oil and gas - chemicals petrochemicals manufacturer’s ... · 2000 2010 2020 2030 2040 million oil...

Oil and Gas

Asia Petrochemical Industry Conference 2018

Harshit Sharma

Research Associate

Drive Growth Through

Tech Innovation

Analysis you trust.

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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

0

10

20

30

40

50

60

70

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

0

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

0

10

20

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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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

100

150

200

250

2012 2020 2025 2030 2035 2040

Consumption in tcf

Global Natural Gas Consumption by 2040

OECD non-OECD

0

2

4

6

8

10

12

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

10

20

30

40

50

60

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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25

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2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

To

tal E

mis

sio

ns

(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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• 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.


• 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


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

20

40

60

80

100

120

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


• 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.


• 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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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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• 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.


• 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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• 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.


• 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.


• 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.

http://www.zincnyx.com/

Summary Information

Founded 2004


Key partner Saudi Aramco

Lux Take:

Wait and seeLong-term: NovomerCatalytic conversion of CO2 to polycarbonate polyols

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• 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.


• 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.


• 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]

mailto:[email protected]

oil and gas - chemicals petrochemicals manufacturer’s ... · 2000 2010 2020 2030 2040 million oil...

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