Solving fracking's biggest problemDecember 13, 2012: 1:42 PM ET
A Georgia company called Ecologix thinks it has found a way to reduce the amount of water used to extract gas.
By Brian Dumaine, senior editor at large
FORTUNE -- One of the big environmental (and financial) challenges the oil and gas industry faces is the amount of water a fracking well requires. In fracking, water is driven under pressure deep into a well. The force of the water fractures or "fracks" the shale below, releasing the trapped gas. A typical well use 4 million or 5 million gallons of water and generates about 1 million gallons of contaminated wastewater that need to be disposed of.
A common complaint environmentalists have against fracking is the amount of water these wells use -- especially in drought-stricken regions of the country such as West Texas -- and they way the oil and gas industry disposes of the waste fluid. The waste water, which can contain sand, salt, and trace amounts of radioactivity and fracking chemicals, typically gets dumped into municipal wastewater systems or into storage pits.
An Alpharetta, GA., company called Ecologix Environmental Systems, believes it has a solution. Says founder and CEO Eli Gruber, who had been a software entrepreneur before founding his ten-year-old, waste water company: "The biggest problem with fracking is we're stripping away from farmers and ranchers billions and billions of gallons of water. We need to recycle what we use." With Ecologix's patent-pending technology, small mobile units are set up near the fracking wells. Trucks deliver the waste water, which is run through the mobile units.
In a process Gruber developed for the food processing industry to separate fat and grease out of waste water, tiny air bubbles attach to the particles of pollution and then float to the surface where the sludge is skimmed off. (The sludge is buried in landfills.) The trucks refill with clean water and return it to the wells for reuse. Gruber claims his process costs the same as the same as the "pump and dump" systems being used now by the industry and is better for the environment.
So far Ecologix, which according to the company has $10 million in revenues and is profitable, has run one successful pilot plant and is raising money to launch its mobile units in the first quarter of 2013. Gruber is facing some headwinds. He's up against giant oil service companies such as Schlumberger and Halliburton that have their own technologies. And as with any new technology there's the challenge of scaling up the business while keeping quality up and costs down. Even so Gruber is undeterred. Says he: Our technology requires low capital and operating expenses and is simple to run. It's a very practical solution." He's betting the fracking drillers feel the same.