, the International Maritime Organization (IMO) has officially mandated more than 65,000 ships (over 400 gross tons) to install approved ballast water treatment systems. The American Bureau of Shipping (ABS) reports that the IMO Marine Environment Protection Committee will meet in October to finalize the new law.

Frost & Sullivan's Frederick Royan, Environment & Water Vice President, discussing the vast growth opportunities and key challenges that will result from the milestone Convention says, "the next few years will witness about $50 billion in cumulative spending of ballast water treatment systems."

After years of the IMO pushing for the new requirements, ship operators and owners will now have until September 8, 2017, to comply with the new regulations. The new regulations will be enforced by blocking non-compliant ships from unloading cargo, levying fines and even the threat of criminal prosecution for non-compliance. The heat is on and the industry is scrambling to find practical and affordable answer.

Current 'Best in Class' Technologies for Ballast Water Treatment Systems
With over 65 competitors listed by the IMO, competition is fierce, and UV and electro-chlorination systems are leading the way as the currently preferred technologies. As the deadline nears, these technologies are being carefully re-evaluated and official requests for extensions to achieve compliance are piling up.

Can Challenges of UV and Electro-chlorination Be Overcome?
UV and electro-chlorination are older technologies that inherently have major hurdles to clear: high capital costs, high operating energy requirements, and large size requirements.

The looming question is, "Can operators afford to achieve compliance with these existing technologies?"

Timing is Terrible
The new requirement for approved Ballast Water Treatment Systems comes at a time when the maritime industry is experiencing severe financial strain from a global slowdown, and banks may be reluctant to pony up the $50 billion needed for their customer to achieve compliance. Clearly, the economics will be challenging.

High Energy Requirements Are Big Problems
Ultraviolet and electro-chlorination systems require large amounts of energy to operate and may require more energy than what ships can currently supply. Power requirements must be considered, as existing vessels were designed with generators matched to the electrical load of the original ship, with only a small reserve. Existing electrical generators may be insufficient to support the power plants of UV and electro-chlorination systems, and additional power supplies such as diesel generators could be required, incurring significant costs.

A further complication is that IMO standards mandate that newly installed diesel generators must be "Tier III" certified, meaning they are equipped with special emission control technologies such as selective catalytic reduction (SCR) or exhaust gas recirculation (EGR). Simply put, this means that the added power generators will be very expensive and they are exceedingly large. Since these new power supplies would need to be housed in the tight space available, this exacerbates an already complex issue that could keep engineers busy for years. Arguable the most important factor to consider is that the added water treatment systems and power supplies will diminish the payload capacity (mass) for the ship, meaning it would need to reduce its payload and therefore its revenue for each trip going forward.

Let's see if this adds up? Add costly capital equipment to meet the water discharge specification, add the required power supply, fit it all into the ship, increase the operating costs and lower the payload. This combination should send a shiver up the spine of any ship owner.

BioLargo's Newly Unveiled Advanced Oxidation System (AOS) is the "Low Energy, High Impact" Solution for the Maritime Industry
After millions of dollars in R&D, many government grants, and several years of hard work, BioLargo, Inc. (OTC: BLGO) recently showcased the first pre-commercial prototype of its AOS water treatment system, billed as the lowest cost and highest impact, scalable clean water technology in the world. By combining a cutting-edge carbon matrix, advanced iodine chemistry, and electrolysis, the technology rapidly and inexpensively eliminates bacteria and chemical contaminants in water. What places the AOS above competing technologies is its low cost of input electrical energy: studies done by BioLargo researchers in conjunction with the University of Alberta have shown the AOS to achieve dramatically higher rates of disinfection with approximately 1/20th the electrical energy input of competing technologies such as UV disinfection or electro-chlorination. It is this aspect of the AOS that places it above the competition for the race to solve the ballast water treatment problem, and is the key value proposition of the AOS in this highly competitive and super-charged market.

Figure 1: The Alpha AOS - Sensor drive and computer controlled

Ocean-going vessels already have power plants built to move ballast water, so whichever water treatment system can achieve competitive or even superior disinfection results with nominal power requirements could be adapted to current ships without major power plant upgrades. This is what separates BioLargo's AOS from all other options as the system of choice. If the AOS can manage a ship's ballast water treatment requirements without requiring installation of a Tier III IMO-certified power generator, it could be the default choice for many ship owners simply because such a power generator could be prohibitively expensive, space-intensive, and heavy.

The outstanding energy efficiency of the BioLargo AOS has another implication for ships requiring a ballast treatment system. Since a ship's ballast treatment system runs off power supplied by either the main diesel engine or an auxiliary diesel generator, a treatment system with lower power requirements consumes less fuel and therefore generates less greenhouse gas emissions. This point is critical, since new European Union and IMO rules mandate that ships' emissions be tightly regulated to meet strict standards, and in the case of the IMO measures, these standards become stricter every 5 years. With its unrivaled energy efficiency, the BioLargo AOS can make it easier for ships to comply with these regulations and reduce their carbon footprint.

In addition to the unrivaled performance and power efficiency of the BioLargo AOS, the technology has other attributes that make it valuable to the maritime industry. Namely, the AOS is perfectly capable of treating water with high turbidity or total dissolved solutes, which cannot be said of UV disinfection systems in particular. The AOS is also billed as a flexible, modular system that can accommodate space limitations and interact well with physical filtration systems, easing integration into existing infrastructure. Additionally, its capital cost is expected to be lower than UV and electro-chlorination in this context because its materials are simply, ubiquitous, and are readily available at a low cost. Importantly, the AOS also uses safe and eco-friendly materials and chemicals, elevating it for ship owners concerned with safety and environmental considerations.

The AOS will very soon be deployed in the livestock production industry, where its first pilot projects are slated. With additional scale-up engineering and partnership with manufacturing operators, the AOS can next be deployed in the maritime ballast water treatment market, where it could dominate the market with its low energy cost vs value proposition.

Dennis P. Calvert, President & CEO of BioLargo commented, "In order to successfully compete in this highly competitive and fast moving market, our company will need to pick our strategic partners carefully, focus on the engineering scale-up, and refine its business modeling to maximize value and cost savings for customers."

With the new regulations approaching rapidly, shipping companies such as Navios Maritime Holdings (NYSE: NM), DryShips, Inc. (NASDAQ: DRYS), Ship Finance International Limited (NYSE: SFL), Nordic American Tankers Limited (NAT), Frontline Ltd. (NYSE: FRO), Scorpio Tankers, Inc. (NYSE: STNG), Seaspan Corporation (NYSE: SSW), and Teekay Corporation (NYSE: TK) are watching closely and focused on finding the best solutions.

Luxury cruise operators such as Carnival Corporation (NYSE: CCL), Disney Cruise Line owned by The Walt Disney Company (NYSE: DIS), Norwegian Cruise Line Holdings, Inc. (NASDAQ: NCLH), and Royal Caribbean Cruises, Ltd. (NYSE: RCL) will also have to meet the same ballast water treatment requirements.

About BioLargo, Inc.
BioLargo is a science and technology company developing multiple advanced technologies that are now entering early stages of commercialization to treat water and air for broad use in large industries.

Dennis P. Calvert, President and CEO of BioLargo, comments, "We are thankful for the support by our shareholders and investors as we advance our technology and commercial efforts. Our AOS continues to garner attention from an expanding audience of industry, public funding sources, and potential strategic partners. Since our technical symposium approximately one month ago, we are experiencing a swell of attention and interest in anticipation of our first commercial pilots planned in early 2017. We are also busy advancing the automation and optimization of the system as it moves from alpha to beta in preparation of its first commercial pilots, as well as developing more operations oriented staff. Sales from our Odor-No-More subsidiary continues to improve as we build out infrastructure to support an increased focus on sales, marketing and manufacturing. We are also working closely with new distributors and agents to expand sales of our CupriDyne Clean ( industrial odor control product. At this time, our advanced wound care products in development remain on target for 510(k) application with the FDA in early 2017. This is a great time at BioLargo and our future is bright!"

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