Oil and gas companies have discovered most of the world’s “easy oil,” but face extreme pressure from shareholders and Wall Street to consistently increase production and replace reserves, which takes them further offshore and closer to the poles. And as petroleum resources are increasingly developed in outpost locations with unconventional methods, the key to making these complex, expensive and often dangerous projects successful is technology.
In addition to those challenges, sustainability and a social license to operate are becoming requirements as well. Operators need to decrease greenhouse gas emissions, use less water and fewer chemicals, while increasing energy efficiency. Technological advancements are making it possible for companies to achieve these often competing expectations.
“The tech industry and the oil & gas industry need each other. They are no longer mutually exclusive,” Wal van Lierop, Chrysalix Energy VC recently told Breaking Energy.
“You now see CEOs of major oil companies presenting at places like CERA Week touting unconventional oil & gas, but in the same presentation they’re calling for sustainable solutions because they need a social license to operate,” he said.
Hydraulic fracturing also provides an example of cleantech mixing with oil & gas development, as the need for water to complete wells has forced companies to develop and help fund advanced water filtration solutions.
For more on this read our series on drilling wastewater recycling.
Canada’s oil sands are another industry sector where reducing water usage has become a high priority. Chrysalix teamed up industrial wastewater treatment company Axine, which developed a technology that is 60% to 80% cheaper than competitors, according to van Lierop. Axine Water Technologies has drawn “enormous” interest from Shell, ConocoPhillips and Cenovus, he said.
Enhanced oil recovery is another area where cleantech overlaps with traditional fossil fuel development. GlassPoint – previously covered by Breaking Energy – developed solar-powered steam generators that help oil companies coax crude from older fields. The technology is particularly desirable in the Middle East where natural gas is often used for the same purpose. GlassPoint’s solution allows companies to preserve valuable gas for domestic use and export to international markets.
Shell and Petroleum Development Oman – the country’s national oil company, which is partially owned by Shell – are extremely interested in GlassPoint’s technology, with orders from PDO progressing nicely and Shell mentioning the company on its global homepage, van Lierop said.
The mining industry is also using new technology companies to arrest energy intensity increases. “The mining industry has seen its energy intensity go up, while in most other industries it’s going down,” said van Lierop.
Chrysalix portfolio company MineSense reached an agreement with mining giant BHP Billiton, a larger company with the balance sheet needed to help MineSense access the necessary capital for growth. The company offers an innovative rock sorting solution that can dramatically cut costs by testing ore quality in the field and alleviating the wasted expense associated with transporting low-value rock to processing facilities.
Some venture capital firms have been down on cleantech in recent years, but van Lierop thinks now is a great time to find opportunities in the sector. “We serve large industries in transition,” he said. Major issues facing the oil & gas industry include increasing energy efficiency and sustainability, while reducing greenhouse gas emissions. And smaller companies with niche technologies are helping larger companies fill in those gaps.
With regard to seizing the right moment to invest in some of these companies, van Lierop said “when your taxi driver tells you about Bitcoin, it’s too late.”
