By day, Mike Schuette helps run Merchandise Outlet, a long-time discount retail store in Mt. Pleasant. By night, he and his brother-in-law Josh Lauderman team up in a business that aims to cleanse industrial wastewater in a way that creates streams of income along the entire — no pun intended — pipeline.
GCI Wastewater applies the spirit of capitalism to the problem of what to do about oil field wastewater. Like a lot of successful entrepreneurs’ stories, it started in someone’s garage and through a lot of long hours and sweat equity now occupies physical space.
In fact, while the business has grown to be sustainable and poised for further growth, both men still work day jobs. Lauderman is a chemical engineering who works in Hemlock and Schuette co-owns Merchandise Outlet in Mt. Pleasant.
The space for GCI just happens to be Titusville, Pa., the home of the American oil industry. There is still a going oil industry where the nation’s first oil wells were sunk, and the small- to medium-sized producers who are chiefly there are GCI’s primary clients.
The story of why that is starts with how GCI does its thing.
It starts with barrels and barrels of filthy water created by drilling. The first is a grayish combination of muck and chemicals created when water is pumped into a well to help cool and lubricate a drillbit working deep beneath the ground. The second is water with an orangish hue. This is the water that comes back up with whatever is being pumped from the well, either natural gas or oil.
When that water reaches the surface, most of the desired product is separated out, leaving dirty wastewater.
GCI address the question of what to do about that wastewater, Schuette said.
Their primary means is an advanced oxydation process that helps make it easier to filter out volatile organic matter, radioactive waste, heavy metals and hydrocarbons, co-founder Lauderman said. Lauderman, a chemical engineer, is responsible for most of the business’s scientific and technical side. This separates out the chemicals, leaving only heavily-salted brine.
Some of the chemicals pulled out by this process are themselves valuable, Schuette said. One is lithium, which can be found in lots of modern electronics.
“That’s what’s interesting, the waste is valuable,” he said.
Another is the brine itself. In the past, the untreated wastewater has been sprayed on roads to melt ice in winter and keep the dust down in summer. Schuette said that as he leanred more about this, the more adamantly he felt about finding ways to keep hazardous chemicals off the roads. Spraying just the brine while removing the hazardous elements can achieve the same results without exposing people and the environment to toxins.
The next phase is about finding an economical way to remove the salt from that brine, leaving just clean water. Doing this economically is one of the great technological Holy Grails of our time. Schuette said that they are keeping track of some very interesting developments in which small-scale desalinization could become viable.
Once that is realized, just with being able to sell chemicals removed from the first phase of treatment, there is a market for the sodium, calcium and magnesium salts they remove.
While the two said they want to keep the actual technology they use a proprietary secret, what’s given them a leg-up in the competition isn’t a piece of technology they are selling. It’s how they are marketing it.
After the two started working on the business together, they realized that while the market was wide open there were vendors selling equipment similar to theirs. It’s just that the equipment is really expensive and operating it requires that a company hire people trained to operate it.
That leaves a lot of small- to medium-oil producers — some families going back generations — with few options besides going to big expense to ship it out of state. This is also why while the two live in Mount Pleasant, most of their business takes place in Pennsylvania.
Michigan’s wastewater disposal laws mostly just require that you put it down a deep hole. Schuette said that while they’d love to provide services in Michigan some day, there’s not really much space for them right now.
Pennsylvania has strict regulations, Schuette said. And they have only a few deep injection wells, which gives most producers the only viable alternative of shipping it out-of-state to Ohio and West Virginia. Those transportation costs for smalltime producers can be daunting.
GCI’s primary innovation isn’t in a new, novel way to treat water, but in modeling their business as a service rather than a selling of goods. Titusville was a good choice because it’s at the center of a network of wells owned by smalltime — sometimes family — producers.
GCI puts a treatment facility somewhere surrounded by operating wells, and producers pay them to take the water off their hands. But, since the proximity of that service facility is close, transportation costs are significantly cut, from $10 a barrel of water to $3.25. That is especially noticeable when the price of oil has plummeted to $40 per barrel. The difference is enough in some cases to let a family continue to operate a well and make a small profit.
So far, they have less than 1 percent of penetration in Pennsylvania’s oil industry. Given the openness of the market, they see tremendous room for growth. There’s also potential for growth outside of the oil and gas fields.
“The beautiful thing about water is that it’s in every industry,” Schuette said.
They see room for operations in Okalahoma in oil and gas production, and say they think they could help clean PFAS out of Michigan’s water.
These might represent big dreams for a company still largely in its infancy. They’ve got two employees at their Pennsylvania operation, so far, and much of the work is less technical and more traditional business building. This is Schuette’s specialty.
There are tremendous hurdles in raising capital and overcoming regulatory obstacles, he said. One thing they did early on was develop a good, working relationship with the Pennsylvania Department of Environmental Protection. They are transparent with how they operate, which they said has helped smooth things with regulators.
As for raising the capital, that falls back on good old-fashioned sweat equity, Schuette said. And a little help from the Central Michigan University Research Corp. Actually, that’s quite a lot of help, Schuette said.
The CMURC, a business incubating program, helps small-scale entrepreneurs find money and make business contacts to help them realize their ideas. Schuette said that they have received critical assistance from the CMURC. In return, CMURC named GCI Water Solutions as the 2018 SmartZone Small Business of the Year.
“GCI Water Solutions came to CMURC while in the early development phase. By utilizing surrounding resources and funding opportunities, they progressed into a full-scale facility,” said Erin Strang, CMURC’s president and CEO, said in a press release. “The persistence and dedication of these entrepreneurs is why they were chosen for this honor.”