•    How does the Top 50 best serve to bring forth the promise of innovation to have an impact in water over the short term?
•    What should be the organizational structure and support provided for the 2012 Artemis Top 50?
•    Which organizations should sponsor, as advisors, as judges, as recommenders as partners?

We look forward to hearing your comments.  Watch this space for updates.

Today’s economic map of the world is characterized by clusters: critical masses in one place of linked industries and institutions–from suppliers to universities to government agencies–that enjoy unusual competitive success in a particular field.

There will be water tech start-ups that will redefine water management the way that Ericsson and Nokia redefined telephony.  The regions that are home for the first group of water successes will reap the dramatic economic growth that comes with technology booms. For these cities, environmental challenges really will be good for business.  Oil and gas has built great corporations, but the profitability and the intensive growth of software and technology continues to outpace it dramatically, with 37.6% compared with 12.6% profitability.

In particular, author Purabi Thakre and editor Laura Shenkar believe the rich Marcellus “play” — the gas industry term for large deposits — and its location under heavily populated New York and Pennsylvania are creating a vast market opportunity. “The Marcellus Effect: Building Momentum for Advanced Water Technology Solutions” says, “Experts estimate that shale gas drilling will grow sevenfold over the next 10 years in the Marcellus Shale…. The resulting market for wastewater disposal and treatment in this region alone will exceed $3 billion per year, according to the banking firm Boennings & Scattergood. In addition, Shenkar expects that water technology innovations created for shale plays will find markets in other industries.

An expert on corporate water strategy and water technologies, Shenkar founded the Artemis Project, a consulting firm that advises corporations on water strategy and supports technological innovation in water management. Each year the Artemis Project sponsors the Top 50 Water Companies Competition to identify emerging technologies and investment opportunities in the water sector. This year, 10 of the 50 companies were innovating new technologies to clean up fracking wastewater.

Fracking has been around for decades, but new technology innovations and a higher price for natural gas have recently made it economic to employ it more widely. But Congress, pushed by Vice President Dick Cheney, exempted gas drilling from EPA Clean Water Act regulations in 2005. So as fracking has ramped up, particularly close to where people live, environmental concerns about water quality have emerged. Perhaps the image that best captures people’s concerns is video footage of a man setting his tap water on fire in the documentary film Gasland.

Since that film debuted last year, a scientific report has linked fracking to methane contamination in nearby aquifers. Pennsylvania officials fined Chesapeake Energy more than $1 million for contaminating the water supply in Bradford County. New York recommended a ban on drilling in the watersheds for New York City and Syracuse. In June Texas became the first state to require disclosure of fracking chemicals, which were previously considered to be intellectual property. Just this month, a federal panel recommended greater disclosure and monitoring of fracking’s environmental effects.

Fracking is a water-intensive process. According to “The Marcellus Effect,” a typical frack well uses about 4 million gallons of fresh water over its lifetime. The fracking process dirties the water both with the proprietary chemicals used and by its exposure to elements deep in the earth that are not found in surface waters. The industry calls its wastewater “produced water.”

According to the report:

“Produced water is often high in naturally occurring total dissolved solids, chloride, sulfate, and metals (such as iron)…. Produced water may also contain naturally occurring radioactive material or petroleum compounds (such as benzene, toluene, and xylene). The produced water might also contain remnants of the fracturing fluids [which contain secret recipes of chemicals]…. An individual well in the Marcellus Shale is estimated to create approximately 15,000 gallons of produced water per year.”

Historically the industry has disposed of produced water by injecting it underground in “disposal wells.” But the Marcellus region’s geology does not permit construction of disposal wells, and its undulating terrain makes it difficult to pipe water long distances. In the Marcellus area, some companies have been recycling wastewater to use again but sell the byproduct, a salty, contaminated sludge, to communities for de-icing roads or suppressing dust. Companies have also paid to haul wastewater to sewage plants, which aren’t designed to adequately treat it. Tainted water is then dumped into rivers, a particularly pernicious problem in Pennsylvania, where the Department of Environmental Protection is beginning to impose more stringent regulations.

All this attention has been uncomfortable for the gas companies, but it is forcing them to deal with their wastewater in a more substantial way. In particular, energy companies are interested in onsite water treatment options.

“We predict that the integrated wastewater appliances that emerge in Marcellus will replace off-site disposal as a predominant practice in shale gas drilling,” says the Artemis report.

Water technology companies smell opportunity, and several big companies that have historically handled wastewater disposal in central treatment locations are working on new strategies. They are naturally well positioned to exploit this opportunity as they have standing relationships with the oil and gas companies. However, emerging companies have a unique opportunity right now, says the report:

“There is an urgent need for a reliable water management solution, which has created a game-changing vacuum…. The unique situation in Marcellus has opened a window of opportunity where technology and innovation trump the positions held by established companies, allowing these emerging companies to gain access to end customers. Until the bigger players that are the gatekeepers “crack the code” and establish strong onsite water treatment solutions for shale gas drilling, promising young technology solutions companies have a chance to commercialize their solutions and attain sustainable profitability by deploying quickly.”

The report also says that several emerging companies have received interest, funding, and support for product testing and validation from gas companies.

Shenkar told me she expects to see turnkey solutions, the equivalent of a PC or other end-user product. “These products offer a company operating in a remote location a portable solution that will give them the ability to precisely execute the several processes required to clean the water and to validate the results by testing it afterward,” she said. “We believe Marcellus will demand that, and technology can do that better than humans.”

In particular, Shenkar believes companies may be motivated by the Sarbanes–Oxley Act of 2002, which set new accountability standards for public companies in the United States.

“Under the act, a CEO could theoretically be thrown in jail for failing to clean up the water to accepted standards,” she said. “The validation component of these turnkey solutions, in particular, is likely to be in demand as industry standards come into focus.”

http://www.forbes.com/sites/ericagies/2011/08/23/game-changing-vacuum-creates-market-opportunity-to-clean-fracking-water/

The Summit was unique gathering of industry leaders in the change that it happening in the water industry. The activity there reflects the change happening in the industry. I was excited to watch CEOs from Top 50 companies meet CEOs of the largest water companies and the leading water tech investors.

The challenges of water scarcity, ecosystem breakdown and infrastructure decay set the context of the meeting, but the focus was upon what can be done. How can innovation make a difference in water management?

Water is an important commodity, but the challenge is to develop technology products to manage it. What we call “the Internet” today, emerged as a stream of different small businesses within the communications industry over a period of years.

The water industry of the future is emerging in initiatives by established players in the water industry, as well as in the early successes of high-tech startups.

Here’s a little of what we’re seeing:

- Alliances — Over the last few weeks, companies from the Top 50 have announced partnerships that will bring their products to a wider scope of the market. More on these in a post to follow.

- Superpower Innovation Programs — Yesterday, Debra Coy brought together some of the water industry “superpowers” to discuss how they were addressing the dramatic changes that loom in the future. Partnering with promising technology startups was the hot topic.

American Water’s CEO Jeff Sterba described how they are ramping up their innovation program. Similarly, the CEOs of United Water, ITT and Nalco described new programs that they are introducing to bring the most promising technologies to their customers.

-  It Takes a Village— Investment in early-stage water tech has been sparse, accounting for only 3% of the total cleantech investment wave. The Top 50 companies that are showing the first successes are combining seed and growth-stage investment with strong partnerships and early wins with marquee customers.

The changes set to rock the water industry are more dramatic given the conservative nature of water. We might like innovative computer software and renewable energy sources, but we want the same old water we have always had.

The Artemis Top 50 are facing an industry with little history of success for start ups. At the same time, they are enjoying an open field, with opportunities for support from an increasing number of water industry players as well as investors.

The Artemis Project Top 50 Unveils 2011’s Most Innovative Water Technologies

Annual Competition Evaluates Emerging Companies for Promising Sustainable Water Management

TORONTO — May 17, 2011 — The Artemis Project, a boutique consulting practice dedicated to helping companies thrive in a world of increasing water scarcity, has announced the 2011 Artemis Project Top 50 award honorees. The Top 50 identifies the most promising companies that are applying innovation in the market to address today’s dire water challenges. The Artemis Project revealed the companies at the Ontario H20 Global Water Leadership Summit occurring through tomorrow at the Metro Toronto Convention Center in Toronto, Canada.

Since 2009, the Artemis Project Top 50 has served as a primary resource on the most promising emerging water technology solutions for investors, water equipment and chemical companies, and prospective customers. Eligible companies must have completed product development and have annual revenues of less than $25 million.

“The Artemis Top 50 is the water industry’s benchmark for recognizing innovation that will matter. It identifies the entrepreneurs that are applying technology to meet the world’s water challenges,” noted Laura Shenkar, principal at The Artemis Project. “Water tech is quickly becoming an engine for economic development and job growth. With these awards, we strive to identify the companies offering the most promising technologies coming onto the market.”

The 2011 competition brought together leading experts in the water industry to evaluate the nominated solution, its value in application, and the companies’ core team. The judges for 2011 include: Bill Wescott, Veolia Water; Steven Kloos, GE Water & Process Technologies; Peter Williams, IBM Green Innovations; Chris Morrison, Nalco; Peleg Chevion, Syngenta; Paul Gagliardo, American Water; Andrew Salveson, Carollo Engineers; Jean Debroux, Kennedy Jenks; Paul O’Callaghan, O2 Environmental; John Simpson, GSA and Rengarajan Ramesh, Wasserstein & Co. The Artemis Project solicited input from the U.S. Environmental Protection Agency in developing environmental, sustainability and quality assurance/quality control application questions for this year’s contest, although this does not imply an endorsement of any technology.

The Artemis Project Top 50 by the numbers:

Culled from over 200 applications — a 30 percent increase from 2010 — the companies named to the 2011 list are applying innovative technologies to provide more sustainable water management. They are helping to manage infrastructure, recover valuable resources from waste, and preserve natural ecosystems. They work in fields such as energy-efficient wastewater treatment, smart grid water management, biosolids conversion to energy, pollutant biodegradation, and reverse osmosis desalination.

Companies by industry application:

• infrastructure solutions:  18
• water and wastewater treatment:  23
• wastewater recovery solutions:  9

Companies by geography:

• USA:  31
• Canada:  7, of which Ontario has 4
• Israel:  7
• One each in Australia, Denmark, Ireland, Luxembourg, the Netherlands

Other data points related to the 50 companies:

• focused on solutions related to the oil and gas industry:  16
• focused on solutions related to integrated onsite water treatment:  18
• with over $5 million in revenue:  17
• backed by venture funding:  30

Below is the full list of The Artemis Project Top 50 (alphabetical order):

1          212 Resources

2          ABS Materials, Inc.

3          AbTech Industries

4          Altela, Inc.

5          American Micro Detection Systems, Inc.

6          APG-Neuros, Inc.

7          APTwater

8          Aqua-Pure Ventures

9          Aquaporin A/S

10        Aquarius Technologies Inc.

11        Aqwise

12        BioPetroClean

13        BlackGold Biofuels

14        CheckLight

15        Clearwater Systems Corporation

16        Derceto Inc

17        Desalitech

18        Drake Water Technologies, Inc.

19        Ecosphere Technologies, Inc.

20        Emefcy

21        ENBALA Power Networks Ltd.

22        Environmental Operating Solutions, Inc.

23        Epuramat S.A.

24        Evandtec Inc.

25        eWater Innovation

26        Falcon Waterfree Technologies

27        Hadronex, Inc.

28        HaloSource

29        Hydration Technology Innovations

30        HydroPoint Data Systems, Inc.

31        Hydrovolts Inc

32        M2 Renewables, Inc.

33        Marrone Bio Innovations

34        MaxWest Environmental Systems, Inc.

35        Microvi Biotech Inc.

36        MIOX Corporation

37        NanoH2O, Inc.

38        NovaThermal Energy

39        OndaVia, Inc.

40        Ostara Nutrient Recovery Technologies Inc.

41        PAX Water Technologies, Inc.

42        Puralytics

43        Purifics ES Inc.

44        SCFI Group Limited

45        SolarBee, Inc

46        TaKaDu

47        TransBiodiesel Ltd

48        UV Pure

49        Voltea

50        VRTX Technologies

Links in this release:

The Artemis Project: http://theartemisproject.com/

Top 50 Awards: http://artemistop50.com

Laura Shenkar’s bio: http://theartemisproject.com/about-us/management-bio/

Ontario H2O Summit: http://h2o.ocediscovery.com/en/default.aspx

About The Artemis Project:

The Artemis Project™ is a boutique consulting practice dedicated to helping companies thrive in a world of increasing water scarcity. We operate at the intersection of corporate strategy, advanced technology, investment and policy. We work with global corporations to achieve a sustainable competitive advantage through operational excellence in water management and assist advanced water technology companies in maximizing the value they bring to their customers.  For more information visit: www.theartemisproject.com.

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Contacts:

Laura Shenkar, The Artemis Project, (415) 751-0100, laura@theartemisproject.com

Lisa Hawes, Sterling Communications for The Artemis Project, (408) 884-5155, attensity@sterlingpr.com

• The actual addressable market for their technology is much smaller than they think.
• They are capital intensive and require project financing for unproven technology, which is hard to acquire.
• The commercialization ramp-up is likely to be long and costly due to the need to sell many small one-off systems to customers.
• Their commercialization strategies involve a direct assault on entrenched incumbents.
• They are dependent on a regulatory or other market shift that may take many years to be implemented / enforced.

The Artemis Project Top 50 competition takes these challenges into account when evaluating applicants. Our expert judges gauge companies on the strength of their technology, on their potential to capture a business opportunity and the capacity of their leadership to succeed.