BLOOMBERG: Fracking Water-to-Cup Technology Plugged by Oasys

Shale-gas wells aren’t yet synonymous with a fresh glass of water. Former U.S. fighter pilot Jim Matheson thinks he can change that.

The Oasys Water Inc. chief executive officer oversees a startup specializing in water-treatment and desalination solutions that clean so-called produced water. Companies have been challenged trying to cleanse a substance saltier than seawater and often laced with radioactive materials that returns to the surface with fossil fuels extracted in fracking.

“It’s a difficult water, and today that represents a big environmental challenge and it represents a huge economic challenge to the producers,” the ex-Navy flier, 49, said in an interview in London. “We can convert that economic and environmental issue into a freshwater resource. You can drink this water.”

Oasys hopes to tap into an estimated $36 billion hydraulic fracturing market that transformed the U.S. energy industry by blasting water, sand and a chemical mix into rocks to free trapped gas. Opponents’ worries about fracking getting into the water table from the technology has prompted producers and equipment developers to focus on ways to recycle the resource.

The Boston-based company has won U.S. and China contracts at a time that water supply crises, including a drought emergency in California, threaten energy production as power demand rises and the Earth’s population surpasses 7 billion.

Within two decades, global energy consumption will climb 35 percent, increasing water consumption by 85 percent, the International Energy Agency says.

Global Risks

At the World Economic Forum in Davos, Switzerland, water crises ranked as the third-biggest global risk after financial shocks in key economies and joblessness. Fifth, sixth and eighth in the survey of 31 risks by 700 industry leaders are related to water: climate change, more frequent extreme weather events such as floods and storms, and food security.

Oasys plans to play into that by deploying its systems that use a process called forward-osmosis in Texas and Pennsylvania after signing a sales accord with National Oilwell Varco Inc. (NOV), the biggest U.S. maker of oil-field equipment.

Oasys also has a partnership related to industrial water with Beijing Woteer Water Technology Co., where freshwater resources are depleted, Matheson said. Oasys is looking beyond China to the U.K. as Britain’s government establishes a shale industry, he said.

‘Top Gun’

Matheson’s skills stem from serving as an instructor from 1993-1997 at the Navy Fighter Weapons School, whose program “was indeed made famous” by the 1986 film “Top Gun” starring Tom Cruise, he said.

Oasys can treat produced water, which includes that found naturally in shale that’s returned through the well during extraction, for $3 to $4 a barrel, Matheson said. That’s usually less than the cost of trucking water away for pumping underground typically used by producers, he said.

It’s also less energy-intensive than techniques such as evaporation or reverse-osmosis, which aren’t effective for these kinds of waters that contain higher levels of chemicals such as magnesium and calcium, the CEO said.

Oasys’s technology works using membranes and the natural pressures of liquid to separate impurities from industrial waters. Oasys systems for oil- and gas-produced water can treat 4,000 barrels a day, or six to 12 fracking wells’ worth, according to Matheson.

The treated water can be returned to the water cycle or used for agriculture. While it’s potable, it may take time before many are willing to drink it, Matheson said. To support operations, Oasys raised funds in 2013 and may seek $20 million to $25 million this year or next with plans to access public markets in two to three years, he said.

Originally posted Jan 24, 2014 10:35 AM ET by Sally Bakewell of Bloomberg.