Oil and Gas - CPMAI€¦ · • The Oil and Gas Climate Initiative: OGCI is a voluntary, CEO-led...
Transcript of Oil and Gas - CPMAI€¦ · • The Oil and Gas Climate Initiative: OGCI is a voluntary, CEO-led...
Oil and Gas
Asia Petrochemical Industry Conference 2018
Harshit Sharma
Research Associate
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TECHNICAL EXPERTISE PRIMARY RESEARCH ADVANCED ANALYTICS
BOSTON NEW YORK AMSTERDAM SINGAPORE TOKYO
Agenda
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3 Monetizing environmental initiatives in oil and gas
Looking externally to reduce the industry’s environmental footprint
Mounting pressure from environmental policies on oil and gas1 Mounting pressure from environmental policies on oil and gas
Hydrocarbons today are the drivers for global energy
consumption and also the biggest emitters
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Coal, 17%
Oil, 36%Natural gas, 27%
Nuclear, 10%
Hydro, 2%
Biofuels and waste, 6%
Other, 2%
Global Energy Consumption
Coal Oil Natural gas Nuclear Hydro Biofuels and waste Other
Source: World Resources Institute
Coal, 45%
Oil, 35%
Natural gas, 19%
Other, 1%
Global CO2 Emissions
Coal Oil Natural gas Other
Oil demand is projected to grow despite the emergence of
renewables and electric vehicles
5Source: 2018 Outlook for Energy: A View to 2040 (ExxonMobil), BP Energy Outlook: 2018 Edition
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10
20
30
40
50
60
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2000 2010 2020 2030 2040
Million oil equivalent
barrels per day (MBDOE)
ExxonMobil Fuel Demand Projections
Light-duty vehicles Heavy-duty vehicles Aviaton Marine Rail
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1
2
3
4
2016 2040
Billion tonne of oil
equivalent (btoe)
BP Fuel Demand Projections
Aviation, marine, rail Heavy-duty vehicles Light-duty vehicles
Several opportunities exist for the world’s top oil companies to
reduce their carbon emissions
Source: United Nations Development Programme
Unit: GtCO2e/year
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10
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30
40
Sa
ud
i A
ram
co
Ga
zpro
m
Na
tion
a Ira
nia
n O
il
Exxo
nM
obil
Pe
me
x
Sh
ell
BP
Pe
tro
Ch
ina
Gigatonnesof CO2e
Carbon Dioxide Emissions from Top Oil Majors
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0
50
100
150
200
250
1990 2005 2012 2013 2014 2015 2016
Million tonnesCO2e
Historic Methane Emissions from the U.S. Natural Gas Industry
Methane remains an environmental risk globally; wastewater is
a growing concern in North America
Source: Environmental Protection Agency (EPA)
0 0.2 0.4 0.6 0.8 1
N-Nitrosodiphenylamine
Di(2-ethylhexyl) phthalate
Benzene
1,4- Dioxane
Benzo(a)pyrene
1,2- Diphenylhydrazine
Toxicity Score
Cancerous Chemicals in Produced Water
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Agenda
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1
2
3 Monetizing environmental initiatives in oil and gas
Looking externally to reduce the industry’s environmental footprint
Mounting pressure from environmental policies on oil and gas
The oil and gas industry is no stranger to external collaboration.
Here are some examples from the Digital Oilfield:
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Data analytics: In 2015, Shell invested in the drilling analytics startup
Quantico Energy Solutions, who is a developer of synthetic well logs.
Shell subsequently saved over 80% in logging costs for a deepwater
project in the Gulf of Mexico.
Wireless sensors: In early 2015, French oil major Total invested in
sensor developer Avenisense. Avenisense is a developer of oil and gas
density, and viscosity measurement sensors for optimizing performance
of internal combustion engines.
Several oil majors formed initiatives driven by environmental
and sustainability concerns
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• The Oil and Gas Climate Initiative: OGCI is a voluntary,
CEO-led initiative which aims to lead the oil and gas
industry’s response to climate change.
• Launched in 2014, OGCI is currently made up of ten oil and
gas companies and created a billion dollar fund for
investments in promising technologies.
• The Climate & Clean Air Coalition: Founded in 2012, the
coalition is led by the United Nations Environment
Programme (UNEP) with the singular goal of cleaner air
quality, and climate.
• In 2017, eight oil and gas companies joined the coalition with
the goal of reducing methane emissions via releasing annual
emission reports, and investing in new technologies.
The three elements of the oil and gas industry’s environmental
footprint require three different sets of innovations
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The demand for natural gas will double by 2040, creating a even
larger issue of methane emissions
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0
50
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150
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2012 2020 2025 2030 2035 2040
Consumption in tcf
Global Natural Gas Consumption by 2040
OECD non-OECD
0
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1980 1990 2000 2010 2020 2030 2040
CO
2e
g
ram
/M
J
Projected U.S. Methane Emissions
Source: International Energy Agency (IEA)
Upstream is the primary emitter for emissions, identifying faulty
equipment however remains the bottleneck
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0
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40
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Gas production Gas processing Transmission andstorage
Commercialdistribution
MTPACO2e
Emissions from Compressor Stations across the Supply Chain
Compressor stations Other sources0% 5% 10% 15% 20% 25% 30% 35%
Gas production
Gas processing
Transmission and storage
Commercial distribution
Methane Emissions from the Natural Gas Supply Chain
Source: Environmental Protection Agency (EPA)
Summary Information
Founded 2017
Location United States
Key partner Total
Lux Take:
PositiveStartup spotlight: DistranHand-held ultrasound imaging for methane leaks
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Technology and Differentiators:
• Distran has developed the Ultra M, a hand-held ultrasonic imaging system that
detects gas leak sources within a 40 cm radius.
• Unlike competing solutions, Distran is gas agonostic, and quantifies leak rates
between 2 L/hr to 5 L/hr.
Strategy and Markets:
• Distran’s current business model is service-based, the company performs leak
inspections for the customer using the Ultra M.
• The company is part of Total’s 4.0 incubator, and has worked with Engie and
ExxonMobil in Europe for refineries and gas power plants.
Case study: Prioritizing gas leaks in refineries
• As part of its work with ExxonMobil, Distran surveyed the oil major’s Antwerp
refinery in 24 hours with the Ultra M. During the survey, Distran identified
specific valves, pipes, and compressors that were leaking gas.
• Moreover Distran quantified leak rates from each equipment with over 90%
accuracy, helping Exxon prioritize remediation work in the refinery.
Accurate identification is the bottleneck for methane
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CO2 remains the primary concern for climate change despite
stalling in recent years
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2000
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2005
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To
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(G
T C
O2
)
Global CO2 Emissions by Sector
Power generation Manufacturing Transportation Buildings Others
0 0.2 0.4 0.6
Natural gas
Light crude
Heavy crude
Tonnes CO2e/boe
Lifecycle CO2 Emissions
Upstream
Refining andprocessing
Combustion
Source: Emissions Database for Global Atmospheric Research, The Institutional Investors Group on Climate Change (IIGCC)
Start-up Spotlight: Solidia TechnologiesCarbon sequestration via CO₂ curing of concrete
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Technology and Differentiators:
• Solidia injects industrial-grade CO₂ into wet concrete, which reacts with calcium
silicates in the concrete mix to form calcium carbonate nanoparticles.
• The concrete product, dubbed Solidia Concrete, contains CO₂ equal to 5% of the
concrete product's final weight and offers curing times of less than 24 hours.
Strategy and Markets:
• Looking at markets and applications, the company targets the pre-cast concrete
market for commercial applications.
• Key relationships of the company include a commercialization agreement with
LafargeHolcim, with which it produced over 5,000 MT of Solidia Concrete.
Case study: Undisclosed funding round from the OGCI
• In late 2017, Solidia became the first recipient of a funding round from the Oil and
Gas Climate Initiative. Solidia who in the past has also received backing from BP
Ventures is exploring the opportunity of curing wellbore cement in upstream sites
using captured carbon dioxide onsite.
Summary Information
Founded 2008
Location United States
Key partner Oil and Gas Climate Initiative
Lux Take:
Wait and see
Carbon dioxide requires cost effective capture techniques
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The advent of hydraulic fracturing has positioned the United
States as the global leader in petroleum
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0
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
MillionBbls/day
Wastewater Production Forecast for U.S. Tight Oil and Gas
Source: Lux Research
Water treatment is region specific, and every aspect of the value
chain is cost intensive
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$0.45
$0.71
$0.78
$0.79
$0.83
$1.09
$2.19
$5.73
$12.57
$0 $2 $4 $6 $8 $10 $12 $14
Pre-treatment
Treatment
Sourcing
Flowback Services
Transfer
Storage
Disposal
Hauling
Total
$/bbl of crude oil produced
U.S. Wastewater Life Cycle Costs
0 50,000 100,000 150,000 200,000 250,000
Eagle Ford
Fayetteville
Barnett
Wooford
Haynesville
Marcellus
Permian
Bakken
Mg/L
TDS Levels for Different U.S. Plays
Source: Lux Research, Sourcewater
Technology and Differentiators:
• The company's technology is a flocculant made from the extract of seaweed,
which is paired with a compact flotation unit and glass-based filter for ZLD.
• Sorbwater’s flocculant can withstand temperatures in the 0 °C to 100 °C range,
with pH between 4 and 13.
Strategy and Markets:
• Sorbwater has done business in Kuwait, Mexico, and Congo and is seeking
opportunities to enter the United States and Asia.
• The company received a $5 million investment from Repsol in 2017 for
international growth.
Case study: Commercial unit for Chevron
• Sorbwater sold a commercial unit to Chevron in Kuwait in 2016. The company’s
unit had a 72,000 bbl/day capacity and required a $35,000 yearly opex for
operation.
• Although a highly cost intensive process, Sorbwater delivered water streams
with a oil in water content of less than 1 ppm, fit for reuse in industrial
applications.
Summary Information
Founded 2007
Location Norway
Key partner Chevron, Repsol
Lux Take:
PositiveStartup spotlight: Sorbwater TechnologySeaweed-based flocculant for water treatment
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Methane holds the highest near-term opportunities, water and
carbon require a further technology development and policies
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Agenda
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1
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3 Monetizing environmental initiatives in oil and gas
Looking externally to reduce the industry’s environmental footprint
Mounting pressure from environmental policies on oil and gas
Summary Information
Founded 2003
Location Canada
Key partner Cenovus Energy
Lux Take:
Wait and seeNear-term: LCO TechnologiesAir compressor for capturing casinghead gas
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Technology and Differentiators:
• LCO’s CrossFire is a solar-powered air compressor/pump that requires a 25%
lower power rating.
• Priced in the $1,000 to $4,000 per unit range, the compressor is capable of
capturing vented gas from wellheads.
Strategy and Markets:
• LCO utilizes a product sales business model and works with distributors for
selling its pump/compressor.
• The company is seeking distributors in Asia and Australia, where the company
recently demonstrated its product to Santos Energy and Eni Australia.
Lux take: Wait and see
• The idea of capturing vent gas with air compressors is still early-stage.
Considering the CrossFire captures 50 MCF of gas in a day, over the course of
a year the compressor will generate a revenue of $180/annum.
• Without regulations or inflated gas prices, the compressor will fail to offer a
payback in its lifetime.
Summary Information
Founded 2014
Location Canada
Key partner PurLucid Treatment
Lux Take:
Wait and seeMid-term: MGX MineralsLithium extraction from oil and gas wastewater
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Technology and Differentiators:
• MGX's primary value proposition is the extraction of useful minerals like lithium
and magnesium from oil and gas wastewater.
• Calling this approach "petrolithium," MGX is capable of recovering 83.7% of
lithium from petroleum brines with a 71 mg/L lithium content.
Strategy and Markets:
• MGX is exploring two different business models. Its secondary approach is a
product sales model; the company partners with oil companies and deploys its
treatment units.
• The primary model is buy oil and gas assets and extract Lithium to build
batteries with its subsidiary ZincNyx Energy Solutions.
Lux take: Wait and see
• MGX’s technology is proven, however the extracted lithium is significantly
expensive compared to commodity prices. MGX will need to scale up from its
existing 750 bbl/day facility, and look for petroleum brines with lithium content in
the 150 mg/L to 200 mg/L to make the process economical.
Summary Information
Founded 2004
Location United States
Key partner Saudi Aramco
Lux Take:
Wait and seeLong-term: NovomerCatalytic conversion of CO2 to polycarbonate polyols
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Technology and Differentiators:
• Novomer develops a catalytic process reacting CO2 with commodity epoxides
over a cobalt catalyst for the production of polypropylene carbonate (PCC)
polyols.
• The polyols have a CO2 content ranging between 20% and 40% and are used
as a precursor for the production of polyurethane.
Strategy and Markets:
• Novomer’s business strategy since inception was to demonstrate its technology
and position the company for acquisition.
• In 2016, Saudi Aramco acquired Novomer’s CO2-to-polyols business at a
valuation of up to $100 million.
Lux take: Wait and see
• As one of the early entrants in the CO2-derived polymer space, the company
quickly achieved its goal of getting acquired by Saudi Aramco.
• However, with several competitors approaching commercial-readiness, Saudi
Aramco needs to accelerate commercial deployment to prove the scalability.
Three closing thoughts…
1The future of oil and gas remains unmoved despite the growth in renewables.
With impending environmental policies, strategize today for the right partners.1The future of oil and gas remains unmoved despite the growth in renewables.
With impending environmental policies, strategize today for the right partners.
2To drive humanity’s climate goals, identify technologies for monetizing the
environmental footprint for a win-win for industries, and governments.
1The future of oil and gas remains unmoved despite the growth in renewables.
With impending environmental policies, strategize today for the right partners.
2To drive humanity’s climate goals, identify technologies for monetizing the
environmental footprint for a win-win for industries, and governments.
3Incorporate external collaboration as a tool for technology development.
Startups can both enhance and diversify your businesses.
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TECHNICAL EXPERTISE PRIMARY RESEARCH ADVANCED ANALYTICS
Clean Oil & GasInnovations driving oil and gas
environmental initiatives
Questions?
Harshit Sharma
Research [email protected]