In April at the Sixth Annual Weapons Complex Monitor/Western Governors' Association Applied Research and Technology Colloquium, representatives of the Department of Energy's Office of Technology Development and a small technology developer signed a letter of intent to demonstrate a magnetic separation technology to decontaminate groundwater. (See June 1995 issue of Initiatives .) Since then, Selentec, a small business in Atlanta, Georgia that holds the patent for the MAG SEP technology, and OTD have been negotiating a contract to demonstrate MAG SEP at DOE's Savannah River site near Aiken, South Carolina. Initiatives interviewed Michael Dunn, president of Selentec, to learn what working with the Office of Technology Development means to his company and to the commercialization of MAG SEP.
Several stages of research and development preceded Selentec's signing of the letter of intent with OTD. Selentec wanted to protect its intellectual property rights by independently financing its early research and development without federal assistance. Michael Dunn said, "We filed our patents before we got any DOE money so we owned the intellectual property. Four or five years ago, we didn't want to get into a problem of who owned the intellectual property. Now, OTD and DOE will waive intellectual property rights to the small business, and that is the real advantage. Now you can do some of your development with OTD money; whereas when we started, our approach was to do none of the basic development with OTD money.
"To raise the money we did several things. The people who formed the company put some capital into it. But that was not enough to get where we needed to go in terms of getting the patents and developing the basic technology. So we signed an agreement with Chem-Nuclear Environmental Services, now known as Rust Federal Services. (See related article in this issue for information on an agreement between Rust Federal Services and OTD.) They're part of Waste Management [WMX Technologies, Inc. of Oak Brook, Illinois]. We signed license agreements with them that gave them the rights to be the applicator of the technologies. In return, they made certain advance royalty payments to us, which allowed us to continue the development and the enhancement of the technology. Once you file the patent, you own the rights; but you don't have something that is ready to work commercially. There is a long way from filing the patent to having something that fully works in the field. So we used the money that was provided by Rust to continue furthering the technology."
MAG SEP, the technology
The particles produced by the MAG SEP process are tens of microns in diameter and have the capability to selectively adsorb contaminants. The particles, resembling toner dust from an office copier machine, are engineered with a magnetic core, a protective material, and an adsorbent covering.
Dunn compared the particles' components to a baseball. "The inner core is a piece of iron that makes the particle magnetic. Around the iron core, equivalent to the winding or string of the baseball, is a polymer material, a kind of a plastic that protects the iron. The counterpart to the leather surface of a baseball is a selective adsorbing material. It can be an inorganic adsorber like a zeolite material. Or it can be an ion exchange-type material like that on resin beads.
"These tiny particles can be injected into water. Because they're very small, they disperse like a cloud and interact with the contamination in the water. The surface adsorbers we put in the particles selectively adsorb contaminants. Because the core of the particle is iron and is magnetic, we run the particles through a magnetic filter. All the particles are trapped in the filter, but everything that is not magnetic goes through the filter. These particles ignore the aluminum, calcium, sodium, and various other natural minerals typical of water and trap the nickel and chrome—the heavy metals. What exits the filter is clean water"
The crux of the groundwater demonstration at Savannah River will be Selentec's capability to manufacture its MAG SEP particles in sufficient quantity without loss of quality to support full-scale and long-term groundwater remediation. It will not be necessary to scale up the equipment. "Right now we can treat a thousand gallons a minute. All the equipment is available, but we've made these particles in a laboratory versus making them in a production facility. DOE's last question on a technology is, 'Can you produce them in large quantities and still get the same effectiveness?'"
For Selentec, collaborating with the Office of Technology Development is an opportunity to obtain financial assistance and a venue for a full-scale demonstration, a necessary hurdle for commercialization of MAG SEP. Dunn said, "There are several reasons we felt it [a cooperative venture with OTD] would help us. The first reason is the full-scale demonstration of the technology. When you're dealing in the private sector, nobody wants to be first. So by having OTD actually use the technology in a full-scale demonstration, it furthers us commercially.
"The second thing is a full-scale demonstration is very expensive. If we had to raise the capital to verify the technology works on a commercial scale, it would have run us several million dollars—probably more than $5 million. It's not just our cost. For example, we can put in a system that would treat 2,000 gallons a minute and operate it for a year and probably stay under a million dollars total. That includes all capital equipment and everything. But the problem is, you also have to have a site, power feeds, a building to put it in, health and safety [procedures], characterization of the site, analysis of the samples. By the time you get through with all that, you are talking several million dollars. With the cost share situation, we have to raise less money in the private-sector capital markets than we would have if we were doing the whole thing by ourselves.
"The third thing is to verify the particles can be made in large production runs. The question is, 'When you stop making pounds a day and start making tons a day, do you get the same quality particles and does the performance match up?'"
Dunn expressed some apprehension in his company's dealings with Westinghouse Savannah River Company, DOE's managing and operating (M&O) contractor at the Savannah River site. Dunn feels "OTD's motivation is to demonstrate technology and get it in use. There is not an inherent conflict between our goals and objectives and their goals and objectives. We do, however, have concerns about working at a DOE site with an M&O contractor.... It's kind of like a mouse dancing with an elephant. Even if it's a friendly elephant, you know the mouse is always at risk. We're always trying to be careful and cautious, because the corporate cultures are different. We're a private-sector business, and they're an M&O contractor. We're small business—they're huge. We have to perform and deliver certain things to get paid; whereas for a site contractor, everything goes into overhead. There are a lot of differences between us that affect the culture and our relationship. We're working on how to structure the relationship so it works for both of us with our differences."
Dunn is specifically concerned about cost overruns due to outmoded methods of operation and unrealistic cost structures. "You can watch a DOE project and see that costs are high, because they are applying the old weapons-mentality operating procedures to things that are not weapons-related. We don't want that applied to us. We don't want an operation that is inherently costly, because things are being imposed on us that are unrealistic. A second concern is you hear about the $300 toilet seats and all the expense and cost of things that go on in DOD and DOE because of overhead and various cost structures set up at the site. We need to be protected from those types of unreasonable costs. We're setting our contract in place with DOE and getting our costs fixed by DOE. Then if there is a perturbation on the site that causes some unreasonable costs—that is between DOE and the site contractor and not immediately passed on to us."
Negotiating the contract
Dunn is seeking to anticipate every contingency in his negotiations with Westinghouse. He feels the contract will protect the mouse from the elephant by establishing fixed costs. "For example, we'll be buying power at something comparable to a commercial rate. If there were an accident or a fire in one of the facilities that generated power, the site contractor makes the repairs and adds that cost right into the cost of power with all the overhead structure and everything applied. Sometimes you can get some very unreasonable costs that way. Power should be in the order of seven cents a kilowatt hour. If something happened to make it go to 15 or 20 cents a kilowatt hour, that would be unreasonable. That would never happen in the private sector, and we have to protect ourselves against those types of things. We can't absorb the cost of something beyond our proportionate use of it."
Applying the technology
Selentec has demonstrated for the Ukrainian government the use of MAG SEP particles to remove cesium from milk. The next step is obtaining financial backing. "The president of the Ukraine has asked President Clinton to provide it as humanitarian aid. So far our bureaucracy is churning very slowly. We have some other potential private backing, but that is conditioned upon business relationships that can be established in the Ukraine."
The U.S. Geological Survey has used the technology to obtain water samples. "They were collecting water samples in the Arctic fishing zones off Alaska and shipping those samples to DOE's Savannah River site, which had the capability to do very low-level detection. The concern was contamination getting from rivers in Russia into the Arctic Ocean north of Russia, going across the polar zone, into Alaskan fishing waters, and contaminating our fish.
"They were shipping between five and 20 gallon samples of water back to the Savannah River site. The cost of shipping was very expensive. One of the engineers at Savannah River suggested treating the water with MAG SEP at the boat and just shipping back the particles. We went through a test program and actually found out you could do that. They were actually getting sensitivity on technetium that was better than what they were getting when they were shipping the water.
"Starting in September, they are going to map the Ob River in Russia, starting at the head waters and going to the Arctic Ocean to determine if there are any places with radioactivity from old Russian sites leaking into the river. They will get a map of contamination in the Ob River, which will help determine if there are sources of contamination that need to be treated or if no significant contamination is leaking into the river, and therefore the fishing waters."