By Daniel Noll
Omni Water Solutions, Inc., is an emerging technology company that builds and deploys modular water treatment solutions. Based in Austin, Texas, Omni Water is well known locally due to its affiliation with the Austin Technology Incubator (ATI) and the application of its technology to the treatment of effluent from the hydraulic fracturing exploration of shale gas. I sat down with CEO Warren Sumner to ask him some questions about the Omni Water business model and their approach to sustainability.
TriplePundit: How has your company grown and what skills are you hiring?
Warren Summer: When I joined the company there were seven of us — founders who had put money into the business — and that was 18 months ago. We’re at 24 now, 30 by the end of the year and we’ll be up near 40 by the middle of 2013. We recruit knowledge workers for the software and water analytics side of our business — from places like Stanford, MIT, and UT — and the other half are in manufacturing. About half of the company is specialty welders and electricians who put our systems together.
3p: Omni Water operates technologies for industrial re-use (mostly fracking) and also drinking water. What’s a bigger market for you?
WS: In the short run it’s definitely frack or produced water, which amounts to about 130 billion gallons of fresh water used by the industry per year. We can reduce the volume of disposed water by 80 percent. In the long run it will be drinking water, which is global issue. Making use of sources that are currently unusable is the real opportunity.
3p: A lot of the need for drinking water is in places and communities without financial resources. Is Omni Water finding business opportunity in those areas?
WS: We were founded first with a technology for emergency drinking water — one that can make drinking water out of any source. So our core expertise is in sensing and responding to contaminants, such as arsenic and mercury. Currently, we’re working with an opportunity in Japan, sponsored by the government, for drinking water machines to deal with natural disaster situations. There are all sorts of ways to solve the water problem. I’m a big fan of helping folk dig wells in rural areas. Our machine is a high tech machine with a lot of expensive capital equipment, so we need to deal with governments and NGOs that are well-financed and can put in place the infrastructure and personnel to maintain the equipment over time.
3p: What are some of the enabling infrastructure that need to be in place for your drinking water solutions to be deploy successfully?
WS: I think it’s people who can provide security, power for the machine, and maintenance when it’s required. It’s also important to keep in mind the cost of transporting water. Unless you can bottle and transport water economically to where it is needed, producing the water doesn’t do you a whole lot of good.
3p: How much does drinking water from one of your machines cost?
WS: Our drinking water machines can make about 31,000 gallons per day. That translates to 11 million gallons per year. This will get you somewhere in the neighborhood of 2 to 3 dollars per year for the first year with decreasing costs to about 50 cents per gallon after that.
3p: Could this business have gotten off the ground if it wasn’t for shale gas?
WS: The challenge of doing good, putting drinking water in places where people need it, is that the sales cycle is so long and the needs are so diverse and scattered, and organizations are so different that it’s very challenging to get a business funded and off the ground. Our belief is that you have to enter in markets that are predictable and where people are spending money so you can attract capital. Once you begin to attract capital yourself, you have the opportunity to enter other markets and do good with the scale that it requires.
3p: How closely does Omni Water watch the macroeconomic ebbs and flows of the oil and gas industry?
WS: As we grow we pay a lot of attention to macroeconomics. The industry shifts assets from oil plays to gas plays very, very quickly as prices shift. Even though we’ve uncovered so much supply of natural gas, I believe prices will remain unpredictable. We’re sensitive to a simultaneous fall in the price of natural gas, oil and liquid gas (ethane). If you saw prices fall across the board that would be a bad situation, and that’s one of the reasons diversifying our business into drinking water is one of our goals.
3p: Are there other applications for your technology in other industrial processes that have large water use requirements?
WP: We discover these every day. One company that makes industrial grade sand approached us about how to use our solution to use brackish water and to treat their wash water. We’ve also spoken with the military about ways to reuse the wash water used for tanks and helicopters.
3p: You’re in the business of providing a public good vis-à-vis water. Can a company do good and make money at the same time?
WS: We believe so. I don’t think you can be in business if your mission is not to make money. As a venture-backed company our goal is to make money for our investors, and unless we can do that we don’t get an opportunity to help anybody. As we go after our core market of oil and gas, we have a solution that will free up a lot of water and that at the same time we can make a lot of money in providing. We believe you can do good and make money at the same time. We won’t get the capital to do anything at scale that matters in drinking water if we don’t make money for our investors. We believe we can deliver solutions and get paid for them.