In an industry filled with high-tech drilling gear, why are shale drillers excited about a sponge? Because this one -- called Smart Sponge -- looks to be a great new weapon in the fight to clean up oily water.
This could be a big deal. A significant challenge in developing America's bounty of oil and gas is how to handle all the polluted water that's generated in the process. Every well that gets drilled into shale formations or other tight reservoirs requires hydraulic fracturing before the oil and gas will flow. And each frack job requires the injection of millions of gallons of chemical-laced water. Most of those chemicals are designed to stay underground, where they react with the rock and help the oil and gas flow. The water, however, comes back up to the surface, and when it does it is fouled with raw petroleum liquids, metals and other gunk.
Mechanical systems like skimmers, centrifuges, and reverse osmosis machines can go a long way towards separating oil from water. But a perennial challenge has been in getting the water clean enough that it can be reused in the next frack job or simply discharged down a river or stream.
Smart Sponge, as Abtech's product is called, is made out of extruded plastic in a secret process that makes the sponge highly oleophilic yet hydrophobic. That means the sponge refuses to soak up any water, while it loves oil so much that the sponge's polymer molecules chemically bind with the hydrocarbon molecules. Sounds crazy, right? Once the Smart Sponge has soaked up some oil no amount of squeezing will get it back out.
Cleaning the frack water entails pumping it through a tank that contains loose pieces of Smart Sponge "popcorn." It can handle 300 gallons a minute.
The oil locked up permanently inside, the used Smart Sponge can be disposed of in regular landfills -- something you can't do with a big jug of old motor oil.
But founder (and co-inventor) Glenn Rink says there's no point in tossing away a perfectly good source of energy. A pound of Abtech sponge can soak up about three pounds of oil, meaning that once these sponges are fully engorged they are like blocks of fuel. Most generators that power oilfield equipment run on diesel. Abtech is developing generators that will get their power by burning oil-engorged Smart Sponges. The vision is to have a "closed-loop" water-processing system out in the oilfield that uses Smart Sponges to get the oil out of the water, then burns the sponges to power the system.
Rink explained to me that Smart Sponge was initially developed for use in mopping up oil spills. The problem with the spongey material commonly used in oil containment booms (made out of extruded polypropylene plastic sponge) is that it may soak up oil, but it doesn't trap it. It's no good for cleanup workers to pick up containment booms only to have some of the oil glop back out.
Abtech tried to get Smart Sponge deployed by contractors during the BP clean up, but they mostly balked at using the material because it did its job too well. It seems clean up contractors prefer piling up billable hours rather than actually cleaning up the oil.
Abtech figures the market for cleaning up water from fracking and drilling amounts to about $1.2 billion a year. A far greater market, however, is wastewater and stormwater treatment -- a $7 billion market.
Abtech has already sold Smart Sponge-based systems to dozens of municipalities, industrial sites and airports. They've developed vault-like boxes that are installed inside stormwater drains, so that when the rain washes gunk off the streets into the sewers, the collection vaults catch all the big debris and channel the water through a thick layer of Smart Sponge.
The company's biggest deployment has been in Long Beach, Calif. where Abtech deployed filters in 500 catch basins, with a focus on those that drain directly to rivers and into the Pacific Ocean. Over a three-year test, the filters trapped 45 tons of pollutants, including 12 tons of oils and grease -- effectively preventing 3,600 gallons of oil from washing into the ocean.
They also deployed 275 filters in Norwark, Conn. in storm drains that empty into Norwalk Harbor, and eventually into Long Island Sound. Abtech figures that those filters trapped 13,500 pounds of pollution like solvents, oils, cosmetics, plasticizers and heavy metals -- the equivalent of about 1,200 gallons of oil, that would otherwise have washed into the harbor. The company recently installed stormwater systems on military bases in Utah and California.
Abtech also has a version of the sponge that kills microbes like coliform bacteria from feces by disrupting the bugs' cell walls with a biostatic charge. According to the Natural Resources Defense Council, 75% of beach closings are due to high levels of harmful bacteria. Hundreds of communities have sewer systems that in times of heavy rains can't keep up with water flow and so have no option but to discharge untreated sewage into rivers or the ocean.
In 2011 Abtech entered a joint venture with Waste Management, which is marketing the stormwater applications to its thousands of municipal customers. In areas where Waste Management already handles trash pickup, it would be relatively easy for its crews to stop by the storm drains to clean out captured debris and change out filters.
So Abtech has a neat, award-winning technology and a big partner in the form of Waste Management. But it's yet to be seen if the company can drum up enough business to even survive. Revenues were $382,000 in 2010 and $537,000 in 2011. But they're growing. In the first half of 2012 they did $580,000. Yet Abtech's net loss last year was $5.4 million, and its ability to continue as a going concern is in doubt. Abtech shares are up 87% in the past year to 88 cents. Market cap is a measly $43 million.
For that price an oilfield services giant like Halliburton, or a Waste Management might just decide to buy the whole thing.
