Canadian Business, March 1997
The Aberdeen Proving Ground, a US Army base that lies in a patch of Maryland forest about 65 kilometers from Baltimore, has been in the news a lot lately. Allegations of harassment and sexual abuse at the base emerged early in November 1996, prompting the military to suspend 20 people from duty while it investigates-and, in the process, making Aberdeen the most notorious post-Tailhook symbol for sexual misconduct in the military.
But Aberdeen already had another, less publicized kind of pollution to deal with. The base’s Edgewood area is one of eight sites across the US at which the army developed and tested its arsenal of chemical weapons. Once a trump card in the Cold War balance of power, chemical warfare agents—largely mustard gas and nerve agents—have become massive problems for their owners. In November 1995 the US signed a treaty with Russia mandating the destruction of chemical warfare stockpiles in both countries. The deadline for compliance is 2004. The current method for destroying chemicals is incineration, which is slow, expensive and a public relations nightmare. So army engineers have thrown open the doors to new ideas.
One of those ideas comes from Douglas Hallett and his company, ELI Eco Logic Inc. of Rockwood, Ont. A scientist with a PhD in analytical chemistry and toxicology, Hallett left his job after 17 years with the Canadian government in order to design and build the SE25 ELI Destructor, a toxin-eating machine that is portable, energy efficient and clean — it produces no emissions. The Destructor was designed to handle mainly toxic waste from industry, and the machine has already proven its mettle by taking the toxins out of a Michigan landfill and by turning Hamilton harbor’s poisonous sludge into innocuous mud. Now Hallett’s company is bidding to rid the world of some of the ugly, lasting leftovers from the Cold War.
“We’re talking about chemicals that kill people,” says Hallett, who even in his days as a bureaucrat brought an activist’s zeal to his work. “I still remember one woman from Love Canal [the town in New York State that sat next to a leaky dump owned by the Hooker Chemicals and Plastics Corp.]. Over six years, her husband and all her children died of cancer—her whole family. Their sump system would flood and chemicals would be coming in. It doesn’t take much of this stuff to kill you if you’re breathing it every day.”
But alongside his lofty motives, Hallett has every intention of turning a profit. In Canada, there are more than 3,000 polychlorinated biphenyl (PCB) storage facilities. The number of contaminated sites in the US belonging to the Department of Defense alone is estimated to be 24,000, 7,000 of which need quick attention. And the opening up of Eastern Europe has unveiled hundreds of new environmental disaster sites that also need urgent attention. Hallett believes the Destructor can cure them all.
Eco Logic started with a dream, one that awoke Hallett suddenly at 2:30 one December morning in 1985. “Musicians dream in melody,” he says. “I’m a chemist, so I dream in equations.” This dream was about a chemical equation for eliminating toxic waste. “I thought, ‘Organic hazardous waste molecules, such as PCBs, can be broken down with the addition of hydrogen, and hydrogen can break the carbon/chlorine bonds in a molecule. And that releases energy and makes the whole process efficient: I wrote it all down.”
Hallett’s dream capped almost two decades of grappling with toxic waste as a senior scientist for the Canadian government. With a master’s degree in cancer research from McMaster University in Hamilton and a PhD in analytical chemistry and toxicology from the University of Ottawa, Hallett went to work for Environment Canada (then the Department of Energy, Mines & Resources) in 1969. One of his earliest research projects, studying cancer-causing agents in the Great Lakes region, alerted him to the mounting chemical calamities surrounding Lake Ontario.
By the early 1980s, Hallett was a senior scientific adviser overseeing all of Ontario for Environment Canada, as well as chair of a joint cross-border committee on the Great Lakes. His dedication in running his own department won him a silver medal for environmental stewardship from the United Nations. But by 1985, Hallett’s zeal was curdling into frustration. Even with budgets from three government ministries and a slot in the department just two steps away from the nation’s environment minister, Hallett believed his drive for a solution to the toxic waste problem was producing only indifference.
He persevered for another year or so, then quit. Rolling his son’s crib down the hall (so his boys could share a room), installing a second telephone line and buying a computer, Hallett set up Eco Logic, his own consulting company. Three days after leaving his government post, he had lined up a year’s worth of work for corporate and government clients. “We weren’t an ‘us or them’ group,” Hallett says. “We assessed PCB and dioxin contamination in a large fire in Oakland, Calif. We did the analysis for Fisheries & Oceans Canada that closed the shellfish industry in the Strait of Georgia. We did all the analysis and the toxicological consulting and were responsible for the decision to close the aquifer in Elmira [Ont.] — we also defended that decision in court. We did the insurance industry’s assessment on the Hagersville [Ont.] tire fire....” At its peak in 1991, Hallett’s home-based consulting business was generating revenue of $3.2 million and employing 28 consultants.
Hallett was still employed by the government (although he had already given notice) when he dreamed his toxin-busting equation. While working as a consultant, he researched the equation to see if anybody else had come up with anything similar. Nobody had, so he patented it. The next challenge was to build a machine that would apply his idea. Through a mutual acquaintance, he met Kelvin Campbell, an engineer from BC who was then testing stack emissions for another firm. “The chemistry was pretty straightforward, once you got your mind around it,” says Campbell, now Eco Logic’s vice-president of engineering. “Most of the construction work would revolve around process-temperature, compression. Detail work, not hard engineering.”
When Hallett first conceived the idea of the Destructor, there were still only two ways to deal with toxic waste: store it or burn it. Storage inevitably means leakage and contamination. Incineration multiplies the problem: toxic furans and dioxin float out of smokestacks; filters and scrubbers are packed with poison; there are mounds of ash to be disposed of the process requires massive amounts of energy; and it’s expensive. Canada’s main incinerator, the Alberta Special Waste Treatment Centre in Swan Hills, charges up to $3,000 a tonne to burn toxic waste, plus an additional amount per tonne for shipping. Hallett’s process is called “gas phase chemical reduction.” Waste is forced through high-pressure nozzles into a sealed chamber heated to about 850°C. Hydrogen is added to the mixture, which forces the toxic molecules to break apart. Hydrogen chloride and water are then “scrubbed” from the methane gas. The methane is used to heat the unit and keep the process going. The water is pure enough for irrigation. The hydrogen chloride has a number of industrial uses and willing buyers. And, because it is a reductive process, any remaining contaminated material is then a manageable fraction of its original volume.
Hallett and Campbell figured a functioning prototype of the Destructor would cost about $500,000. (The final cost was $650,000.) Canada’s National Research Council kicked in $100,000, but no bank would touch the project, patent notwithstanding, and Hallett’s former employer, Environment Canada, told him to get lost. Then Hallett discovered that “95 percent of the research money available in Canada is spent on defense.” So he became a defense contractor. “I got a letter from a general on US Army letterhead that said, ‘If this works, we want it.’” Thus, Canada’s Department of National Defence became the Destructor’s major source of funding.
By 1992, Campbell and his team of five engineers had a functioning pilot unit. At about eight meters high and 15 meters wide (the full SE25 unit is five times the width), the Destructor looks like a tangle of parts from a gargantuan plumbing supply house or a Brobdingnagian wind instrument. In 1991 the Destructor was transported on two flatbed tractor-trailers to Hamilton for its first test: toxic sludge dredged from the city’s harbor. It worked. Toxic sludge became plain old mud, free of PCBs, and recovered pellets of iron ore became reusable. The federal and Ontario governments sponsored the test, but took no action afterward. “They’re concentrating on trying to do things that are cheaper,” Hallett says of Environment Canada. “Of course, they haven’t gotten any of them to work, and the harbor isn’t cleaned up yet.”
Hallett found the Destructor’s next test in Bay City, Mich. A hill of soil rises 15 stories on the southern city limits, an anomaly in the flat country between Saginaw and Midland on Lake Huron’s south shore. Ten years ago, it was a site where industrial materials had been illegally dumped. But as industry drifted away from Bay City, the dump fell into disuse — shutting down in 1985. Scientists figure parts of the hill are 40 percent PCBs.
“We could’ve shipped that waste to Utah or Arkansas,” says Ed Golson, Bay City’s environmental coordinator. “But under US law, we’re still fully liable for any damage, illness or effects of that toxic waste. Incineration was an option, but that’s about as popular as a screen door in a submarine.” Michigan managed to find some federal money to pay to run part of the landfill through Hallett’s machine, and the US Environmental Protection Agency (EPA) agreed to put up about US$3 million for independent testing and verification.
The results were unprecedented. According to the independent laboratory that tested processed samples from the Bay City dump, Eco Logic’s Destructor had a consistent efficiency rate of “six nines”: 99.9999 percent of the toxins contaminating the dump’s dirt had been eliminated. It was like witnessing the test run of a machine that stopped aging or repealed the law of gravity.
“We’re sort of like Consumer Reports,” says Gordon Evans, who works in the EPA Ohio office that monitored the Bay City test. “We don’t endorse things. We test them and report what we find out. Eco Logic has a viable process. It does what they say it’ll do.”
After the successful Bay City demonstration, Eco Logic has signed up bigger clients: General Motors of Canada Ltd., General Electric Canada Inc. and the Government of Australia. And the company continues to test its machine on other kinds of waste. So far, the Destructor has successfully processed dioxin, pesticides and industrial waste. The US Department of Energy has Hallett working on a pilot demonstration project, decontaminating a mix of low-level radioactive waste, propellants such as rocket fuel, PCBs, dioxin-contaminated soil and munitions (such as shell casings and napalm). And Eco Logic has just finished another pilot demonstration under the watchful eye of the EPA, this time on PCB-contaminated sludge in New Bedford, Mass.
Along the way, Hallett’s chemical process has won converts even among environmentalists. “The technique Hallett developed is stunningly and elegantly simple,” David Suzuki wrote in his column in The Toronto Star on Jan. 30, 1993. “It seems too good to be true.” In November 1996, Eco Logic was given the go-ahead by the Ontario Ministry of Environment & Energy to set up a Destructor in downtown Toronto, where a defunct General Electric factory has left behind some stored PCBs. The requisite permit was recommended by Greenpeace International. “Environmental groups worldwide will support this technology,” Hallett says. “We’re not a pariah like everybody else has been.”
Of the three companies bidding for the US$750million opportunity to destroy chemicals weapons at Aberdeen and the army’s Newport chemical depot in Indiana, Eco Logic was easily the smallest. Each of Hallett’s competitors had allied itself with established US defense contractors, including aerospace giant Lockheed Martin Corp., as partners. In July 1996, Hallett and two other Eco Logic executives drove eight hours to Pittsburgh to meet with representatives from Westinghouse Electric Corp. It proved to be a good fit. The army knows Westinghouse; the company is already at work on a US$570-million chemical-weapons incineration job in Alabama. And Westinghouse knew Eco Logic: engineers from the company had seen, and been impressed with, the Eco Logic process at industry trade shows.
Testing on Hallett’s process began at Aberdeen in March 1996. Army personnel in chemical-proof suits fed canisters of nerve gas and chemical agents into a pilot version of the Destructor. According to Hallett, the Destructor passed the early trials with efficiency rating of eight nines, destroying 99.999999 percent of the toxic agents.
Of course, landing a big US army contract has to do with more than just test scores. There are a lot of factors that weigh in the final decision, many of them political. The US National Research Council filed its report on the Edgewood trials to the Pentagon and Congress on Jan. 17, about six weeks ahead of schedule. The winner of the contract wasn’t any of the commercial companies but the army itself, for one of two processes it had proposed. Eco Logic is still in the hunt for many of the smaller contracts — in the US$20-million range — that the Department of Defense will be tendering next. Hallett says these contracts “don’t involve the US Army, so it’s beyond the army’s range to choose its own technology at the end of the day.”
While it waits, Eco Logic is focusing on niche markets, such as municipalities looking to deal with PCBs in industrial landfill sites and utility companies with PCB-drenched equipment. The company has entered into an agreement with GTS Duratek Inc., a firm based in Columbia, Md., for a pilot test of the Destructor on high-organic radioactive waste. There is also interest in Hallett’s process — and preliminary discussion — in Spain, South Africa and at least one nation in the Middle East. “Where there’s oil, there are petrochemicals, and where there are petrochemicals, there’s a need for Eco Logic,” Hallett says.
Most of the 121 people who work in the Eco Logic head office in Rockwood, near Guelph, Ont., are concentrating on the operation of two existing Destructors. (Hallett had wrapped up the Canadian consultancy business by 1996.) Destructors are built as needed by contractors to Eco Logic’s specifications and under its scrutiny. One basic commercial-capacity Destructor costs $10 million. The rates for running it depend on the size of the job and the kind of toxin. PCBs can cost as little as $400 a tonne; high-level radioactive waste as much as $100,000 a tonne.
“Usually, high-tech types don’t know how to build a business,” says Jim Beatty, the president and CEO of Bay Street’s Trinity Capital Corp., which raises money for high-tech businesses. “They’re often very brilliant, creative people. But when it comes to running a business, ego can get in the way. Doug is different. He’s one of those people who wants to succeed, so he’s listening to what the directors on his board tell him.”
Hallett’s company will have billed about $5 million in 1996, and he expects to do four times that this year. After going public in March 1994 at $3, Eco Logic’s share price went up to $22.75 by August 1995 before dropping back down to the $5 to $6 range. Beatty blames the drop in share price over the last half of 1995 on “investor impatience and an insufficient number of contracts.” Maggie Treanor, Eco Logic’s head of investor relations, says that Canadian investors still lump the company in with toxic waste producers instead of viewing it as a leader in a separate sector, which is eliminating waste.
Project by project, contract by contract, Eco Logic is changing that perception. “What we’re doing in one year with Eco Logic would have taken 10 years in government,” says Hallett. “There’s this assumption that industry makes pollution and government cleans it up, and that that’s just the way it is. But government can’t really solve these problems, and we realized objectively that it’s not government’s job to get rid of this stuff. An industry needs to form to get rid of this stuff. It’s an important mission. And that’s exactly what we’re doing.”