As demand for freshwater increases globally, a few companies and water-rich countries envision water shipped in large tankers designed for oil as the next big supply-side solution.
By Brett Walton
Circle of Blue
Two American companies and a small Alaska city are drawing closer to an export agreement that ships fresh water from North America to a bulk bottling plant in India in order to supply the thirsty Middle East, according to Terry Trapp, the chief executive of True Alaska Bottling, one of the companies in the partnership.
Trapp’s company holds the rights, at a penny a gallon, to export 2.9 billion gallons (10.9 billion liters) per year from the Blue Lake reservoir owned by the city of Sitka, Alaska. Meanwhile the company’s partner in the venture, San Antonio-based S2C Global Systems, is negotiating with developers in India to build facilities at a deepwater port south of Mumbai.
Sitka and Alaska Resource Management LLC, the partnership formed by the two companies, are seeking to be the first to introduce bulk supplies of freshwater, transported in huge tanker ships, as a new commodity in global trade. The concept is straightforward. Where local supplies cannot meet demand, a small group of wildcatter companies and water-rich countries are positioning themselves to provide large shipments of water via 80-million-gallon capacity tanker ships and floating polythene bags–bulk water, in the industry parlance.
“The concept we have with our partner is constructing a water depot in India or the Middle East where water is unloaded and stored with an adjacent bottling tank,” Trapp told Circle of Blue. “The water would then be distributed to countries in two-and-a-half liter or five liter containers.”
The consequences of bulk water exports are not nearly as clear cut. Proposals to export water supplies out of their natural basins have sparked fierce political resistance in some parts of the globe. The Great Lakes region of the U.S. Midwest established laws and regulations over the last decade that sought to ban the practice. Moreover, reliance on imports could perpetuate water-wasting practices in dry regions. And the capacity of wealthier regions to afford their water in five-liter containers could widen the economic and quality of life gulf between rich and poor countries.
Bulk Water’s Past and Present
Bulk water transfers are not new. Diversions out of river basins both within and between countries have occurred for decades: Singapore imports water from neighboring Malaysia; Lesotho sends water to South Africa via the Highlands Project; Southern California exists as we know it today because of water channeled from the Sierra Nevada hundreds of miles to the north. Historically, engineers have moved water through pipelines, canals or rivers under government control and oversight.
Water is also exported by bottling companies. But the volumes sold from a single source are much smaller than the volumes available in bulk. Danone, the world’s second largest bottled water producer, sold 18 billion liters (4.8 billion gallons) in 2009 from all its bottling plants combined, a sales volume that is roughly half of the water available from Sitka.
What is new is the idea of shipping water in tankers across oceans. It differs in scale and the notion that big commercial advantages exist when a scarce commodity is supplied to eager communities willing to pay the price. Accompanying the shift in supply also is a shift in perspective, said George Paterson, chief executive of Aquazeal, a New Zealand company with water rights for export.
“Long-term I see that municipalities will import pure water for human consumption and use desalinated water for lesser uses (e.g. irrigation),” Paterson wrote in an email. “I think what will happen is that there will be a recognition that all water is not the same and that pure water should be reserved for human consumption.”
The Export Plan
In its bid to pioneer the global bulk water trade Alaska Resource Management LLC is focused on sales to water-stressed areas of the Middle East, northern China, southern India and parts of Africa as potential export markets, several sources told Circle of Blue. Though Sitka has made public infrastructure investments to make it easier to load water tankers in Alaska, Alaska Resources Management, LLC has not yet found a place to unload. A potential deal to secure off-loading facilities in Fujairah, United Arab Emirates fell through earlier this year because the company could not get the real estate next to a bottling plant.
Currently, S2C Global is discussing a site near Mumbai, according to Trapp. Those discussions will go on for several more weeks, Trapp told Circle of Blue. Representatives from S2C Global did not return phone calls or email messages for this article.
The site in India would be used as a regional hub to supply the Indian market and as a supply depot for the Middle East, Trapp said. Water could be offloaded to smaller vessels for the final leg to the Middle East, or it could be transported in bottles.
“What’s missing is infrastructure on the receiving side,” Trapp said.
Once negotiations in India are concluded, ARM plans to focus attention on loading facilities in Sitka and lease contracts for tanker ships, he added.
If ARM breaks through the impediments, it could set off a run on Sitka’s 6.2 billion gallons per year of unallocated water rights. Two companies in the last six months have sent letters of inquiry about the city’s water supply for export to the Sitka Economic Development Association – American Water Company and Aqueous International, a subsidiary of a Luxemburg-based company.
Although no significant volumes of bulk water have been sold, A phrase on Aqueous International’s stationary perhaps captures best the prevailing mood in an industry that sees big profits in moving water by tanker. “Not a dream – inevitable!”
Sitka’s mayor, Scott McAdams, has similar sentiments. “I think the idea of selling bulk water to a thirsty planet has merit but its time has not yet arrived,” McAdams said. “Watersheds around the planet are under assault. The value of a commodity like water is only going to go up over time.”