The Q&A: Tom Pankratz

With each issue, Trib+Water brings you an interview with experts on water-related issues. Here is this week's subject:

Tom Pankratz is a Houston-based consultant in the desalination industry and editor of the Water Desalination Report, a weekly publication at Global Water Intelligence that covers industry developments across the world. Pankratz has worked on desalination committees at the World Health Organization, the Middle East Desalination Research Center and the National Academy of Sciences.

Editor's note: This interview has been edited for length and clarity.

Trib+Water: There have been studies about seawater desalination, as opposed to groundwater desalination, in the past. What’s the history behind all of these efforts and what has been done so far?

Tom Pankratz: As far as seawater desal goes, it’s certainly an initiative that started in 2002 by Gov. Perry. He thought that we should look at it, so the state launched a program where they invited proponents to submit plans for projects. The state was willing to help fund the pilot study and help facilitate the implementation of the program.

So the Texas Water Development Board put together specifications for potential projects and opened it up to the private sector and said, “Tell us what you’d like to do and where you’d like to do it.” They got about seven or eight responses, and of those, they shortlisted about three projects and ended up doing a pilot test in the port of Brownsville.

The initiative was announced in 2002, and I think it was about 2005 by the time the pilot was finished. And then there was some talk about the state helping to fund a potential project. But it slowed down. The demand wasn't quite what was expected, apparently.

The talk of desal and the interest in it is somewhat cyclical. And I think what happened was a little bit of reality crept in. They said, "This is not cheap," and the question was, “How badly do we really need it?” So it kind of slowed down, and there were a number of projects put in the five-year water plan that the state puts together.

But the issue came up again in the last few years when the drought got worse. People began to have more interest, and the population of Texas kept growing. The renewed interest has led a number of different water agencies and private developers and industrial water users to take a good hard look at seawater desal again.

As the drought got worse, the interest level picked up. Down here in Houston, we were on water rationing in the city that I live in, and it was pretty bad. Not only were we not allowed to water our lawns on odd or even days. We couldn’t water our lawns at all.

So not only were the residential users having problems, but with the industrial users, people were looking at starting plants in Texas, new industrial facilities, and all of a sudden some of the people who were looking at those plants started to have second thoughts. There was talk that some of the plants started considering looking at Louisiana and other coastal areas when the municipalities in the area couldn’t guarantee that they would have sufficient water.

The alternative is, of course, for the industrial facilities to provide their own water, and some certainly have started to look at that. This wasn't just Houston; this was all the way down the coast. And in Corpus Christi, where they’re building the world’s largest PTA plant — a big plastics plant that M&G is building down there — they realized they didn't have enough water for their plant, so they launched a project to build their own desal plant, and that's something that’s ongoing right now. They’re designing it, and they've been very quiet about the details, but also the city of Corpus and a number of other coastal cities started looking at potentially being the site of a seawater desal plant.

It’s also led some inland locations to consider participating in coastal desal plants and a variety of creative mechanisms sharing the water that’s produced to free up some other water assets that they have. One of them is the Guadalupe Blanco River Authority, or GBRA. They are now exploring the development of not only a seawater desal plant but a power plant. They’re conducting a feasibility study right now. They’re evaluating a potentially very large scale desal plant coupled with a power plant. That would be done so they would supply not only water, which there’s a shortage particularly for industrial clients, but also power, which a lot of people speculate is going to be in short supply in the near future.

And at the same time, there are a number of private water development companies that are looking at various partnering agreements with industrial facilities and municipalities to build a desal plant. So there’s a lot of activity. It’s all preliminary activity with the exception of the one project in Corpus that is being done, but some of the projects look very interesting and some of the people developing these projects like GBRA — I’ve been an adviser to GBRA — they’re taking this very seriously and they are very interested in moving forward with their project.

Trib+Water: There are a lot of groundwater desalination plants already, but how big of a role can seawater desalination play in addressing Texas’ water problems?

Pankratz: I think the short answer is it certainly can play a role and especially in industrial development. One of the problems that industry has is when they’re building a petrochemical plant, when they’re building an electronics fabrication facility, when they’re building just about anything, they need water. And if the spigot is turned off, their plants shut down.

The way things generally work is the first priority is residential users, and the industrial facilities are usually at the end of the line. So if you want to continue the growth that Texas has projected and has experienced in the last 30 years, if you want that to continue, it requires some of these industrial facilities to move forward. If you don’t have water for the industrial facilities, they’ll move somewhere else.

So it could play a very significant role. Whenever it rains, people immediately start questioning seawater desal and say, “Do we really need it?” The problem as the scientific community is pretty convinced and most of us are convinced that the weather is changing and we’re in for more frequent and longer periods of drought. If that is indeed true or if even a repetition of what we had in the recent past is true, seawater desal makes sense as part of the overall water portfolio.

Nobody who thinks this thing through believes that seawater desal is the silver bullet to all of our problems, but it’s certainly part of a solution. And I think, without a doubt, there will be some seawater desal capacity built in Texas beginning right now with the Corpus plant, the GBRA plant and perhaps others. But it’s always going to be — not always but certainly for the foreseeable future — it’s going to be a portion of the water supply. We’re still going to continue to rely on reservoirs and rivers and the more conventional supplies. A lot of areas will use fresh groundwater, and we’ll see an increased use of brackish groundwater in the areas outside the coastal plains, a little bit further inland.

But seawater desal will provide kind of a topping off of the reservoirs and the overall water demand when and if it's required. Seawater desal isn’t cheap, and the thing that’s going to end up driving this is economics. A lot of people believe the drought meant we’re gonna move forward with the seawater desal plants, and they thought the new legislation that has been passed in the last two legislative sessions are going to be the switch that starts the seawater desal momentum on a roll. They certainly are helping developers understand the environmental hurdles that they have to overcome and the permitting process, which will help developers do a better job of cost estimating.

Still, so many people forget these projects have to make economic sense, and unless you have someone who’s gonna buy that water these plants make — and I don’t mean promise to buy the water, I mean contractually promise to buy the water — the plants aren't gonna go ahead. In the same way, just because you want to build a house doesn't mean that a bank is going to lend you money to buy a house. You have to prove that you have a job that will provide you with enough income to pay the house note.

The same is true with desal. They could be dying of thirst in Corpus, but if the bankers believe that it’s just an aberration or it’s just a one time or short-term thing, they’re not going to allow someone to come in and provide a new, very expensive water supply. It’s going to have to be demonstrated that it makes economic sense, that it is a long term requirement and that the development occurs sensibly. You don’t start with a huge plant. You start with a plant that can be expanded as needed.

Trib+Water: Gov. Abbott signed a bill into law regarding regulations on this industry. What does it do, and how might it help?

Pankratz: What it does is, I think, it sends a signal that the state recognizes that seawater desalination has a place in Texas’ water portfolio. When you’re building a desal plant, usually the way these things are built around the world, these plants are usually built as public-private partnerships, and they’re not built by the city. They’re usually built by a private developer in conjunction with some public agency, and the private sector finances a huge portion of it or maybe even all of the facility in return for some long-term purchase agreement. So what happens is when you’re planning a plant and you’re a developer, you look at it and say, “How risky do I feel? How big should this plant be? How gold-plated should it be? Should I even build it, and what are the environmental implications?” Often times, you don’t have answers to all those questions until you spend a lot of money.

And in California, which may be an extreme example, admittedly, they spent between $40 million and $60 million to do the development work for the plant that’s being built right now in Carlsbad. There’s no city in Texas, and in fact, the state of Texas wouldn't risk $40 million or $50 million on development work on a project that might not go ahead.

So what these laws do is they help establish the criteria that will be used to judge whether or not a plant should go ahead or what environmental requirements should be required. They help erase or address some of the risk that developers have. So the developers who are thinking about building a plant say, “I think we could build a plant. I think we could make money but what if the state comes back and say we’re not gonna support desal, or to do it you’ve got to do this and that?" Then, the plant wouldn’t make sense economically. But if you have some legislation in place that helps outline the permitting process, it helps address some of the risk that developers have.

It’s like if you were to build a house you say, "That looks like a nice place to build a house. I’m gonna buy that land and build a house." And you shell out your life savings, you put a down payment on it and hire a contractor, and then all of a sudden the city says you can’t build a house there because it’s flood prone. Then, you’ve got to build your house up 10 feet. And so you say you can’t afford to do that so all of a sudden you're sitting with a piece of property that isn’t worth much.

What this legislation does is it helps tell developers that as long as you put the plant in a place that you assure that you can get the right amount of water and discharge it without harming the marine life or killing fish or seagrasses, we will consider it. It helps them get a sense to say, "Let’s move forward. Let’s buy the property because we have a very good possibility of getting this whole thing permitted rather than throwing our money down the drain."