Finding a niche is one thing. Making that niche profitable is another thing entirely. But GreenHunter Water has done just that in a short amount of time.

The key to that success? Combining decades of experience in the oil and gas industry with a serious mission. But, interestingly, a fly in the ointment led the company down a slightly different business path — one that has increased revenues, notably and incrementally, in just a few years.

GreenHunter Water is a wholly owned subsidiary of GreenHunter Energy, headquartered in Grapevine, Texas. The company, which has 160 employees, provides total water management solutions to oil and gas operators active in four core operating areas in the United States: the Marcellus, Utica, Eagle Ford and Bakken shale plays.

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But that wasn’t originally the company’s goal. When GreenHunter Energy was founded in 2005 by noted oilman Gary C. Evans (who had previously founded Magnum Hunter Resources), the company was intended to be the first publicly traded renewable energy company providing many diversified assets in alternative energy.

According to GreenHunter’s website, “Our original business plan was to acquire businesses, develop projects and operate assets in the renewable energy sectors of biomass, biodiesel, wind, solar, geothermal and clean water.”

That laudable mission, however, derailed a bit when the company found it tough to get financing for renewable energy projects, according to GreenHunter Water’s COO and President Jonathan Hoopes. “With the low cost of natural gas, it is extremely expensive to put a solar or wind project in,” he adds. Without capital market buy-in, the company shifted course — drawing from its many years of experience and contacts.

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Within four to five years after founding, GreenHunter Energy divested of its wind turbine properties and exited the biodiesel refining business, and by 2011, it had refined its focus on improving efficiencies and lowering costs of handling, recycling, hauling and disposing of produced water and frac flowback.

“We have identified water reuse and water management in the oil and natural gas industry as a significant growth opportunity,” says Hoopes. “It is our intention to develop water solutions needed for shale or unconventional oil and gas exploration,” he adds. “Our biggest opportunity is increasing the capacity of saltwater injection.”

Other arenas for GreenHunter Water include, for example, water purification facilities, trucks, environmental cleanup and rental equipment. The company also owns and operates saltwater disposal facilities in Ohio, West Virginia, Kentucky and Oklahoma. New locations are scheduled to come online in South Texas later this year.

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As part of its new focus, GreenHunter Water has entered agreements acquiring and leasing acreage in the Marcellus and Eagle Ford shale areas to develop commercial water service facilities. They have also deployed an above-ground temporary water storage system in the Marcellus shale. These proprietary tanks, Hoopes says, are made for GreenHunter by third-party fabricators. 

All of GreenHunter’s projects, actually, aren’t too far removed from the company’s original goals of renewable energy projects. According to Hoopes, “[Our new focus] still maintains the mandate the company has for reuse … and a sustainable project … but our target market is not dependent upon subsidies. 

“We have very deep relationships within the industry,” says Hoopes, a multilingual executive with many years of Wall Street experience. GreenHunter’s senior management team has a combined 100 years in oilfield experience. 

Because of that expertise, “We identified a really high growth area, and we have a smart approach to the business,” says Hoopes. 

That smart approach has paid off. Revenues on the water portion of the business were zero in 2010, during its development stage; the first revenues in 2011 were $1 million, followed by $16 million in 2012. Hoopes estimates $30 million in revenues for the publicly traded company in 2013. 

On the path to that goal, Hoopes notes that GreenHunter hopes to “expand smart and strategically.” To that end, most recently, the company has purchased 10.8-acre barging terminal facility, previously used as a gasoline storage facility, in Wheeling, W.Va. The company plans to convert the location into a water treatment, recycling and condensate handling logistics terminal with operations scheduled to begin in late 2013.

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