Tesla Nanocoatings might be about to hit a gusher

MASSILLON, Ohio—Todd Hawkins thinks his company, Tesla Nanocoatings in Massillon, is about to strike it big in the oil and gas industry.

The company, which received six patents this year for its technologies and processes, makes corrosion- proof coatings for metal, especially steel. It sells them to customers who need to protect metal assets in harsh environments such as saltwater. Think offshore oil rigs and commercial and military ships.

All told, the company now has been awarded 22 patents for its technology, including 12 in the U.S. and the rest abroad, Hawkins said.

In the past year, Tesla has sold about $5 million worth of its coatings, and in 2019, it turned the corner to become profitable. That's something Hawkins said he could have achieved last year, but he chose instead to invest further in the company and its intellectual property.

So far, Hawkins is working with a fairly small staff. He's got 10 employees in Massillon and four working in the South on projects in the Gulf of Mexico, he said.

Now, Hawkins is getting his shot at the big leagues. A major oil producer and smaller oil and gas customers are testing his coatings, including on offshore rigs in the Gulf of Mexico.

If it works like Hawkins says it does and is approved for use, Tesla is likely to hit a revenue gusher, he said. Some experts in offshore drilling who know about related corrosion problems said there's definitely a big market and opportunities out there. So, what does Tesla Nanocoatings make exactly?

"Disruptive carbon nanotechnology," Hawkins called it, explaining the technology is based on what are known as "carbon nanotubes"—itty-bitty tubes of carbon discovered in the 1980s in nature that now are being produced commercially. They're so small, you'd need to cluster thousands of them together to get a fiber the width of a human hair, Hawkins said.

But in large numbers, they are mighty, he said, and can be used to produce extremely tough and self- healing coatings like the ones Tesla Nanocoatings makes.

His small facility on North Avenue Northwest, where the company does much of its research and development, is largely filled with devices that test how the coatings withstand saltwater, exposure to UV light, extreme temperatures and impacts from hard objects. Those are the sorts of things the coatings will encounter in the field and must endure to protect ships and drilling rigs, Hawkins said.

Hawkins said he's developed coatings that not only perform better, but also are easier to apply than competing products. Those other products require four or more coats, he said, while Tesla's coatings only require two: a primer and a topcoat.

"In a shipyard, the paint shop is kind of the bottleneck. When you take three-, four- and five-coat systems, they take a week or more to get through the paint shop. We can get them through the paint shop in two days," he said.

Tesla's coatings also conduct electricity, something Hawkins said most existing coatings can't do. That makes his coatings more versatile than others, he added, and they can be combined with other corrosion-prevention methods more easily.

"Not only are they 100 times as strong as steel, they're 1,000 times as conductive as copper," Hawkins said of the nanotubes he uses.

Tesla has done well with the shipbuilding industry, but the oil and gas industry represents an even bigger source of potential sales. And there's also a whole nation full of steel bridges and other so-called "metal assets" that Hawkins said need protection.

Oil and gas also is an industry Hawkins knows. He came out of the local aerospace industry before starting Tesla Nanocoatings, but his degrees are in petroleum engineering and geology, in addition to a master's degree in business administration.

Experts say the corrosion-protection market is as big as Hawkins' nanotubes are small. That's because the costs of allowing corrosion to take place are too huge to ignore, especially with metal assets that are earning money while they work.

"In a 2016 National Association of Corrosion Engineers (NACE) study, direct and indirect corrosion costs in the U.S. were estimated to be $1.1 trillion annually. This exceeds 5 percent of GNP. Corrosion costs the oil and gas industry at least $10 billion every year. Consequently, it is a major focus area to the industry," David Young, a researcher and assistant director for Academic Affairs at Ohio University's Institute for Corrosion and Multiphase Technology, said in an email.

Hawkins is waiting to see if end-users and groups like the American Petroleum Institute, which sets many of the standards for the industry, will approve his coatings for broader use on offshore drilling rigs. He said he should know soon, once his first big potential customer completes its testing. Hawkins said he can't divulge the name of the company but said it's one of the world's largest oil businesses.

He predicted he'll succeed with the testing and the result will be an "exponential" growth in Tesla Nanocoatings' sales.

Time will tell if he's correct, but those who know the oil and gas industry say there is a definite need for corrosion protection, and that the industry is always looking for better and more cost-effective ways to achieve it.

"It is the biggest single concern outside of the technology of what you're doing, which is drilling and producing," said John Givens, now retired but a former design and project engineer for the former Brown & Root engineering construction firm in Houston.

Givens, who spent more than 40 years designing, building and working with offshore drilling rigs, said protecting them from corrosion always has been critically important. In addition to the cost of corrosion itself, drillers lose a lot of money if a rig goes down or if it's not deployed quickly because it's held up by slow construction methods, he noted.

Givens is not familiar with Tesla Nanocoatings' technology but said that if it works, the industry will likely give it a chance.

"If, in fact, he's got the ability to prove that, they certainly will listen to him, because time is money," Givens said.

Working with a big producer to get tested and approved might be a good approach, too, Givens said. That's because there are a lot of federal, industry and corporate standards to comply with, and meeting them with the approval of a major producer is a way for a company to prove itself to the rest of the industry.

"If you are approved, like with testing with someone like Shell, you can certainly market yourself as being out there and doing it. Then they can come in and market against the established leaders," Givens said.