Playing the 'Kevin' Card at OTC

Abstract: Newly based in Houston, Costner Industries Texas brings its movie star/entrepreneur owner to OTC to tub-thump the company's oil/water separation technology.

Analysis: Costner Industries Texas (CIT) played the "Kevin" card at last week's Offshore Technology Conference in Houston.

Academy Award-winning actor Kevin Costner, an obvious risk-taker if his box office highs and lows in choosing motion pictures to direct or star in are any measure, was on hand during the conference's opening day to promote CIT's liquid-liquid centrifugal separation equipment. He owns controlling interest in the company. The product is billed as an efficient but simple, small-footprint way to speed up oil/water separation, among other applications. Costner himself, aided by company officials, performed booth duty at CIT's exhibit. He also held a morning press conference.

Furthering the aims of CIT has indeed been a high-risk investment for Costner, who founded the company in Carson City, NV in 1993 after gaining a license to the separator technology, which had been developed earlier by the U.S. Department of Energy (DOE). Using his own money--to the tune so far, he says, of some $15 million--Costner hired engineers and scientists to improve on the DOE technology, which they did, apparently, having subsequently filed several new patents based on it. Such advancement is required by the U.S. government for the long-term licensing of any technology developed originally with the aid of taxpayer dollars.

The CIT liquid-liquid centrifuge both mixes and separates liquids inside a single, compact unit, says the company's literature. Basically, two immiscible liquids of differing densities (like oil and water) are pumped into the unit and mixed rapidly in the space between a spinning rotor and the outside housing. Inside, the centrifugal force caused by the spinning action compels the mixed fluids to separate according to their densities, each exiting the top of the housing through a different outlet. The oil then, in this case, could go straight to storage, and the water, after filtering and/or other treatment, could be discharged into its original source.

At the OTC press conference, Costner recalled that through the years, in watching television coverage of oil spill cleanup operations around the world, he had become concerned about the low level of technology used to remove spilled oil and oil/water emulsion from open water and shorelines--small boat-mounted skimmers, floating containment collars, shovels, buckets, and even straw to soak up the glop.

"There had to be a better way," he said.

So, Costner and his brother, Dan, visited libraries, searched the Internet, and inquired about any new technologies that might be applicable for separating oil and water on scene, preferably before the mixture reaches shore. The result was discovery that the DOE's national laboratories had developed a lightweight, compact centrifuge for nuclear metals applications. Costner arranged for licensing, formed the company (previously named Costner Industries Nevada Corp.), hired engineers and supervisors, and asked them to apply the technology to oil and water separation.

While his original intent had been to introduce a better way to handle the after-effects of major oil spills like the Exxon Valdez incident in Alaska, Costner is now encouraged that the separator also could be used to head off "casual" hydrocarbon spills, ranging from bilge dumping at sea by large vessels like tankers or barges to those resulting from power boat wash downs, even on freshwater impoundments. If taken in the aggregate, such discharges, which involve everything from crude oil to much more toxic hydrocarbon products like benzene, diesel fuel, and gasoline, far outweigh the occasional spills suffered as the result of holed tankers.

He told reporters that the centrifuge is now available with up to 200 gallons-per-minute capacity, and that higher rate units could be manufactured. It would be a comparatively inexpensive investment for vessel owners, he said. Its lightweight, simple operation, easy repairability, and small footprint, he added, would allow it to be used aboard tankers and other large vessels to separate bilge liquids or other hydrocarbon/water mixtures. Additionally, it could be on hand for spill emergencies, should the need arise.

But the outlook is equally good for using the centrifuge technology in other industries, he said, thanks to the vision of his engineers and marketing staff, who have found applications in the upstream segment of the petroleum industry, including handling produced water from producing wells and recovering well completion fluids, among other uses. The centrifuge also is applicable to various downstream processes. But it also is finding uses in the pharmaceutical, mining and metals recovery, and food industries, as well as in the printing business.

Costner, whose political philosophy has been described as "independent," not uncharacteristically often takes the side of liberal causes. He avows, however, that he's not interested in the "finger-pointing" attitude that many Hollywood celebrities take toward the business sector. "I gave that up a long time ago," he noted.

Rather, he said, one has to decide to look for ways that aren't based an "either-or" proposition. Aware that he was talking to a press segment that basically is in an advocate role vis-à-vis the petroleum industry, he stressed that technology that separates oil from water quickly and efficiently after a spill not only can mitigate harmful environmental effects, but also can recover oil early enough for it to retain its value. The benefits to industry of using such types of technology, he observed, have to be stressed or there is little incentive to employ it.

He also described himself as a "plodder," a goal-oriented thinker who takes his time to address challenges. The time spent on false starts, he noted, ultimately is valuable.

Although the company has exhibited at OTC several times in the last few years, this time CIT appeared to be making a full-court press aimed at offshore oil and gas production and transportation. Bringing Costner himself to OTC obviously helped attract attention to the CIT booth, a benefit many other exhibitors no doubt envied, what with a total of 1,999 exhibits at the conference. Additionally, Costner has installed a new management group for the company and moved its headquarters to Houston. It's now truly "oilpatch."

Board Chairman of the privately owned company is Rod Lake, who describes himself as a "company builder." Lake and Costner apparently have been friends since their teens, and venture capitalist Lake invested in at least two of Costner's motion pictures, Dances with Wolves and The Bodyguard (two of the ones that "made the most money," Lake said).

Costner said CIT has not yet shown a profit, but attributed his lack of knowledge about starting and operating a business as a chief reason. A good part of the $15 million spent so far, he noted, paid for "false starts." There were many reasons for the false starts, he noted, such as the lack of a positive direction, as well as that bane of many celebrities who invest in new business ventures: insincerity among their advisors, which represented still more money drains.

But with the new management team and an organized marketing plan that includes the petroleum industry, Costner believes CIT will be profitable in a short time.

With the recent news rife with stories about celebrities using their broader platform to make political hay, it has to be positive to see at least one such star positioning his dollars in the same vicinity as his mouth. Undoubtedly there are many other headliners who quietly invest--often successfully--in the petroleum and other industries. And while Costner himself may even align himself with certain elements of the entertainment community who regard many of those industries as avaricious and indifferent to the environmental and societal effects of their trade, he at least is not afraid to seek solutions to such problems based on market-driven initiatives, rather than hurling useless invective.