Marketing Water - Yes You can be a Water Tychoon

Our Ground Water Science clientele is largely highly conservative and risk-averse. They like a sure thing and the worst disaster of all is to invest in an asset such as a well and have it turn out nonproductive. This is worse than not trying at all. Such an attitude is 180 degrees different from oil and gas producers, who accept a certain level of risk of failure. In the "oil patch" they do everything they can to mitigate risk (exploration) but sometimes wells are “dry”. The acceptance of risk goes with the fundamental purpose of oil and gas development: to sell product for a profit. The successful of course have done quite well. Sometimes things don’t work out and investors end up wearing barrels, not selling them. However, a water supplier can make money expanding its market with the right vision and good information.

Many water utilities avoid risk entirely by simply buying water from regional water companies. Even when they have their own abundant ground water assets, such as our home office town of Bluffton, Ohio, much to our dismay. Some of these regional suppliers manage to make money (or seem to) mostly because they can get their extensive pipeline networks financed or subsidized by public funds. In contrast, we work against the grain and try to get our productive clients to be the water seller: this is a fundamental axiom of being in business (‘be a seller of water and not a buyer, beholden to a seller’). I have something valuable to sell (in this case, pumped and treated water). This helps defray my investment in extracting this asset and pays a return to my shareholders (water rate payers and lending agencies). We have been largely unsuccessful, even when a client is readily apparent (nearby water-short community or rural area). People with even good supplies and excess capacity are afraid to sell.

That’s why we admire the Dayton (Ohio) Region’s H2Open for Business. Dayton understands that it has tremendous water resources and developed assets (large, established wellfields and state-of-the-art water treatment and distribution facilities). Kudos to Dayton and best wishes. More places in our region could try it. All the regional states are ground water-surplus on the average. As is the case with Dayton, the Great Lakes Region in general has world-class ground water assets, but distribution is spotty.

What about your water asset? Can you sell and how much? You should know

• The capacity of your existing wells and if they can be used to supply additional water
• The condition of your current wells – can they be cleaned and improved? Are they in good physical condition?
• The capacity of your water treatment plant and distribution system – can it supply the additional throughput or can it be expanded?
• Can you expand or add a wellfield? This will require some exploration.
• What are the costs of options and the price points for success in sales.
• What are the growth projections in your service area?

In our region, with reduced population (until people realize we have water and they don’t), many municipal utilities have excess capacity and access to extra capacity from productive aquifers. However, if growth is strong in your service area, you may want to be conservative. You also need a growth and management plan. If you take on customers, they depend on you now. Remember, you are selling water service (abundant, good quality water) not water as such.

Resistance – or “the Friday Night Lights Effect”. We are always encouraging communities to have their own water sources, but sometimes it is tough to do because of hydrogeology. A past client of ours has fabulous wells while its neighbor up the road had low-yield wells producing poor water quality. They were offered water from a neighboring large city (no), and also by our client (at favorable terms but clearly to make money) – no. The only reason we can imagine (the number crunching said it would be "win-win") is that for generations they have been bitter high school football rivals. “Joe over there sacked my brother in 1974 and took the championship away from us. We ain’t buying water from them.” So instead, Poor Water Town built a big, costly upground reservoir to supply its own water (financed by a large fraction of our state's available public funds that year). Note that they could have also bought water from the city that had these assets already built and excess supply capacity. Again, cost-benefit was not used in the decision-making process. If you have this situation with your potential target market, it may take some sensitive negotiation, and recognize the human pride element. Send Joe over there to buy Sam a six pack of microbrew or something.

Other resistance thinking: “We are happy with our shallow, nasty, coliform-ridden wells because the water is free.” Stomach medicine, faucets and fixtures are cheap. We have nothing against private wells in dispersed settings, but small villages where the water supply is individual house wells and wastewater is septic tanks should be legitimate targets for water sales from a good neighbor.

Thinking unconventionally. With some change in thinking (and maybe regulation), the many millions of gallons (10,000s m³) of hydrofracturing flowback water and produced water that will result from oil and gas drilling in Ohio and West Virginia in particular can be an asset, not a liability. Appalachian Ohio and tight-rock sections of West Virginia struggle with adequate water in rural areas. This is where hydrocarbon wells are being developed. Why do we have to inject what could be valuable water? If we have treatment systems to recover fresh water (they exist!), and we also have energy (gas, solar, geothermal), we can grow food or other valuable agricultural products year-round in economically depressed areas. Also, if it is not for a public well, sometimes enough conventional ground water can be obtained by drilling directionally in tight-rock areas. If you want to take the risk, there could be payoff!

Ground Water Science can help. We can start by helping you with an evaluation of your existing wells and how they can be improved. We can help you with the exploration to limit risk (we have explored whole states) and construction of new water producing assets to optimize results (we help you build to last). We will work with your engineering advisers on the feasibility and options in water delivery. We’ll help explain options to your potential client. If it will help, we’ll buy the microbrew, but no bribery please.