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A Startup Has Solved Fracking's Dirty Problem Boston's Oasys Water is pioneering a revolution in the wastewater treatment industry that could turn it on its head.

By Andrew Zaleski

This story originally appeared on CNBC

A tiny startup in Boston is pioneering a revolution in the wastewater treatment industry that could turn it on its head: a forward-osmosis technology to purify the water used in fracking.

Backed by $35 million in total financing, 45 patents and a team of 60 full-time employees that counts veterans of GE and Siemens among its ranks, Oasys Water has already landed two key partnerships to take its water purification technology to the front lines of the oil, gas and power industries.

Oasys is working with National Oilwell Varco to offer its forward-osmosis solution to shale oil and gas companies in the Gulf of Mexico. And in China, where the start-up has signed a deal with Beijing-based Woteer Water Technology, Oasys is in the final throes of delivering its first "zero liquid discharge" project to clean every gallon of contaminated water 100 percent of the way to potable drinking water.

"We're providing a much more cost-effective, robust, simple approach," said CEO Jim Matheson, a former Navy pilot who took on the lead role at Oasys Water in 2013.

Hydraulic fracturing, better known as fracking, is the process by which oil and gas companies inject a cocktail of water, sand and chemicals underground to release and extract gas trapped deep in shale formations. But it's a process plagued with environmental concerns.

"Along with chemicals in the fracking fluids, heavy metals—arsenic, barium, cadmium—are the biggest problem with fracking," said Mark J. La Guardia, an environmental research scientist at the Virginia Institute of Marine Science at the College of William and Mary. "These metals are dislodged from shale during the fracking process."

Typically, such wastewater is purified through capital- and energy-intensive boiling and desalination processes. In the past, hulking thermal systems were used. Think of a big pot that boils the wastewater and leaves the solids behind while distilling the water. Today this process has been largely replaced by a reverse-osmosis method, which cheats the osmotic principle of biology by which water moves from a dilute solution to a concentrated one. In reverse osmosis, a thin semipermeable membrane and a tremendous amount of hydraulic pressure are used to push water out of the wastewater on one side of the membrane and into clean water on the other side of the membrane.

"You need a lot of electricity to pump the pressure to make this flow happen," said Menachem Elimelech, a professor in the department of chemical and electrical engineering at Yale University. What's more, Elimelech said, polluted water that's high in salinity, like that left over from fracking, requires such high hydraulic pressure that the membrane will often break.

Oasys Water—using a process first developed last decade by Elimelech and a team of researchers at Yale—instead takes advantage of a forward-osmosis process and a solution of ammonia and carbon dioxide gases dissolved in water that puts osmosis back in its rightful place (see diagram above).

A similar sort of semipermeable membrane employed in reverse osmosis is used here, but because the ammonia/carbon dioxide solution is of a higher salt concentration than the wastewater from fracking, only very low pressure is required. Forward osmosis effectively sucks the water from the contaminated water across the membrane and into the ammonia/carbon dioxide "draw" solution, which is boiled to leave behind clean freshwater. What's more, Oasys Water's draw solution can be reused again and again.

Other companies are working on forward-osmosis technology, but Matheson said Oasys is "the only company that's doing all three of those components: membrane, draw solution and a recovery."

Lucrative niche

The global market for hydraulic fracturing is on pace to exceed $36 billion this year, according to Oklahoma-based firm Spears and Associates. In the U.S., the market for just the fracking fluids used in hydraulic fracturing is on pace to hit $37 billion by 2018.

Oasys Water has steadily positioned itself to crack into this expanding market. Matheson said the zero liquid discharge project currently being delivered in China is "the first of what will be hundreds and thousands of systems installed" there. Last year Oasys opened its first international office in Sydney, Australia, where the start-up will pilot commercial systems in 2015 for cleaning up wastewater produced by Australian companies that extract Coal Seem Methane gas.

The start-up has already been widely recognized as one of the heavy hitters in cleantech: It has been named to a global list of 100 promising cleantech companies three times—most recently in 2014—by the San Francisco-based Cleantech Group. And 2014 revenue sits between $7 million and $10 million, a number Matheson expects will increase in 2015.

"People have made huge fortunes in energy over history, but it's a very hard industry," said Bill Aulet, director of the Martin Trust Center for MIT Entrepreneurship at the Massachusetts Institute of Technology.

Matheson, a respected cleantech venture capitalist who, prior to becoming Oasys Water's CEO, helped finance and grow sustainable energy companies for 15 years as a partner at Flagship Ventures, is betting on Oasys Water to make both environmental and financial headway.

"What really attracted me was the opportunity to build a valuable company and at the same time build an important company," he said. "The opportunity to really be back in the game with a great team solving an important problem in a fundamentally new way was just too compelling for me to pass up, and it's been great."

Jim Matheson's lessons learned:

  • Look For Leverage. Building a global presence as a start-up requires aligning with the best partners, investors and local experts to help you punch way above your weight.
  • Build A Diverse Team. Work relentlessly to attract the best industry veterans and great start-up players that deeply understand your industry and are looking for ways to disrupt it.
  • Intelligently Embrace Risk. Big bets will help you gain early traction, but take a very hard look at these decisions before making the huge leap.
Andrew Zaleski is a freelance journalist and special to CNBC.com.

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