Gradiant

ANURAG BAJAPAYEE: Hi, I'm Anurag Bajapayee. I'm a cofounder and CEO of Gradiant. Gradiant is a water-technology company focused on treating the most-contaminated water. We like to call ourselves "solving the world's greatest water-treatment challenges."

So we're not focusing on the municipal water treatment or seawater desalination, even, but really the highest-contamination and highest-value water treatment challenges, which either cannot be solved with current technologies or are prohibitively expensive. So examples would be produced water from oil and gas, flue-gas-desulfurization water from power plants, wastewater from textiles, mills, tanneries, and so on. And that's where we come in. We are currently commercially operating in Texas and New Mexico, in the US oil and gas fields, and are quickly expanding into other industries as well as internationally.

Some of us were actually working at MIT, here, about four years ago. And we were working on technologies-- water-treatment and desalination technologies. We were working fairly closely with the industry. So this wasn't something that was generated in an academic vacuum.

But, really, while we were still at MIT, we went to the industry. We asked them what their problems were, what their challenges were, what kind of economic, logistical, regulatory constraints were. And we developed something that was fit for purpose.

So we actually, six of us, left MIT-- five from the Mechanical Engineering department, one admin. So our entire company was coming from MIT. And, since then, we quickly conducted a pilot in the field, which was very successful. We got the go-ahead to convert that into a commercial facility, at the end of 2013.

And, since then, we started our first commercial project, our first technology, called the "carrier gas extraction," which is a desalination technique for treating very contaminated waters. And, at that point, our customers said, this is great, you're actually half the cost of the existing solutions, but you're generating pure water. We don't always need drinking-quality water. So can you give us something that's lower-cost and lower-performance, as well?

And we said sure. We went back to the labs, developed our second product line-- selective chemical extraction-- which doesn't produce drinking-quality water but really gives water back to the customer that is just fit for reuse. And what that started was Gradiant has a team that's very good at taking market feedback and developing new technologies-- new products, really. And, to that extent, while we have commercial operations now, we still maintain a very active R&D group that continues to improve current technologies and developing new technologies to address other problems that we learn from the market. We still also maintain fairly close interaction with MIT.

ANURAG BAJAPAYEE: So current technologies-- number one, we have a technology called Carrier Gas Extraction, or CGE, which is really a humidification/dehumidification technique. It's an efficient, economic way of desalinating water with very high salinities. So we're talking water that is two to five times more saline than seawater. And that was our first technology, that was our first product. We still take very contaminated water that comes out with high salt content, oil and grease, suspended solids, bacteria, sulfides, gases in some cases-- volatile organics-- and generate into fresh water quality.

Our second product line or Selective Chemical Extraction, SCE, is what we call a treat to spec water treatment solution. So we take the water coming from our customers and we asked them what exactly do you need taken out. Because if you don't want drinking quality water, then why pay for it, even though that solution is half the cost of what's existing there. But if you don't need it, then don't pay for it. And we-- it's a la carte solution where our customers tell us what exactly they need taken out and we take that out.

In both of these technologies one of the important things to note is the ability to handle variability. Industrial waste waters as opposed to municipal water or seawater can vary quite a lot and most technologies are designed to work at a steady state. Whereas, our solutions take feed water that is changing constantly-- sometimes even hour to hour-- and we are able to optimi-- continuously optimize the system to generate product water quality that's exactly the same every single time.

In addition to the freshwater solution and recyclable water solution, we have-- we also have a disinfection solution called Free Radical Disinfection, which is really to take out bacteria at very high throughput rates. Now, this is very specific to the oil and gas industry. As the water is going down the well for fracking or drilling purposes, it is important to disinfect it-- to take the bugs out as we say in the industry-- so that it doesn't create complications downhole. And our FRD solution is one that disinfects high amounts of bacteria at extremely high throughput rates.

So with those three solutions we actually can now say we have the full portfolio of water treatment and management needs for [INAUDIBLE] technologies that addresses the water treatment management needs of our customers-- so freshwater, recyclable quality water, and disinfection. And that is our current portfolio.

In addition to these, we continue developing-- of course, you know technology improvement is never complete as we very well know at MIT. We were always working on newer, and better, more efficient and same at Gradiant. Even though our solutions are commercial, and they're competitive, and, in some cases, completely revolutionary, we continue to better them as well. So we are-- our next generation systems of the same technology are expected to be lower cost, higher efficiency, and so on.

In addition to these technologies, we are working on technology called ion caging, which is specifically focused on sulfate removals. It's actually a closed loop softening system. We are also working on directional solvent extraction. It's another desalination technology for high salinity waters, also, actually one which we worked on at a MIT long time ago-- more focused on small scale and space constrained applications. And, finally, we are working on novel membrane systems, which promise to increase the efficiency or increase the recovery of standard seawater desalination systems.

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ANURAG BAJAPAYEE: So our customers-- see, currently our first-- Gradiant's first market entry was in the US oil and gas industry. Even though the technologies are applicable to a wide variety of industries in a very wide variety of waters, we entered the oil and gas industry, because at the time we were founded-- remember, this is 2012. And the Shell boom was going up and up.

And water was the centerpiece discussion, both economically and environmentally. So it was not just an environmental issue and-- or not just a cost issue. It was both. And that's where we found the most interested customers-- the right immediate application.

So currently our commercial activities are in the oil and gas space. And our customers are exploration and production companies-- so you know, all the oil companies that you've heard about.

As we move into other industries, our customers are also-- the base is expanding to include powerplants, for example-- specifically coal power plants, textile mills, tannery-- so leather tannery factories, and so on, as well as eventually, as we enter into more high recovery seawater desalination. We foresee ourselves going into a more of the seawater desalination, large water companies, and so on. But that's a little bit down the line.

Yeah, so most of our commercial operations are in Texas and New Mexico. We just started up a plant in Pennsylvania, so not too far from here. And that's where all our field operations are located. But our R&D and engineering continues to be out of Boston.

These are actually in the middle of oil and gas drilling acreage. So we're right in the active-- active territory. And the plants actually are mobile. So they can move and be-- demobilize and mobilize as the customers need change and the location changes.

And this also depends on the application itself. For example, for the US oil and gas industry, where the plants tend to be somewhat smaller capacity, but they tend to move around a lot, there's a smaller but mobile plant, whereas as we are talking to our overseas customers, both in oil and gas as well as in power plants, they tend to be much more concentrated.

And the activity stays there for several decades-- for example, a power plant. If you install something at a power plant, it's going to be there. And so in those cases, we are designing and building systems that are much more stationary, because again, same argument-- if you don't have to make it mobile, then why pay for it?

So currently as we speak, we do not have any running commercial operations overseas. But we are working with large companies overseas, specifically focused in China and the Middle East.

The other markets that we have in that-- down the priority list are India and Latin America. But there is a huge need for what we do, of course, in the US, where we are operating, but outside of the US-- China and Middle East tend to be where our greatest queries are coming from these days.

And for China, for example, we are developing a very large oil and gas project in Western China, which is actually a desert environment. So water is not readily available. But there is produced water coming from the oil well. So if you can desalinate it, make it into fresh water at a cost that is viable, then you've just created a new source of fresh water in a fairly remote desert.

So we are working on that. We are also working with coal power plants. So in China recent regulations require all coal power plants to take their FGD wastewater. So this is flue gas desulfurization process. The wastewater generated from that process needs to be treated to zero liquid discharge standard.

And that's where we come in, because when you go to do your liquid discharge, you're getting higher and higher salinities until eventually you take all the water out. And you're left with solid salts. So we are working on those FGD wastewater zero liquid discharge projects as well.

One of our strategic investors and partners in China is Shanghai Electric, which is a very well reputed, publicly listed state-owned enterprise, which has operations both in China as well as overseas. They are mainly a power equipment manufacturer. But they also have a sizable desalination business. And we are working through them on a non-exclusive basis to develop these projects in China.

In Middle East, it's so far mostly oil and gas, or high recovery sea water desalination projects. So in terms of oil and gas, it's, again, taking water from the oil wells, making it into fresh water quality. In terms of seawater desalination, what currently happens is you take water from the ocean.

You take half of it out as fresh water. The other half is highly concentrated with salt. And you dump it back into the ocean. What that sometimes tends to create is these localized zones of high salt content, which is not good for the marine life and the local ecosystem.

So what some of our customers have come to us and asked if we can take that reject that's going back into the ocean, which as higher salinity cannot be treated with existing seawater desalination technologies and pull more water out of it.

So we are developing such projects as well where we'll take that reject, pull more water out of it, saturate the Brine to almost the level where it starts to crystallize into salt. And then you've suddenly increased the capacity of the seawater desalination plant without taking any more water from the ocean.

And the brine, since it's so highly saturated in a smaller volume, you could actually potentially use it to make sea salt, to make for chemical manufacturing. Textiles and tanneries also use saturated brines. So the idea would be to increase the capacity of desalination plants without taking any more water from the ocean and reducing or eliminating the brine discharge into the sea.

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ANURAG BAJPAYEE: Water market's very interesting. It's definitely a combination of economics and regulation. So, for example, in the US, every single customer that we are operating with, we are saving them money. So when the water comes out of the oil wells, our customers have to take it and dispose it off, and then they have to bring in fresh water for their operations.

In this case, we take the water. We treat it and give it back to them. So you're saving money on both ends. You're not disposing all of the water, and you're taking much less, or no, water from the public water supply. So if you can do it for less than or the same costs as x plus y, it's a no-brainer.

Of course, there are increasing environmental concerns and regulatory pressures even on the oil and gas companies in the US. You've heard about seismic activity in Oklahoma, the concerns about contamination of aquifers, and so on. How much of that is actually true is yet to be determined. The jury's still out.

But that said, if you can address it without increasing your costs, it makes the most sense. So I would say our business in the US is definitely a combination of the economic benefit that we bring as well as the environmental responsibility that it brings with it.

Overseas, certain markets-- for example, the coal power plant markets-- we find it's entirely driven by regulation because that is something that the government does now require the power plants to do as opposed to just dumping the water, which had been the practice for decades. Or not just dumping, but dumping with some minimal treatment.

I was telling you earlier about our oil and gas project in Western China. That is actually fully economically driven. So we'll take dirty water, prevent its disposal or reduce its disposal, and generate fresh water that they might have otherwise needed to bring in from a very far distance. So, again, it depends on the exact customer and the exact market. But some tend to be a combination of economics and environmental with heavily weighted in favor of economics. Occasionally, you'll come across this coal power plant market which is regulatory driven.

We started in the oil and gas industry. We brought a very attractive solution to the market. We were on a quick growth trajectory at which time the oil price collapsed to less than $30 a barrel. And we saw a definite slowdown in our market as a result in the company's growth and prospects.

However, looking back, that's not such a bad thing. Again, all good companies always try to evolve and adapt when they come across challenges. And what we did-- we took that opportunity to, one, further lower our costs to make our operations much more efficient as well as something that we would have done anyway, but it happened sooner than later-- was diversification. So if the oil market had not slowed down, we might not have already looked into exploring all these new markets overseas and other industries.

Now we find ourselves in a position where the company is well positioned to address these very large global opportunities while, at the same time, the US oil and gas market is coming back. And because the price of oil is lower, the cost pressures-- the economic pressures-- are even more. So the industry has come back, but everyone is very cost-conscious.

And along with that, the environmental and regulatory concern has only increased. So that makes us, Gradiant, the go-to company to address both the cost issues as well as the environmental issues in a resurgent industry. In terms of managing growth, of course, it can be a challenge. Again, looking back, if we hadn't had some short period of slow growth, we might have had more difficulty preparing for this upcoming growth.

But I think we did make our company more efficient, our procedures and our processes much more robust, because this is one of the things that companies have to come across. When you start, it's very laissez-faire. There's six people. It doesn't matter. But when you're 40, 50, which is where we are now at, versus when you are several hundred people, your processes really have to be in place.

And as startup founders and, especially, as engineers and scientists, some of us can be quite averse to that-- the process and the structures. But you have to adapt to that. And I think we did that. While there was a period of slow growth, we adapted ourselves. And now we look to be in a fairly good position to grow from.

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ANURAG BAJPAYEE: There's no silver bullet. Water is such a diverse, such a large, field. And people either work on one specific thing in water. But if you want to be really world-leading industrial water treatment company, you need to have a portfolio of technologies and solutions as opposed to one silver bullet that you're trying to hit everywhere.

And that is what Gradiant has really embodied-- that we put our solutions out there, which, if they're good, that's great. If they're not fully there, we improve them and get them there. But we continue to take market feedback and admit where we need the new solution that we could only currently bring. And that's how we've created this portfolio.

We also have a philosophy of developing product as in doing engineering rather than science. We're all coming from scientific backgrounds, so we know that fundamental science has very high value, and it has a very holy place. But that's what we did while we were at MIT.

As a company, we tend to do more engineering and creative innovations on existing fundamental science to bring it to the market in an economic, efficient, and quick fashion. Gradiant went from-- we won the Water Technology Idol in 2013, which is given to a promising new technology. In 2014, we won the Industrial Water Project of the Year, which is given to a running, working, profitable commercial project.

That was the first time in the history of the organization that we went from a technology idol to a industrial project of the year globally within one year time frame. And, again, that goes back to that philosophy of doing engineering rather than science as a business.

And I also just think, back to that whole adaptation and evolving, successful companies and successful technologies both adapt and evolve along the way rather than stick to the one thing that they thought initially and continue to beat upon that. I think that's where Gradiant's strength lies.

And our customers see that. They look at us as a good solution. But they also look at us as a long-term partner, a team that can solve any issue in water that might come their way. Our customers tend to be very large companies. We are in heavy industry. We're in this for the long haul. Our customers don't tend to move quickly, and the sales process is long. But we also, on the other side-- we find that once you get in, you're in.

And growing up as a company-- even though we call ourselves a technology company, a lot of this has been about our processes, procedures, safety practices-- how we treat health environmental safety-- because when we come across-- especially when we come across very large Fortune 500 customers, they take those things very seriously.

Their operations depend on our operations. So reliability every single time-- not only maintaining the water quality, but running all the time. You don't have the luxury to shut down as and when you please.

Those are things that we had to learn and adapt to. Those are the things that we didn't necessarily foresee as a technology company. Technology works. That's great. But there are so many other things that need to be done. And really makes you appreciate the complexity of large industrial operations. Even running things like power plants, which is, probably decades-old technology-- but it's a very complex logistical undertaking.

And those are the challenges that we had to address. We had to evolve and to bring people to take part in that. We actually competed against two incumbents once at a customer site-- real time, treating water. And at the end of a three-month trial, we came out on top-- not just on quality and price, but also on health, safety, and environmental practices.

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ANURAG BAJPAYEE: There's two unit operations in the technology. What we are trying to do here is essentially replicate the rain cycle, but in a confined space and in a very short period of time. So we have two unit operations. One's called a humidifier, and another is called a bubble column dehumidifier.

So the humidifier, think about it as a tall tower with a bunch of packing inside of it. We take the dirty water. We heat it up.

Now, that heating can be done with any low-temperature thermal source. So wherever there is cheap or free gas available, we use that, like in the oilfields. We can use low-temperature solar thermal. And we can use waste heat.

Now, this waste heat aspect comes very handy when we are dealing with industrial customers, like power plants, because they have so much waste heat that would otherwise be rejected, as hot water, for example. But we can actually utilize that. So that reduces or eliminates the energy cost.

So anyway, coming back to, we heat up the water. It goes up to the top of the humidifier, and drips from there. We take carrier gas-- which in this case is just air, dry air, ambient air-- which comes in from the bottom. And as the water comes down and the air goes up, they come in contact on this packing material.

All the packing material does is provide surface area for that absorption, the evaporation process. The air picks up the pure water vapor, leaves behind the salts and other contaminants, which get to the bottom as a saturated brine. By the time the air gets to the top of the humidifier, it's hot and humid. It's basically carrying-- it's pure air carrying pure vapor.

So we're essentially created the cloud. Now we have to create the rain. So we go into this bubble column, which is multi-staged. So you have a tower with a bunch of perforated plates going right through it.

So if you imagine, each of these stages has holes in the bottom of it. On top of each of these plates sits a shallow pool of ambient-temperature or cold freshwater. As this humid air comes through the bottom of the bubble column, it passes through these holes. And naturally, it starts bubbling through these shallow pools of water. Hence, it's called a bubble column.

And then, as that bubbling happens, this is a very rapid heat transfer and mixing process. So what that does is that cools the air down. And therefore, it condenses the water back out that it had picked up, because it can no longer carry all that humidity. You know how humid air, the temperature reduces, and you get dew? Exactly that's what we're getting.

So each of these liquid columns keeps increasing in height, because you're adding more pure water to it. And then we just have overflow ports, so that when the liquid column hits the overflow port, it falls to the sump, to the bottom, where we collect it as our fresh water. By the time the air is past the last stage of the bubble column, it's cold and dry again, and then it can either be ejected or recycled in closed loop.

So very simple. Obviously this is a brief introduction to it. There's many more aspects that actually make it work, and actually make it efficient. But that's the concept how we desalinate high-contamination water into fresh water.

Remember, it's low-temperature. It is ambient pressure, so we're not using any pressures or vacuums. It's just that regular pressure.

We're using-- because it's a simple process, we're not using high temperatures, we're not using high pressures, our materials of construction are simple and therefore inexpensive. We're not using large heat exchangers made of exotic metals, because when your salinity goes up, you need higher-quality material so that it doesn't get corroded.

Here, we do not need that. We constrain the use of exotic metals to a very small area. We have decoupled the separation process, where the salt separates from the heat recovery process, which is in this multi-stage bubble column, which both reduces the need for pretreatment, cost for pretreatment, and-- I can go into more, of course. But other innovations that reduce our energy consumptions as well.

So our plants, our systems, sit in the middle of the customer's operations, whether they are oil fields, or power plant, for example. And we treat this continuously. These are plants that are running 24/7. They are treating water as it's coming in from the operations.

Our current operations in the US are treating 12,000 barrels a day. Or if you think in terms of cubic meters, that's 2,000 cubic meters a day, or 2 million liters per day. So that's the extent of-- or half million gallons a day.

So that's the size of the systems. So they're fairly large throughput rates. Of course, they're small compared to, say, a city effluent treatment plant.

The projects that we are developing overseas are actually 10 to 20 times larger than those projects we're doing in the US. Now, that is-- from a scaling standpoint, that's not an issue, because we're not necessarily building larger units. We're just building more of them. It's a modular technology. So that hopefully gives you an idea of the scales that we operate at.

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