You're listening to Redefining Energy. Your co hosts from Berlin Gerard Raid and from
London Lawrence Segalan. Today on Redefending Energy job, we're going to talk about
metha. Sure are my friend, absolutely looking forward to this. But first
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So back to the show. I don't know if you remember, but two
years ago we did the episode fifty seven with Josh Tishbush of an IQ about
the meeting problem. That was, Yeah, that was really excellent, and
that was just before Cup twenty six where they made those global meat and plage
And I think the product is nobody really know how much meat and lead,
how much meat is emitted, and I think even the emitters didn't have a
clear view of what was going on. You're absolutely right, and I still
think today it still don't because well, what I talk about the conversation really
is that in certain cases, so called clean gass might not be as clean
as what we think it is, and in fact it might be better off
burning cold. That's a pretty big statement to make, but that's what he
said, and we actually don't know. Was someone that I could take this
from the European perspective, we're taking llen g in from the US. We
really we don't know if it's clean or not. And by the way,
at least you could say that the US in terms of that gas, there
are people looking at meta an emissions and making judgments in around them. If
we go to let's say, some of some of the former Russian republics,
that really is huge problems in terms of leakage. Yeah, so met The
good thing is there's been a lot of progress recently made on chasing methane.
And we brought one of our friends, Greig Rottenberg, who is the CEO
of Kros Aerospace. Chu do you want to introduce Greg. Greg's a great
guy, serial entrepreneur in the whole in this energy space. It's a great
pleasure to have them. Come on. Let's listen to the interview. Greg.
Welcome to the show. Thanks so much for having me again. It's
good to have you again. I think you were on about three years ago.
At this point in time, Man, I'm feeling very special, like
a very special guest if I've been invited back. Yeah. Well, they
were talking about a completely different theme, but just as important. We're going
to talk about methane. We're going to talk about how to assess methane,
identify methane, and remediate all those fugitive emission. So, John, I
think you have a first question. Yeah, Greg, I think we all
know that from carbon emissions point of view, it is much better to burn
gas and coal. But there's another fact that we don't they need to take
into account, which is metane leakage and we know these metane leakage coming from
coal plants, but we also know that they're coming from gas plants, and
we noticed a big topic within the climate community. But maybe he just gives
a little bit of your sense of it at the end of the day,
because you're really examining gas and metane leakage and you know, every day of
your business life. Yeah, so it's fairly well known in the industry that
there's this indifference point of around three percent. And as you point it out,
you really have to make sure you're measuring the methane emissions of the coal
plants as well. But there's a known indifference point of around three percent,
meaning if the methane is leaking more than three percent of total production, and
that's across both upstream, midstream, you know, all the way all the
way to market. If you're leaking more than three percent, you really we're
better off with coal. And unfortunately today, most of the data we have,
and this is an understudied industry, most of the data we have says
that we're well above that three percent number. The most studied basin in the
world is the Permian Basin in the US, and there the estimates are at
about nine percent methane leakage, which is obviously quite high. Now that is
really the bad news of this story. I don't want it to get lost
that it's quite easy for firms to move well below three percent, and the
most responsible operators are working really hard and they're most of them are well below
three percent wo wo wo wo nine. So when you put that number forward,
is is it a kind of global basing analysis or do you aggregate no
wells after wells? How would you come to that number? The data in
this area is quite limited. We don't have enough data globally to make really
strong statements, and it's an area where the strong statements that were made prior
to having data, many of them have been proven to be false. So
somebody who operates within this methane world adopts a degree of caution and starts asking,
with every data fact that's provided, has that been well studied and researched,
Do we have scientific literature on that? Or is that someone's opinion?
In this space, we get real good at asking that question because the data
needs to be reliable or you come to conclusions that are not accurate. We
saw a lot of press the past two years about the company which unfortunately as
almost the same name as yours, which is Chiros and you are Chiros.
So one is one R and Y and the other one is you I and
one R. And they are mostly doing satellite observation or satellite and you know,
we talk about Turkmenistan and other stories. As you you use planes and
drones, So how would you characterize the different sensing technology the respective maturity.
So there are really four different key ways that we measure methane Satellite, aerial,
drone and stationary which is often called continuous or ground amount. Those are
the four main methods here. Why don't I cut to the chase, which
is every one of these modalities or ways of measuring methane and mitigating methane will
ultimately be used by our world. They're all four fairly important, but they
each have their place, and as the technology evolves, there's some debate as
to whether their places may change. So, for instance, today's satellites are
very good at measuring methane in places like Turkmenistan. When you want to measure
the total methane in a region, satellites are quite good at doing that.
Unfortunately, the resolution today is not sufficient that you can do two important things.
You typically cannot quantify the emission. So while they see a large emission
and they know it's large, it's difficult for them to estimate exactly how large
that emission is. The second problem they have is that while they'll see that
emission, they can't do what's called attribution. They don't know who caused that
leak unless there's only one producer in the area. So that's the real challenge
with satellite. They can only see about half of the emission that exists,
so the other fifty percent is too small for the satellite to identify that emission
or the source. So that's why satellites are very good for understanding a region,
usually less helpful for understanding the performance of a specific operator. It's usually
the other three technology that will be used on the other operators. Let me
start with the drones. The drones had a lot of optimism when they first
came out. We now understand that the economics of using the drone for onshore
is just not compelling. That said, for offshort drone appears to be the
best solution to use offshore. There are problems with the other two methods in
trying to use them off shore. Great, can I cut across you,
because that seems to be illogical to me, because I would have taught a
drone offshore is actually much harder to control ACCESTERA accestera on a plane would be
easier. So explain that, because you could just explain that to me a
little bit. Yeah, the drones will use a technology called sniffing, which
is different than imaging technology. And because they sniff you can effectively put the
drone upwind of the equipment and do a measurement, and then do another measurement
downwind of the equipment, and you now know what the equipment is leaking.
Okay, okay, makes sense. The other technology, unfortunately, can't do
that, ground mount or stationary. I think there's a lot of long term
optimism around continuous that likely will land in a world where twenty percent of the
wells, the highest producing wells in the world, will ultimately be measured with
continuous monitoring. Now, you guys understand how oil and gas production works.
You thrill wells, you have very good production, and then it tails off.
There's a belief probably that the continuous will not be economic enough to stay
on all those wells, you'll actually move them as the top twenty percent of
the wells change, You'll move them within your portfolio or perhaps ultimately within firms.
Today, continuous does struggle to quantify. They see lots of emissions.
In fact, they see very small emissions. They struggle with telling you how
big the emission is. They're also plagued with very high false positives. And
one of the challenges in this industry is you've got these repair crews and you're
sending them out. You'd like to use them efficiently. You want to avoid
sending them to places where there is no leak at all, and you'd really
like to avoid sending them to places where there's a very small leak when in
fact you could have found a much larger emission for them to have fixed.
Aerial really is where all the action is today in order to dramatically reduce your
emissions. And that's because aerial is quite good at finding the more sizeable leaks,
the more material leaks. Aerial can see at least ninety percent of the
emissions, and that's really where the real opportunity lives today. Correct, Can
I ask you just to get back to the whole emissions area. We've had
some of the European gas operators who really have been talking about selling clean gas,
and there's been a lot of talk that, for example, the Russian
gas was never clean, and there was always a story along the lines that
there was so much leak issues there. Anyway, exactly what you said,
it was better off using coal. But when I hear just what you've said
here, I'm thinking, as European, so why are we important all this
energy? Now? I know we need to geo politically do it, but
from a carbon emission point of view, it's a complete disaster. So you
said something which I thought was quite interested, is an easy fix. There's
an easy fix on this. Tell me how do you fix this and why
is it not being done up to now? You can get way less than
three percent emissions by just serving your assets often, by looking for the larger
leaks and serving them often. And this is very important for everyone to understand
the cost to fix a small leak, a medium leak, in a large
weak or nearly the same that rarely changes. What really changes is how much
gas you recover from fixing the leak, and where that quickly leads you to
is an understanding is that every company in the world has a break even point,
a size of leak above which they make money and finding leaks below which
they're not going to make money fixing those leaks. And the really good news
of this story is that you can get way less than three percent by fixing
only the highly profitable leaks. So, Carols, your job is to deliver
data to the oil company. So I mean you own your planes or to
lease your plane? What type of sensor do you use on your planes today?
We lease the planes. And the key reason why we lease the planes
is because as soon as the FAA makes a key change in their rules that
allows you to operate drones or unmanned aerial vehicles outside line of sight, this
industry becomes extremely compelling for using those UAVs and we're waiting for that moment.
Once you're allowed to operate outside line of sight, we will move to a
fleet that is predominantly automated. And that's why we don't own the planes today.
We do have a proprietary instrument. We had to build a proprietary instrument
that aren't really off the shelf instruments that do this. It was quite hard
to do, and we built an instrument whose key advantages we can fly it
very high and much higher than the other detection methods to get a reading of
fairly small emissions. We had to build that proprietary sensor in order to operate
at that high altitude and see ninety percent of the emissions that are occurring.
Can I ask you a little bit about transparency, because again, I just
want to go back to your working in the biggest gas field really in the
Western world and the Permium, and I would also say that's the most probably
observed gas field in the world. You've got investors looking, you've got everybody
looking at this, and still we don't have this transparency there. So explain
why that is and why you think that's got to change going forward. Unfortunately,
I think our own Environmental Protection Administration, the EPA, has a lot
to do with how we wound up in this space. I've shown you both
a chart previously that showed the thirty three largest firms in the Permian and what
they reported to the EPA as their emissions, and then I've superimposed on top
of that a chart showing their actual emissions. And what you can see is
that the typical firm is emitting at least six times what they've told the EPA.
They're admitting, some ten times, some twenty times. Ironically, there
are even a few firms who have reported more than they're actually admitting, and
the reason for that is that they're not given a lot of degrees of freedom.
And how they report they fill out a spreadsheet. It's an emissions factor
spreadsheet where they input their assets and you press a button outcomes. The result
here is what your theoretical calculated emissions should have been. The problem is that
calculation is not accurate and doesn't do a good job of accounting, especially for
human air the kinds of human errors that cause these very large emissions. One
more point I thought, I think we should make sure everyone understands somewhere between
sixty and eighty percent of the total emissions for any firm will come from one
percent of their sites. If you stop and think about that for a moment,
you start to understand why this problem is tricky. It's a long tail
problem. It's not a bell curve. When you look at your sites,
one percent of your sites are causing most of your problems, and the trick
is surveying those sites very often finding those large leaks and fixing them quickly because
the larger those leaks go on obviously the higher your methods. When, in
your opinion, was the technical chipping point where you said, I have the
technology now to deliver your data which is much mar curate that your ext sheets
are. You know, whatever method you are using, Well, that's interesting
because I think as soon as aerial detection came out, even if you go
back at least five years ago with cairos, we were giving you actionable data
that was profitable and highly valuable to the amount of methane you are leaking.
There was considerable resistance at the time in the industry because most firms even today
don't believe they're leaking very much. Again, a lot of this gets tied
back to those EPA numbers, which are very misleading, and you have many
firms believing their emissions are much lower than they actually are. There is an
irony that in most of those firms there are at least several people who know
those numbers they're reporting to EPA are quite different than the actual measure numbers.
Greg, does it mean that we have to wait for the EPA and other
similar organizations across the world to actually bring in regulations in this or is there
a coalition type approach that could be used. So the answer is both.
The current rules state that there are findes methane fee finds based in the Inflation
Reduction Act. Those going to effect in twenty twenty four from Unfortunately, the
twenty twenty four numbers will be calculated based on the fictitious data that EPA uses
today. But in twenty twenty five we are moving to measured emissions. That's
written into the Inflation Reduction Act that the fines on your methane emissions will be
based on actual observed emissions as long as the EPA does a reasonably decent job
in calculating what those missions are. As long as they come up with any
reasonable standard for how a firm measures their emissions, the world, especially in
the US, will change quite a bit in twenty twenty five. There is
though, also a coalition that is building called Base and Why. You can
read about it it basin why dot org. That is a list of leading
industry methane firms with some very impressive firms behind this that are coming together to
benchmark the entire industry and that will be an important variable, being able to
see exactly what the emissions are of the various firms in the world. And
the amazing thing is that fixing those leaks is not a cost. They make
money, so they should fix it for God's sake. Because you know when
you hear some lobbies as, oh my god, it cost us so much
to fix the leak. No, no, no, no, guy,
you need to change your lobbying book. It's profitable to fix those leaks.
Yes, that is painful to watch that. We really could fix these leaks
quite profitably. The one asterisk I will add here it is profitable. We
have two key problems. The first is whether the firms believe they're leaking as
much as they are. The second is materiality. Yes, it's profitable.
The ROI on these projects is extremely attractive. Our problem is that for these
large oil and gas companies, the numbers often are not very material. When
you can save twenty million or forty million dollars to a very large oil and
gas firm, that's just not a lot of money given the work they need
to do, the way they need to organize their teams to go after this
problem. For many oil and gas companies today, it isn't a priority.
Note that there are plenty of firms, plenty of industry leaders where it is
a priority, and they're doing a very good job. Great. I would
assume I'm just going to look at this from the buyer perspective. I think
the buyers now correct me if I'm wrong. I'm going to have to take
much more responsibility for how they're sourcing gas going forward, because at the end
of the day, if you're going to sell clean gas, you'd mean to
make sure bloody is clean gas. And if I'm a customer, an end
customer, like I'm an automobile manufactured as buying gas in and you realize that
it's actually dirty gas, it's going to impact the fines that I have.
So I would assume that's also going to be a big push for change as
well. Gerard, I haven't yet been able to connect the dots and make
a compelling case to the buyers that they are going to be fined. I
hope that world ultimately exists that you described. I think all you're talking about
is an efficient world where we efficiently find the biggest sources of leaks and reduce
them. I'm confident that world is going to occur. I think the counting
on the buyers, though, is difficult. The most important thing we need
is some kind of a premium or discount associated with the methane that's inherent in
the gas. That is what the world is looking for. Their multiple firms
trying to create that world. But it's not an easy solution to bring about.
Lauren, Can I ask you, I mean, listen your next carbage?
I am, I mean, what do you think of it? What
do you think of this? Well, there were some carbon credits attached to
methane news and I remember I made a decent amount of money out of a
Chinese whole mine capturing the methane which was otherwise vented and internationally to capture it,
but to use it to power installation. I'm not sure it was very
well money thought, but there was this feeling that if you could make money
out of it, a lot of the meat and capture would be done.
And I think it's a good segue because we talk about the US a lot,
and look, it's messy as usual, but it's kind of under control
because people of the parhamto But now if we look a bit globally, and
you talk about Russia, but you know, we can talk about Turkmenistan or
other places. Once you know why, there's a satellite above who says,
oh, it's not very good, and the ambassador of Turkmenistan and all of
a sudden, as this moment of glory then goes back into oblivion. Great,
Please explain how you're going out internationally and how the non US sectors can
benefit from the innovation you've done in the US. Well, we do work
with many of the largest global oil companies and we follow them so where they
have needs, we will follow them all across the world, So we work
all throughout the US. We work a lot in Colombia and Argentina and parts
of South America. Today we are in multiple discussions in territories in the Middle
East and Australia that are very interesting. So I think this industry is about
to go global. This idea of not just serving your emissions and fixing your
biggest leagues, but also publishing what your actual results are. There's more and
more hunger from the esters, the regulators and the other stakeholders for firms to
come clean with a disclosure of how much they're actually emitting. In fact,
if you went to SIRA Week, which is by far the biggest industry gathering
in the oil and gas industry, if you went to SIRA Week this year,
what you would have heard is CEO after CEO of the top ten oil
and gas companies standing up and saying, not only are they going to disclose
their emissions, they're going to have them third party validated. That is the
direction the world's going. Greg There's a lot of film that claim that they
have the biggest impact on climate to year, but I think we found the
winner, and the winner is Kalo sale Space. Because your company is the
one was abated the most common last year. Can you please explain them.
Yeah, our total abatement last year was sixty six million tons of CO two
equivalent. We do believe that makes us the highest carbon impact firm in the
world. It's in fact, five times the impact Tesla had last year on
carbon. It's two point six times the impact of every EV on the road,
and we're really flying very much below the radar, so to speak.
It's worth noting here that we are finding the emissions. It's our partnership with
the oil and gas companies. And then fixing those profitable emissions. That's really
what creates the impact. So this really is an award we share with our
customers in terms of the impact that we've had. Those numbers were validated by
Ernst and Young, by the way, because one of our largest investors is
OGCI, which is thirteen of the largest oil and gas companies in the world.
Greg, that's pretty amazing. Can I maybe just let's move to the
future. I'd love to hear how you see the whole future of the maintain
emission world, and also even how you see the future of your own business.
It's a fascinating es qu I think this is such a dynamic world right
now. Assuming the EPA does a good job with defining how companies will measure
their emissions, twenty twenty five becomes a landmark year in methane emissions because so
many US firms will be facing fines that are much bigger than they anticipated,
and they will become much more aggressive at mitigating methane. And the really good
news here is because it's profitable for them to mitigate methane, we can have
massive impact if EPA just does a good job in twenty twenty five. In
defining what actual emissions are, and it looks like they probably will sometime in
between twenty six and twenty eight the EPA's emission requirements go into effect. Those
will also do a very good job managing upstream emissions. So when you look
at the regulations that are coming, when you look at what the stakeholders in
oil and gas are doing, and the pressure that they're putting on oil and
gas companies to release publicly their true numbers through groups like basin why dot org.
You put all that together, this methane crisis, and we are in
a crisis is likely about to be resolved if we stay on track. The
issue around methane, which is much bigger than most people realize, will come
down to a very manageable level by the end of this decade. I like
it, Greg, I like it. That's good. It's good that technology
provide climate solution more than big speeches that do UN which of course very necessary,
and we salute the UN here and all the diplomat but you know,
I prefer practical exactly. Greg. It was a pleasure to have you back
on the show and see that you continue working very hard to decabanize the planet.
Always a pleasure speaking to you guys. I look for the future conversations
and I'll remain a loyal listener. Thank you very much, my friend.
Thanks all, Jaab. This interview gives me a lot of hope because technology
is in the motion and it is very clear that if operators want it,
they can really identify and fix all the meta leaks. So it's not that
the technology is not there. I mean other people are complacent or use less,
but we can defeat methane. Yeah. Yeah, And by the way,
it makes economic sense straight away because while leak, when you can sell
it to somebody, right, So I take my hat after this because we
do need people though that actually really go and look at what's going on and
benchmark and all that type of stuff because I want as a user gas,
I want to know that it's clean, because what's the point otherwise they are
doing great stuff in the US. But Lord Lord Law Turkmenistan, Iraq,
Russia, Russia and others, that's a disgrace. They're going to do that
Cup twenty eight. They should not do like climate diplomacy. They should tell
those culprits do something about it. It is wrong. But what I will
say is what we need to do is work with these countries, and that
means also investing in these countries and making sure that they actually have the technologies
in place to be able to use that gas. That's also a factor.
And a lot of the countries are just named. What you've got is old
infrastructure in place and they need new CAPEX problem. Yeah, of course,
of course you just get top Yeah, invest in Venezuela, invested Turk Minister,
invest in Libya, investing in your Iran, Iran, Irana. What
you know how to say, really, that's your solution. How else you
gonna do it? How was he going to do it? That's the issue
in all these countries. You can go and what they're going to do,
smack them on the head and say don't do it again. If they're gonna
do it again, you know, we just said it. It's not in
anyone's economic interest to actually go and allow gas to lead because you can sell
it. But if you don't have the right technology in place, is fine.
So it's all that's great saying hey guys, stop doing that, but
let's help them stop doing it. And by the way, it's not just
about meeting. I could go beyond that and say it here. If we
want to go and decarbonize our world, we have to make sure that the
large part of the developing world actually goes and invests in the right energy infrastructure
to make sure that we have a clean world going forward. Okay, fine,
but half of those countries are under sanctions. I don't see a short
term solution. And maybe I'm too cynical and maybe your two kumbaya, but
at least in the US they found some solutions. No, that's true,
and listen, I can understand. You can say. The other thing that
you can do is a character stick approach. And the stick approach is to
say, guys, we're not going to take your gas because the emissions of
it are too high. That's the first thing. But there needs to be
character as well. And the character is, if you, guys, improve
the quality of the gas that you're producing and exporting, you'll get X,
Y and Z out from us. So that has to be in karrot and
stick, not just stick. Just won't work. Yeah, okay, job,
let's agree to disagree on this one. We want to thank Greg for
coming onto the show. We're very pleased with our partnership with the Energy Institute
that we put the links in the show notes, and also our sponsor for
the episode, PVCSE Superior Software for so now looking forward to our next podcast,
My Friend in two weeks time. Cheers, take care, Thank you
for listening to Redefining Energy. Don't forget to rate the show and subscribe on
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