When pipes are run through the walls of your foundation, they are typically sealed up with concrete, hydraulic cement, or caulk. Sometimes, they're not sealed at all! These penetrations are one of the weakest links in the foundation walls when it comes to holding back groundwater, and it's very common for them to leak water. To solve this problem, a series of solutions have been tried. All of them work at least some of the time.
Often, caulk or cement is coated over the crack in an attempt to seal off the crack. However, this repair is a superficial one, and it does not stop water from working its way into the crack. Water will still fill the crack behind the patch, and a white, powdery mineral buildup, called efflorescence, builds up behind the crack. The efflorescence will break down the seal, while the water pressure pushes at the caulk or cement. Soon, the combined forces of water and efflorescence will break the seal, and the pipe will begin to leak once more.
Professionals will sometimes try to inject epoxy (or, occasionally, grout) into the gap around the pipe. These seals are much stronger then caulk or cement and are not likely to break down.
Epoxy cures very slowly. Before it's hardened, it's possible for it to actually run out from the other side of the crack, making the seal incomplete and not watertight. And if the surface it's applied to isn't completely dry, the application will not work the way it's meant to.
Additionally, grout and epoxy injection seals are rigid and inflexible, and the foundation wall is not. Over time, temperature and moisture will cause the foundation walls to expand and contract. Because this material cannot expand and contract in the same way as the wall it's bonded to, the watertight seal can potentially be broken, reopening the gap.
The preferred method is to inject the gap around the pipe with high-viscosity polyurethane. This polymer can be used on both wet and dry materials, and it can work its way into small hairline cracks to make a more powerful bond.
One advantage to this method is that the seal will be able to stretch and contract along with the natural fluctuations of the foundation walls. Unlike some urethane seals, the polyurethane preferred by some basement contractors can expand to 20 times its volume, meaning that its seal won't break if a 1/16th inch crack expands to 1/8th inch.
While these seals sometimes fail, the failure will be partial, with perhaps 5% of the water making it through. The contractor then runs a foam covering around the crack and down into a small drywell created in the floor. The foam is then covered with a gray coating for an attractive tooled-off look, and the dry well is covered with concrete. If the seal ever has a partial failure, the foam will direct the excess water into the dry well, giving you the security you need.
In some specific cases, a polyurethane seal is not the most effective solution. When this has been ascertained, an alternative method can be applied.
The alternate method sometimes used by contractors is to drill two small holes in the concrete nearby the pipe penetration. These holes run into the gap. Water is then injected into the gap, followed by a special chemical compound. The chemical reacts with the water and turns into a sealing foam, which expands and makes the gap around the pipe watertight.