Laura:  Hi I’m Laura Capper and this is The EnergyMakers Show.  I’m here with Mark Patton, Vice President of Hydrozonix and we’re here at the Produced Water Society Conference in Houston; Mark welcome, great to see you.

Mark:  Good seeing you again as well Laura.

Laura:  Well so let’s just kick off, tell me a little bit about Hydrozonix.

Mark:  Well Hydrozonix is a produced water management company.  We’ve really kind of evolved over the years and so we really rank our service lines into a few categories.  One is consulting, helping people manage produced water between gathering systems.  Recycling, whether it’s recycling it to reuse it as a completion fluid or some other purpose and then we’re moving into a new product line where we’re looking at evaporators as an alternative to disposal.

Laura:  And this is all in the oil and gas sector.

Mark:  This is all in the oil and gas sector.

Laura:  I’ve known you 8 years or so and when you guys came to market you really had a disinfection system, right?  Which was going after bacteria which is a big culprit in the oil and gas industry.  So how have you evolved?

Mark:  One is really the way the industry changed.  So when we looked at our original systems which are ozone-based which we thought was a better way to do disinfection.  We’d get a more rapid, verifiable result as opposed to other options that take a longer time to work.  But the real problem is that during the oil and gas kind of completion and production cycles that you see, when oil prices dropped completion activity dropped and with completion the need to recycle.  And so for our own survival we had to move out of just being a recycling produced water for reuse company and that’s really what led to it.

Laura:  Okay, so you had to even out those market bumps and come up with services that worked in both up and down (01:49-Mark: exactly) markets.  Wise move.  But your disinfection stuff is pretty cool because I think that was historically one of the kind of culprits in industry you guys came up with a different way to skin the cat that was more environmentally benign.

Mark:  Right, you have long lasting non-oxidative biocides which are basically toxic, will persist in the water cycle and so a lot of people frowned on them but there’s other impacts.  They’re not immediately verifiable so you have to guess at what the dose rate could be in the ???? number and there can be some compatibility problems although that’s one of the issues they think they don’t have.  They’ve over the years discovered there are some issues that come with non-oxidative biocides.  Then you have the oxidative approach which is what we look at where you can actually oxidize bacteria, kill it immediately, verify it’s killed and you’re not going to have any issues.

The problem is that some oxidizers last for a while and can impact the frack fluid, so we went with ozone because ozone degrades so quickly and is just consumed up and its bi-products are basically oxygen.  So we weren’t producing any bi-products that would affect reuse if there was some other option down the road but it was also very fast-acting and degraded quickly so it wouldn’t interact with frack fluid.

Laura:  Yeah, but the beauty of it was no really long term residual effect like some of the classic biocides we had in industry which we’ve really tried to move away from.

Mark:  Right, exactly.

Laura:  So you went from there and I remember the story being kind of you had this neat solution but then you had to do all the work almost for the operators to get the water to your solution that took you into some new markets.

Mark:  Right, exactly.  And what we saw during that whole storage and gathering of produced water that there were a number of concerns, things that developed.  One is algae growth, or just bacteria growth in pits, H2S, all these things and typically then you look at again some kind of chemical treatment and again you worry about interactions later on with the frack fluid.  And so what we looked at is just straight aeration.

Aeration is really common, it’s real inexpensive so we started looking at aeration programs as a way to control and manage produced water.  That became kind of an add-on service but then later on in the gathering systems we learned that people were collecting their produced water, distributing it different places and seeing solids build up and solids almost always become synonymous with scale.

So we talked to people that were adding scale inhibitors – I’ve tried this, I’ve tried this and it’s not working and I’ve tried that – and so we said well let’s just look at a practical approach, let’s analyze your solids and see what they are, determine their scale and then figure out how to approach it from that point.  And what we learned is that a lot of times it was waxes and paraffins coming out, had nothing to do with scale, and so we ended up helping people optimize their chemical programs on the production side and that’s become a bigger part of our business as well.

Laura:  Hence this consultant side of the business and I have to say I think you are probably more knowledgeable than any single individual I’ve known in industry.  The amount of topics you can talk about and go in – whether it’s mixing or what have you, sometimes not even in your direct bailiwick – you just seem to know a whole lot about this stuff.

Mark:  I think that just comes from years of experience and having to solve problems in different areas and it’s just become kind of a magnet.  I think I’m always looking for better ways to do things.

Laura:  As you know in my studies I’ve been looking at issues around disposal wells and seismicity and pressurization and one of the technologies that comes up frequently and in the toolkit is evaporation systems which are kind of cool because you’re not necessarily recycling for direct reuse but you’re returning it to the environment; you’re keeping it in the hydra cycle and my understanding is that you’ve developed quite a bit of expertise around evaporation as well.

Mark:  Yeah, exactly.  We saw the same issues with indo-seismicity alternative to injection becoming necessary one of the things that we looked at and it started with someone wanting us to design a pre-treatment system for an evaporator.  And we looked at some of these…

Laura:  Because metallurgy is a big deal right?  They corrode real fast?

Mark:  Exactly, they corrode real fast, they have scale build up and they’re looking at solids control.  So as we started looking at these conventional evaporators there were a couple things I noticed right away.  One is they didn’t have really good clean out systems; so in other words as your salts and your solids build up they didn’t have a real way of continuously cleaning out.  And so I had worked with a wet-scrubbing system back with a drilling mud plant that I had operated years ago and we put a wet-scrubber on our system.

And they said well if we do the wet-scrubber with your burner and you put in a clean out system you could really improve some of the efficiency of the system of a conventional evaporator.  And so that was the basis of our design and then we looked at some proprietary ways of controlling scale within the spray nozzles without having to do any kind of chemical treatment that would add to an emission profile.

Laura:  Can you dive into the emissions side of it a little bit more for us?

Mark:  Sure.  One of the things that we looked at when we looked at this evaporator was not so much a standalone evaporator that you could use at a centralized facility – which you could, that’s one of its applications but well head treatment – and so what we saw is with …, which is a new ambulatory action that took place rather recently in 2015, and with that effective date it said you couldn’t flare anymore.  But what it did allow for is alternatives to flaring.

So you have somewhere else where you’re going to have to put distribution systems, collection systems or you can find an alternative.  And we said will if that alternative could be an evaporator then we could put that there and evaporate your produced water and at the same time use your natural gas that you’re generating – or your waste gas that you’re generating – at the wellhead that we could actually kill two birds with one stone.  And we thought that’s the application that we want to look at.

So that was really where we decided to focus our attention is looking at wellhead treatment but ??? is kind of an interesting regulation because one of the things that they used, which is something that’s been used multiple times, is what they call the social cost of carbon.  And I’ve always found it funny how that developed of the years and under Obama Administration they really wanted to focus and have an actual formula that they could use but it almost seemed as if they knew what they wanted the result to be before they developed the formula.  So it wasn’t really a scientific approach where I developed my formula and have an answer, it was they kind of knew what they wanted to answer to be and then they tried to create a formula that would back into it.

Laura:  So I thought there were a lot of studies and stuff that related to went into this.

Mark:  There are a lot of studies and some of the impacts and I’ll give you one.  One of the general ideas is that CO2 is going to impact agriculture and it’s going to impact agriculture negatively.  Well there was something called carbon fertilization, it was a study in Japan, and they found that actually higher levels of CO2 increase crop yields; they didn’t decrease them.  And so it made them have to change their…

Laura:  I remember photosynthesis, how that works, yes.

Mark:  And so as they developed the study they found it was about 35% increase yield in food crops.  So now this model…

Laura:  35%?

Mark:  35%.  So now this model, you know, you add this 35% to this model and all of a sudden the social cost of carbon became 0 or negative.  And they said well we can’t have that so we’re just going to use 8% and they just indiscriminantly changed 35% from the study to 8% to put in the model so that they could still keep the social cost of carbon in this general range that they thought was acceptable.  So the formula is really kind of a – it almost feels like it’s a manipulated formula to end up with the result that they already determined is what they wanted.

Laura:  And the researchers behind that are there not some issues around that?

Mark:  There are some issues with that, there’s some issues with the models themselves but it’s the manipulations to the models that really ultimately change what the goal was.  I’ll give you another manipulation is the office of management budget for every regulation uses discount factors of 3 and 7%, right?  Assuming that your impact to the regulation is in the future and your money if you invested today is going to be worth more tomorrow.

Laura:  Cost of money.

Mark:  So cost of money.  So they use these discount values.  Well they couldn’t use those same discount values for the social cost of carbon because it made the social cost of carbon too low.  So they created new ones of 2.5, 3 and 5% instead of the 3 and 7% which was commonly used.  And so again it’s another manipulation.

Laura:  But these actually made its way in to regulations now that are impacting your business.

Mark:  Made their way in to regulations, yeah, and impacting our business.  And then the new one of course is which was social cost of methane.  Which is funny because they’re actually saying that it’s like 30 times bigger effect than CO2 but there’s been really no support of where that number came from and in … that’s what they use, the social cost of methane, and they say methane is really horrible, it’s 30 times worse than CO2.  So it’s really hard to sit there and say well then if that’s the case then I should burn it and make it CO2 instead of letting it be nothing.

Laura:  Sure, convert it to something.

Mark:  But they use the social cost of methane to say stop flaring and go ahead and collect and distribute it somewhere else so it can be burned later.  So I don’t really see the environmental advantages of the logic behind it, it just doesn’t seem to make a whole lot of sense.  But then again it’s a regulation you have to live with it.

Laura:  We play by the rules, yep, yep.

Mark:  And so that’s why we developed this evaporator.  You know, there was a regulatory drive to do something about it and we thought this fit the need.

Laura:  Well cool.  Well that was a great, great journey, thank you for sharing those stories.  I’m a longtime fan of your company and what you guys have been doing and innovating.  I think the oil industry is moving to be a more environmentally friendly industry and you guys are largely behind that.

Mark:  Well I appreciate that, thank you for the opportunity.

Laura:  Pleasure having you here.  And that wraps up my discussion with Mark Patton of Hydrozonix and this is The EnergyMakers Show.