Mike Schuette and his brother-in-law Josh Lauderman's entrepreneurial journey began as so many do - with a problem. Schuette explains that whenever a company drills for oil, more water comes out of the ground than oil, and in some states, the law requires drilling companies to treat the water before it can go back into the ground. This is great for the environment, but water treatment is an expensive process, and combined with the large volume of water needing to be processed, the cost puts many small and mid-sized well operators out of business.
“Three barrels of wastewater are produced for every one barrel of oil, and that eats up their profits. A lot of small and mid-sized operators are going out of business because they can’t afford to walk away with 5% profit per barrel," says Schuette.
Schuette is originally from Mt. Pleasant. He graduated from Central Michigan University in 2005, and spent 10 years in Chicago working in finance. Lauderman is a chemical engineer.
The entrepreneurial itch runs in Schuette’s family - he owns Merchandise Outlet with his father and step-mother - and seeing a problem that needed to be solved and a lucrative market for that solution compelled him to take the leap despite a lack of knowledge about water purification at the start.
“We knew that the water treatment market was massive and growing, we knew water was hydrogen and oxygen, and we knew that there had to be some way to get all the bad stuff out. So we built out a business plan, not even having a product or anything that we understood, but we knew there was a market there and that somebody had to be able to do something.”
Schuette was right about there being a market for water processing -- by 2024, the industry is predicted to grow by 2000 percent, and in Pennsylvania 60 million barrels of wastewater are produced each year.
That business plan evolved into GCI Water Solutions, a company that treats production water from oil and gas wells. After undergoing their process, water is either able to be reused by businesses or is clean enough to be discharged back into the environment.
“Water clarity is measured in something called ‘total suspended solids’. Drinking water measures around 60 - our water is around 10,” he says. GCI's proprietary system removes impurities from water for a fraction of the cost associated with traditional treatment options
Saving money while saving the environment
Schuette is the CEO of GCI Water Solutions and manages the business and finances, Lauderman is the CTO and is responsible for designing and developing the process. They also have another engineer, Chris, on staff.
GCI Water Solutions is based in Michigan, but their work is primarily done in Pennsylvania where legislation requires water to be treated before its returned to the environment.
Well operators deliver their wastewater to GCI’s tank farm, where it’s treated with GCI’s proprietary process which uses no chemicals - only energy.
“We don’t like pouring a bunch of chemicals into the water, so we use electricity to create an oxidation process that pulls the nasty stuff out. It’s also a trade secret, so I can’t really tell you more than that,” Schuette laughs.
While treating water without chemicals benefits the environment, it’s also benefits the well operators by being low-cost.
“What most operators are paying in water treatment per barrel is about $10," explains Schuette, "For every one barrel of oil that comes out of the ground, three barrels of wastewater comes with it, so they’ve just lost $30 on a $50 barrel of oil.”
GCI is able to charge just $3.25 a barrel.
“It’s considerably less money, and so people are able to keep their businesses open,” he says.
Schutte also credits the support of environmental agencies for GCI's success. They worked with trade groups, Pennsylvania’s Department of Environmental Protection, and the national Environmental Protection Agency for three years before launching their business.
“We’ve been transparent the entire time we’ve been in operation, which is especially great when you’re working with environmental agencies, because they are looking for honesty and for people who are doing what is right,” he says. “With our low cost, we have the support of oil producers, and with our process we have the support of environmental agencies, and that kind of support just doesn’t happen.”
Capitalizing on GCI’s success and support, Schuette hopes to bring his low-cost, environmentally friendly alternative to water treatment to even more people.
GCI's current water treatment facility is a functioning template for future sites
Turning local innovation into a global solution
Imagine H20 is a nonprofit in Silicon Valley with the goal of helping people solve global water challenges. Since 2009, they’ve helped 90 startups and raised more than $275 million to help them succeed. After passing an application process for their startup accelerator, businesses gain mentorship and access to investors and customers in order to allow innovative water solutions to help more people by scaling into larger businesses.
GCI Water Solutions has applied to the accelerator, and Schuette says that the ability to scale is where GCI has the most potential.
“If you’re building a massive, high-volume treatment plant that costs $15 to $25 million to construct, the time before your investment pays off is longer and you’re still forcing people to drive two hours to bring their water to your plant, which costs them money. But because we’re building smaller scale units, we can build multiple plants closer to more operators, cutting down the time and expense it takes them to move the water to a plant. So if we cut $2.70 off per barrel what they’re paying to drive them to a larger plant, and they produce 20,000 barrels a year, that’s saving them some serious money.”
Schuette believes that with their low-cost approach, they have the ability to scale large enough to help solve this problem of oil production wastewater treatment at the global level, and being accepted into the Imagine H20 accelerator program would allow them to do that.
Salt water in the freshwater state
But GCI also has its sights set on helping local problems here in Michigan.
“We’re talking with a local major agricultural company about a desalination project. They use a lot of brine, and so the question is ‘how do we recapture those salts in the water so they can be reused?’
Three different kinds of salt come out of the brine - sodium chloride, calcium chloride, and magnesium chloride - and each type of salt has specific uses if it can be separated from the water. Sodium and magnesium chloride is used for road salt, and calcium chloride is used in concrete.
“I’m friends with a local concrete company and they’re interested in buying the calcium chloride, and I could provide that to them at a lower cost than they could get anywhere else,” Schuette says.
With all the possibilities in front of GCI Water Solutions, Schuette says he still loves the challenge of solving problems most.
“It all comes down to hydrogen and oxygen and if you can get the water back to just that, you can solve a global problem.”