General Electric Co. (NYSE: GE) has an announcement that could be a key development in solving the problem of water supply contamination caused by the fracking process.  The company has introduced a mobile evaporator designed to help natural gas producers recycle untreated waters caused bythe hydraulic fracturing process at the well site.

Large natural gas companies,  such as Chesapeake Energy Corporation (NYSE: CHK), Southwestern Energy Company (NYSE: SWN), Apache Corp. (NYSE: APA), Devon Energy Corporation (NYSE: DVN) and even Exxon Mobil Corp. (NYSE: XOM), are all now potential buyers of GE’s new mobile evaporator.

The new mobile evaporator is represented as being energy efficient, fully transportable, cost effective and that it will enable onsite frac water recycling.  If this works the way it is described, then GE is offering a new solution to reduce wastewater volume and fresh water that needs to be hauled to and from each well site that is highly needed.

Hydraulic fracturing, or fracking, is potentially one of the largest environmental  problems when it comes to extracting natural gas from the earth.  The process involves creating small fractures in the rock surrounding the reservoirs to allow natural gas and oil to flow out.  The process increases the production rate of oil and gas wells, but it is also highly controversial because many argue that it destroys natural water systems.

GE’s mobile evaporator is meant to treat the severely impaired waters, such as frac flowback and produced water.  The system is also geared to allow the reuse of the water in the industrial process, reduce fresh water volume consumed, and is meant to cut down on the environmental impact from discharge.

The target here is all unconventional gas and frac water applications in regions of the world where shale gas can be found, including North America, Europe, China and Indonesia. Initial applications will be in various North American markets such as the Marcellus Shale reservoirs in the Appalachian Basin.

The Marcellus Shale produces very high total dissolved solids frac water and this solution gives natural gas producers a way to cut down on water transportation and disposal costs. The mobile evaporator is “a 50-gallon per minute, horizontal, shell and tube, forced circulation, mechanical vapor recompression system.”

More importantly, the evaporator is said to remove nearly all of the impurities in the water, allowing producers to easily meet the newly passed Pennsylvania discharge regulations of less than 500 TDS.  GE noted that this is the first time that the technology used for the treatment of shale gas frac water has been completely mobilized.

One-product solutions for a company the size of GE will not make or break the company.  After all, GE has thousands of products and is vastly diverse.  The difference here is that this addresses one of the key issues for natural gas and oil drillers that are often accused of wrecking the environment.  There have been many documentaries and many reports on how damaging this fracking process can be.

If GE’s new solution works as well as it sounds, there is an assured built-in demand for the product.  It is not even out of the realm of possibilities that many local communities could demand that the system becomes adopted at all wells in their jurisdiction.  Of course that is speculation, but this new GE product could actually have a built-in demand with significant benefits to local communities where the drilling process is harmful to the environment.

An article from BizJournals.com via the Houston Business Journal outlines just how critical the unintended consequences can be from the fracking process.  There is even a documentary called GasLand that highlights the damage and risks from fracking.

A Texas study from the Perryman Group in 2008 noted that there were a total of 7,170 gas wells across the Barnett Shale region alone and that 541 were located inside the Fort Worth city limits.  A report from the Pittsburgh Post-Gazette in June 2010 also showed that in this year alone, the DEP had issued 1,985 new Marcellus drilling permits and it noted that some 763 wells are either completed or under construction.

As far as the total product opportunity, it is huge.  Whether the large gas companies buy this is not known, but there are literally hundreds upon hundreds of potential customers.  The EIA has a table with the most recent data being 2008, but it shows that the U.S. had 363,107 oil wells and 460,261 gas wells.  GE may have a real winner here in this new product.

JON C. OGG

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