Venture capital funds XPV Capital, Meidlinger Partners, Enertech Capital and Energy Ventures have all made multiple investments in companies offering water management products for extractive industries, and these companies have raised more than $400 million in equity and debt over the past five years, according to a study by the London Environmental Investment Forum (LEIF).
The study found the majority of the investment activity has taken place in North America.
XPV, a Canada-based VC investor focused on water technologies and Enertech, a US- and Canada-based investor in early and growth-stage energy technologies, have both invested in Canadian company Filterboxx Water & Environmental Corp, LEIF reports. The funds first invested in 2010 and committed a further $9 million in a follow-on round in 2011.
Filterboxx has secured a “decent slice” of the North American market, according to LEIF, by renting its packaged water treatment systems, which use ceramic membranes, to oil sands operators. It also has a partnership with GE to develop an integrated solution for heavy oil-related water treatment and recently expanded its technology capabilities, buying Scotland-based H2Oil & Gas last year.
Another key finding of the report: water companies currently serving the municipal and industrial sectors are now applying — or looking to apply — their technologies and services to the resources markets.
Altela, a US company that uses a highly efficient thermal distillation technology to desalinate and decontaminate wastewater, has raised $10 million to date. Enertech has invested in the company, and it is backed by Yates Petroleum and Merrion Oil and Gas. Altela is focused on fracking operations and has projects underway in the Marcellus Shale. Its technology meets new regulations for clean water discharge and has been validated by the Pennsylvania Department of Environmental Protection and the US Department of Energy.
The report also lists four main sectors of the market where demand for advanced water treatment technologies is expected to grow most quickly: conventional oil fields, enhanced oil recovery techniques, shale gas and oil sands.
The market for treating hydraulic fracturing water – a waste byproduct of shale gas production — will grow nine-fold to $9 billion in 2020, according to a report by Lux Research.
Meanwhile, the LEIF report says total expenditure on water-related infrastructure for mining could rise to as much as $13.6 billion by 2014, from $7.7 billion today (see chart).