Energy Capital The Magazine-May-Jun 2021-Edition 03 by energycapital

FOR INFRASTRUCTURE DEVELOPERS, INVESTORS AND INDUSTRIAL USERS MAY-JUN 2021, ISSUE 03

A resilient upstream in a transitioning economy • Innovations in Thermal Enhanced Oil Recovery

• Upstream technologies to reduce Carbon Emissions

• Tidal Energy opportunities in North America

INSIDE THIS ISSUE: look for our video interviews

• America’s 1st Electric Highway Coalition

• Corporate Strategies in the Shale Revolution Video Interviews

Energy Capital Magazine OPINION 8 Rubi Alvarado From R&D adopters to innovators in the Oil & Gas Industry The O&G industry has been both an adopter and innovator of overarching technology improvements since its beginning. In this sense, we should not dismiss the advancements that the industry has developed in terms of technologies, techniques, and industrial needs. 10 Aldo Santillan Why does energy efficiency matter? Energy efficiency is the surest, cheapest, and often most immediate clean energy supply that exists. Considering that companies with a culture of energy efficiency are bound to take the lead, we should be open to all these transformations. 12 Noe H. Saenz For your capital project to succeed, you need a 'people campaign' Capital projects make the energy infrastructure that makes our quality of life posible. The problem, though, is that they fail way too often. Why do they fail?

ANALYSIS 14 Energy Capital A resilient upstream: challenges and opportunities in a transitioning economy The upstream sector is currently facing major challenges. Despite all of that, the sector has kept 2

resilient. Several strategies are currently underway, and they might make us reconsider how upstream is transitioning and surviving. 20 Dolf Gielen Big Future for Green Hydrogen Clearly, renewable electricity has a vital role to play, driven by the falling cost of renewable power generation. This is where hydrogen can be a potential gamechanger for accelerating global energy transitions worldwide. 26 Rodney Schmidt Blue Planet – a CCUS solution of Material Scale for Energy Sector Emissions To address the issue of carbon emissions utilization and permanent storage, Blue Planet has developed a technology that converts captured carbon into manufactured limestone aggregates for usage in concrete.

POWER 32 Rob Gramlich Keeping the Lights On: How Transmission Reform Can Spur a More Cost-Effective and Resilient Grid Texas's situation is a stark reminder that America's transmission grid is outdated and too inefficient to support a modern economy. However, a regionally connected grid would prevent price spikes, save lives, and keep the lights on. 36 Jason Hayman Sustainable Marine’s first next generation tidal platform in Nova Scotia, Canada The ocean is the world’s largest untapped energy source containing an estimated 3-Terawatts of power. Sustainable Marine recently unveiled a next generation tidal platform in Nova Scotia, Canada, which offers a future portent to clean ocean energy.

Table of Contents

Energy Capital Magazine

42 American Electric Power (AEP) Utilities Partner to Enhance Access to Electric Vehicle Charging Six of the US largest utilities agreed to partner to develop fast-charging corridors throughout the Midwest and Southeast. The Electric Highway Coalition will ensure that electric vehicle (EV) drivers have access to a corridor of charge ng stations across the country.

UPSTREAM 48 Jose Wilfredo Molina Down to the Last Drop: Innovations in Thermal Enhanced Oil Recovery Today's energy industry needs to be as efficient and green as possible, and that is what the latest Thermal Enhanced Oil Recovering (TEOR) solutions can help companies do. It is time for us to make the most of the oil fields we have, down to the last drop. 54 JP Chevriere Physics shapes corporate strategy in the Shale Revolution The Shale Revolution affected oil and gas (O&G) operators and service suppliers. Several examples explore how to improve organizational strategies and survive in the ever-changing global O&G market.

MIDSTREAM 60 Claudia Espinosa Improving economic outlook, summer demand likely to up Mexico natural gas demand Last February’s Texas freeze and the 4

coronavirus pandemic severely affected Mexico’s natural gas demand market. However, Mexico’s central-west region has among the highest potential for more natural gas marketing.

DOWNSTREAM 66 Stephany Romanow O&G industry 2021 comeback: Expect a big change The global oil and gas (O&G) industry continues to recover from the COVID-19 pandemic and 2020 supply/ demand swings. Consequently, major integrated O&G companies are revising their 2021 spending.

INFRASTRUCTURE 72 Karen Snyder The XR trend: why is it so crucial? Noticing the XR trend of industrial enterprises committing to the adoption of AR/VR/MR to improve safety, efficiency, and costs? COVID has radically altered business outcomes and accelerated the need for companies to enhance their training, sales, marketing and internal communications.

WOMEN IN ENERGY 78 Sofia Gomez Durham Corporate policies supporting gender diversity: a must in the energy sector “Proud as I am of having worked my entire career in Oil and Gas, I must acknowledge that there are still

many barriers to diversity and inclusion. Although we have made significant progress in the last decade, there is a continuous need for improvement.”

USERS 84 Howard University Howard University Announces 20-Year Energy Partnership with ENGIE North America Howard University solidified its relationship with ENGIE North America by executing a long-term agreement for a new central utility plant on Howard’s campus in Washington, D.C. which will provide both electric and steam services for buildings on campus.

Contact Information MANAGERS Rubi Alvarado General Manager Aldo Santillan Managing Director & Editor in Chief Noe H. Saenz Editorial Board Chairman

INTERVIEW 90 Nakasawa Resources Enhanced oil recovery and new international business opportunities In Interview with Energy Capital, Jose Wilfredo Molina president and founder of Nakasawa Resources talks with us about the company’s Enhanced Thermal Oil Recovery (EOR) solution, the new Super Matroid Heater and the Super Matroid Cyclone.

DESIGN Ignacio Ortiz Art Director

Gonzalo Rivas Senior Designer

Cristian Martinez Digital Strategy

Ivan Ledezma Digital Strategy

EDITORIAL STAFF Ana Tafoya Editorial Team Coordinator Eduardo Medina Editorial Analysis

DOING BUSINESS 96 Energy Capital Greener Upstream in North America for the years to come? What do upstream companies need to leverage in order to grow, and where must investors and developers focus in 2021 and beyond?

Energy Capital The Magazine is published by Capital Media Group LLC © 2020. All rights reserved. Digitalized and distributed by Capital Media Group LLC. We accept no responsibility in respect of opinions, products or services obtained through advertisements carried in this magazine. www.energycapitalmedia.com

Editorial Letter

A Resilient Upstream

Challenges and opportunities for the years to come

Dear Reader Welcome to the May-June edition of ENERGY CAPITAL THE MAGAZINE. We are excited to have you as a reader and look forward to keeping you 'in the know' of new developments, capital projects, and existing assets related to the energy industry. As you'll see, upstream was our focus for this edition; therefore, you'll find analyses with a particular approach to this sector (along with 6

exciting insights across all energy sectors, as usual in ECM). Comprising the most traditional activities within the entire oil and gas industry and being as crucial as it is, the upstream sector is addressing some of the most relevant challenges/opportunities to remain competitive and resilient for the years to come. In this issue, you'll find out more about this!

UPSTREAM IN A TRANSITIONING ECONOMY

lobal trends in the energy sector signal an inevitable transition into a cleaner economy. In this regard, traditional energy activities such as drilling, flaring, extraction, and oil and gas E&P have been subject to recent scrutiny due to economic, health, but remarkably, environmental concerns. Should we continue strengthening a highly efficient but polluting sector? Or should we focus our efforts on developing cleaner energy alternatives only? (with several downsides related to costs and demand satisfaction). As much as we'd want to ignore it, we as participants in the energy industry should acknowledge that the challenges are imminent and considerable. However, the answer does not rely on removing all upstream activities overnight; that wouldn't only be simplistic, but it could also create irreversible damages to the economic, social, and even cultural apparatus.

In this sense, acknowledging both the challenges (cleaner alternatives, green jobs, investment, regulations, bans) and opportunities (sustainability, new technologies, cost-effectiveness) concerning the current transitioning economy will help upstream players resiliently advance. Furthermore, such consciousness will help people in other sectors recognize the relevance and expertise that upstream companies can offer them. We shouldn't dismiss all the learnings that this sector has; in fact, recent forecasts and outlooks perceive it as a highly resilient one. So, how are companies in the sector addressing both the challenges and opportunities? Why is upstream still essential to achieve a greener future? Again, welcome, and we hope you enjoy the edition! We look forward to helping you succeed and being part of essential debates like the one we posted here. The Energy Capital Team 7

Opinion

From R&D adopters to innovators in the Oil & Gas Industry

By Rubi Alvarado General Director, Energy Capital

he oil and gas (O&G) industry has been both an adopter and innovator of overarching technology improvements since its beginning. From recovering the hydrocarbons needed to power our economy to doing so while complying with safety, human welfare, efficiency, and environmental standards, the sector has a long history of familiarity with Research and Development (R&D) solutions. For decades, O&G companies have raised the question of how they can succeed in an industry where supply is limited and demand is stringent. Therefore, they’ve looked for ways to adequately satisfy the global market for energy with unconventional resources previously challenging to recover. Several producers have acknowledged the importance of utilizing and investing in sophisticated technologies to find and produce 8

tomorrow’s hydrocarbons. Considering that most of the world’s ‘easy oil’ reserves are exhausted, O&G players are harnessing the opportunities of an increasingly technologically-driven world. In this sense, R&D efforts have helped reduce uncertainties for E&P companies since, with new developments, they can currently increase their recovery efficiency. Accordingly, the industry is becoming more capable of safely producing unconventional resources in previously hostile or non-feasible environments. Similarly, this technological approach from the sector has been strongly driven by incidents, such as the Deepwater Horizon accident (2010) and Shell’s Brent Spar disaster (1995), just to recall a few. Safety concerns raised by stakeholders, organizations, and society made it essential for the industry to improve its equipment and facilities through technological advancements. Until recently, companies also started to comply with mandatory environmental standards and new security concerns such as cybersecurity. R&D solutions have

thus positively triggered innovations following sustainability and the security needs of the future. In fact, according to Saudi Aramco’s 2019 reports, most O&G large producers and service companies globally have significantly increased their R&D investment in recent years. For instance, in a survey conducted in 2018 by classification society DNV GL, energy industry executives identified digitalization, cybersecurity, subsea, pipelines, Enhanced Oil Recovery (EOR), advanced materials, smart emissions reduction, and energy storage as top R&D priorities. In this sense, we should not dismiss the advancements that O&G companies have developed in terms of technologies, techniques, and industrial needs. With more companies quantifying and disclosing the data related to their R&D investment strategies, other industrial sectors can assess the historical innovations coming from the energy industry. Technological processes in the sector have, in fact, led to major competitiveness and innovation outcomes, with great spin-off benefits in other industries. Besides, we should remember that both large and small oil and gas companies are eligible for R&D incentives in almost every country globally. In the US, for instance, this incentive presently values nearly 10 billion dollars, also resulting in substantial tax benefits. It is crucial to recognize that we cannot achieve a sustainable world in the long term without access to oil and gas. Although the calls to immediately cease fossil fuel use may be appealing, we cannot dismiss the fact that hydrocarbon resources are still essential to support the global economy. 9

Opinion

Why does energy efficiency matter?

By Aldo Santillan Managing Director and Editor in Chief, Energy Capital

n 2008, Dr. Steven Chu, American Physicist, Nobel Laureate, and former US Energy Secretary under the Obama administration, said in an interview with Reuters that for him, one topic would be more than crucial in the future for our world's sustainability and survival. Dr. Chu was referring to energy efficiency, since "the biggest gains, in terms of decreasing energy bills, the amount of carbon dioxide we put into the atmosphere, and our dependency on oil" would only be possible by putting the pedal to the floor on this concept. In the same way, several experts and studies gradually showed that energy efficiency not only had positive environmental or savings impacts. Indeed, for some, efficient management of energy can boost renewable energy development as well as generate far more jobs than traditional oil and coal industries.

For instance, in September 2020, the American Council for an EnergyEfficient Economy (ACEEE) revealed that energy efficiency workers are paid on average 28% more than the national median wage. Furthermore, the association found that a suite of energy-efficient policies could create more than 1.3 million jobs in the US alone. Similarly, the non-governmental organization Alliance to Save Energy shared last year that tax incentive proposals in this regard could create over 600,000 jobs in the country. Similarly, and as a spillover effect, net-zero climate policies that trigger energy-efficient policies began to proliferate worldwide. For instance, energy efficiency has become a pillar of the United Nations Sustainable Development Goals (SDGs). Therefore, since 2010 the US Department of Energy (DOE) and the Environmental Protection Agency (EPA) have run the ENERGY STAR program to help consumers, businesses, and industry save money and protect the environment through energy-efficient solutions. But what do we mean when we talk about energy efficiency? Efficiency means using fewer resources to perform the same task. In this sense, managing energy in efficient ways means eliminating energy waste during any conversion, and this can be done through several technologies and design features.

In the energy sector, companies can harness this opportunity through improvements in the efficiency of machines, cooling and heat systems, or technologies to consume less fuel. For example, some providers in this regard are ecobee, Alphabet Energy, Digital Lumens, Enlighted, Gridium, Nest, Nexant, Next Step Living, Opower, among others. Other measures can also be the insulation of buildings with more energy-efficient facilities, investing in R+D, stop flaring and the use of associated gas, and having a focused operational strategy.

Although the health crisis by COVID-19 has weakened investments and the attention has shifted from prioritizing energy efficiency matters towards reviving production levels, the topic remains crucial for our future. In resume, energy efficiency is the surest, cheapest, and often most immediate clean energy supply that exists. According to an International Energy Agency (IEA) report, harnessing economically viable energy efficiency investments can boost cumulative economic output through 2035 by USD 18 trillion. Considering that companies with a culture of energy efficiency are bound to take the lead (in terms of use and production), we should be open to all these transformations already changing the direction of the conventional energy industry.

Opinion

For your capital project to succeed, you need a 'people campaign'

t is well known that the construction industry is one of the least productive in the world compared to most industries. The reality is though that, construction does not happen in a vacuum. It is part of a much larger process involving multiple phases and a multitude of stakeholders. In fact, the actual construction phase happens almost at the end of the capital project process. So, what is a capital project? It is a long-term investment project involving multi-discipline planning, financing, engineering, procurement, construction, commissioning, and startup activities. That requires large amounts of resources (financial, labor, materials, technology) to develop, improve, or maintain capital assets such as manufacturing facilities, oil & gas platforms, chemical plants, solar farms, roads, bridges, hospitals, etc. Capital projects make the energy infrastructure that makes our quality of life possible and is essential to realizing sustainable and reliable living environments. The problem, though, is that capital projects fail way too often. They fail to meet their intended objectives in safety, cost, schedule, quality, etc.

By Noe H. Saenz Energy Capital's Editorial Board Chairman

According to KPMG's Global Construction Owners Survey, around 80% of construction projects fail to meet their original objectives. So, this begs the question: Why do capital projects fail? And so often? The reason is poor communications. But not communications systems; it is about people communications, which directly affects people relations. These two areas directly affect EVERYTHING else in a project. The reality is that capital projects are unique and very challenging in many ways. Just to name a few: Many multi-disciplinary teams from different companies and organizations must come together to plan and manage multi-million-dollar projects in a very short time. Most of the time, these teams have never met before. This creates all sorts of challenges in communications and relations among stakeholders who sometimes are not even aware of each other. Business-people and project-people don't speak the same "language." So, very

often, they are on different "channels," not really understanding each other. A study from the Construction Industry Institute (CII), a research organization of the University of Texas at Austin, found that business people do not get much involved in capital projects, but only a few hours in total. Considering the length and size of any capital asset investment, this lack of involvement affects their understanding of the capital project process, their challenges, and opportunities. Our multi-cultural, multi-generational, multi-office, virtual business world makes it tougher to bring together the right stakeholders at the right time, to make the right decisions on time. So, project managers -and their teams- must be diligent and intentional in communicating and relating to their internal and external stakeholders to keep them aligned throughout the project's life. The above points put a lot of pressure on the project management team to focus on getting the project stuff right, frequently ignoring the People side of things.

Key Facts: Poor communications cause costly misalignments and misunderstandings. Projects without the input –and support- from the right stakeholders will likely fail. Weak people relations make good projects go wrong.

Strong people relations can make bad projects go well.

Bottom line: The best project systems or procedures will NOT make a project successful, but the best people communications and relations will. In conclusion: People communications and relations should be The Key Focus in every capital project -from beginning to end. Yet little has been developed to help guide capital project teams in these critical areas. One reason for the lack of focus on this area is that most of us engineers or technical people do not see the people side of things as important. No one has time for that... let's get to work!

So, what to do? What I have learned over my 22+ year career in the engineering and construction industry as a project engineer, project manager, and business leader is that successful capital projects are able to implement not only a good project plan but also a good people plan…I call this Managing Capital Projects with a People Campaign, one that guides the PM team on good people communications & relations practices. Noe H. Saenz is Energy Capital's Editorial Board Chairman

Analysis

A resilient upstream: challenges and opportunities in a transitioning economy By Energy Capital www.energycapitalmedia.com

The upstream sector is currently facing major challenges. From demand destruction provoked by the Covid-19 pandemic to the exponential growth of renewable energy sources, the century-old and traditionally fossil-based industry now faces a significant urgency to change.

n the United States, President Joe Biden has vowed to make energy transition the culminating target of its administration, with a transcendental shift from traditional fossil fuels towards cleaner alternatives. Notably, one key policy is making the sector crumble: the federal lands drilling ban. On Canada's side, the country is currently facing the difficulties of both the pandemic and the changing political landscape of its southern neighbor, which is also its largest energy partner. They share a bilateral energy relationship valued at $1,96 trillion (a cumulative value from the last two decades). Besides, according to the Canadian Energy Center, between 2000 and 2019, the oil market delivered a nearly $1,12 trillion energy flow between the two countries. Despite all the challenges, upstream has kept resilient, and it is strategically adapting to a new environment. Indeed, the sector is proving that petroleum and fossil fuels will not simply disappear. Several strategies are currently underway, and they might make us reconsider how this sector is transitioning and surviving.

The challenges Demand destruction and financial loses As we now know, the Covid-19 disease shook the world entirely. In fact, it is still striking economies despite the vaccine rollout efforts pushed by governments around the world. Particularly in the energy sector, the coronavirus pandemic prompted a significant crash in oil prices. Around April-May of 2020, oil prices historically fell below zero levels, crashing domestic and worldwide supply chains. Global oil demand fell by a record of 9,3 million barrels per day on a year-on-year basis in 2020. According to the International Energy Agency (IEA), oil demand in April 2020 was around 29 mb/d lower than in 2019, a level not seen since 1995. This market landscape prompted a series of millionaire financial losses from the oil majors and supermajors. In fact, during the third quarter of 2020, oil bankruptcy filings increased 21% compared to 2019's same period, according to Haynes and Boone. For instance, oil major Occidental Petroleum reported a net loss of $1,3 billion for the fourth quarter of 2020. Similarly, ExxonMobil had a year-on-year loss of 15

Analysis

$20,1 billion, compared with $5 billion in 2019. For bp, its upstream wing reported a full-year loss of $17 billion, compared with an $8 billion loss in 2019. Finally, Chevron reported a full-year loss of $5,5 billion, compared with earnings of $2.9 billion in 2019. Shell reported a net loss of $18,3 billion, only in the second quarter of 2020, down sharply from a net profit of $3 billion in 2019's same period. Changing political and economic landscape in the US Joe Biden assumed the US presidency on January 20, 2021. His Republican counterpart in the presidential race and now former US president, Donald Trump, had an "oil and gas at all costs" agenda during his administration. Under Trump, the country lived a shale boom, with an eight-fold increase between 2007 and 2019. As a result, the US became one of the world's largest oil and gas producers, surpassing Russia 16

over the years to help protect domestic oil and gas and energy continue," said Louisiana's Attorney General Jeff Landry. The states joining Louisiana's lawsuit included Alabama, Alaska, Arkansas, Georgia, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah, and West Virginia.

The opportunities

in 2011 for natural gas and Saudi Arabia and Russia in 2018 for oil. In fact, in 2017, American Petroleum Institute's CEO, Jack Gerard, said that Trump's first 100 days in office were America's "energy renaissance." It was precisely the API one of the institutions that challenged Joe Biden's vow to end federal lands drilling. API's Chief economist, Dean Foreman, released a study in which he claimed that Biden's move would trigger a $700 billion gross domestic product (GDP) decline through 2023. Similarly, new API's CEO, Mike Sommers, vowed to take the issue to courts, as millions of jobs would be lost on states that heavily rely on oil and gas income. However, on his first day in office, President Biden axed the Keystone XL project and signed a series of orders to stop fracking and new oil and gas auctions. By mid-March 2021, fourteen states had sued the president's decisions in this regard. "We believe that the president's actions are illegal and unlawful, and we're going to hold him accountable for them; we'll try to make sure that the gains that we've made

Energy trading Amid this political and economic landscape, how did upstream companies adapt? Energy trading was one strategy that helped upstream companies recover after the pandemic's hit and the president’s new energy paradigm. One of the 2020s most effective trading strategies was buying out oil stocks during the price plunge and then re-selling them when prices got stable. According to a bp presentation seen by Reuters, the company made around $4 billion on this strategy alone. Furthermore, in August 2020, bp's Chief Financial Officer, Murray Auchincloss, told analysts during an interview that in the second quarter of 2020, the business was "exceptionally strong from oil trading". Similarly, Shell's oil trading operations earned the company $5,995 billion in 2020, while over 2019's same period, total revenue from oil trading only accounted for $1,3 billion, according to the company's 2020 annual report. This unusually high contribution from selling oil stocks shielded major companies from the hit of the worst recession in modern economic history. However, this strategy had a unique approach, as the income would help companies finance their shift towards a new business model, in shape with a lower carbon economy. Hydrogen as a critical pathway for transition In this regard, making upstream cleaner represents the biggest challenge for the industry. Reducing 17

Analysis

emissions, offsetting carbon, capturing it, and acquiring a comprehensive portfolio of renewable energy assets are key elements to advance the sustainability agenda. The net-zero goal is being practically universally adopted. Accordingly, one commodity is making its way as a made-to-fit strategy for companies to transition: green hydrogen. In early March 2021, major energy companies, labor unions, utilities, NGOs, and developers committed to this commodity's advancement and launched the Clean Hydrogen Future Coalition (CHFC). The CHFC features companies like Chevron, Duke Energy, Sempra Energy, and Siemens Energy; altogether, they intend to promote hydrogen as a critical pathway to achieve global decarbonization. The group vowed to work closely with President Biden's administration, stakeholders, and policymakers to ensure a pathway for clean hydrogen, as it has the potential to decarbonize all industrial sectors, specifically those in which electricity has a hard time, like transportation and manufacture.

Facing energy transition Drilling, resilient hydrocarbons and new technology adoption Other strategies from upstream companies to adapt to this new environment have been an increase in drilling activities and a focus on resilient hydrocarbons. It may seem contradictory, but in late October 2020, the US and Canada rig count rose to levels not seen since 2018. Rig count monitoring agencies, like Baker Hughes, noted that, back then, the U.S raised its total rig count to 287, while Canada did to a total of 83. Such growth hadn't been seen since June 2018. Furthermore, in late March 2021, Baker Hughes' data showed that the rig count increased for the past seven months. Accordingly, the US total rig count was at 310, with the most active drillers 18

being EOG Resources, Pioneer Natural Resources, Occidental Petroleum, and ConocoPhillips. In this regard, how could upstream companies increase their drilling during a global pandemic and the energy transition? The answer relies on the way these hydrocarbons are drilled and delivered. When the pandemic arrived, companies were almost compelled to align to social distancing measures leaving their assets with less personnel and productive support. Nevertheless, the adoption of technologies like drones, augmented reality, and remote work paved the way for more agile and safer production methods. bp's Atlantis project in the Gulf of Mexico is a perfect example of that. According to the company, in July 2020, Atlantis' delivered its production on schedule thanks to technology adoption. In particular, bp's crew used advanced seismic imaging to identify the field and develop a new subsea system. Such innovation allowed the company to boost Atlantis' production up to 36,000 barrels of oil, with costs and time reduction. The increased use of methane capture systems, flaring reduction, and injecting carbon dioxide into wells are also critical components of this "resilient hydrocarbons" trend.

A quick example of these measures' adoption is the creation of the Environmental Partnership, an association that represents about 70% of the total onshore US oil and gas production. With major companies like Chevron, Devon Energy, and API's members' participating, the Partnership focuses on adopting best practices and emissions reduction efforts across the entire value chain of the upstream and midstream sectors. In December 2020, the Partnership launched a Flaring Management Program to identify ways to reduce flaring or at least improve its efficiency and reliability. One of the Partnership strategies was the broad adoption of thermal oxidizers or combustors, which allow a 98,5% gas destruction efficiency. Moreover, this practice allows reducing significantly the amount of methane released into the atmosphere. With strategies like these, upstream companies are improving their operations, better aligning themselves into a low carbon economy and society. Events in recent months have proved (like the winter storm in Texas) that total electrification of the industry endangers national energy security. Therefore, hydrocarbons like oil and natural gas are still essential to the industry. A greener upstream sector is shaping, ensuring its presence for the years to come. 19

Analysis

By Dolf Gielen, Director Innovation and Technology, International Renewable Energy Agency (IRENA)

Big Future for Green Hydrogen

Addressing climate change has become an overriding driver for the energy transition. More and more countries have set objectives for achieving net-zero carbon emissions by mid-century, but the strategies designed to get us there remain subject to intense debate. 21

Analysis

learly, renewable electricity has a vital role to play, driven by the falling cost of renewable power generation. Electromobility and other forms of electrification, combined with increased renewable power generation, can further reduce emissions. But attention is now focusing on the remaining emissions in building heating, transport, and energy-intensive industries. This is where hydrogen can be a potential gamechanger for accelerating global energy transitions worldwide. Hydrogen production from natural gas and coal is a substantial source of CO2 emissions. This “grey” hydrogen accounts for about 98% of all hydrogen production today but can be replaced with clean, either “blue” or “green” hydrogen.

RENEWABLE ELECTRICITY HAS A VITAL ROLE TO PLAY, DRIVEN BY THE FALLING COST OF RENEWABLE POWER GENERATION. THIS IS WHERE HYDROGEN CAN BE A POTENTIAL GAMECHANGER FOR ACCELERATING GLOBAL ENERGY TRANSITIONS WORLDWIDE. Blue hydrogen is also produced from fossil fuels, but the CO2 emissions are captured and stored. Green hydrogen, on the other hand, is made from water electrolysis using renewable electricity. Tremendous momentum exists, with over 200 hydrogen projects announced across the world and more than USD 300 billion in investments planned through 2030. However, green hydrogen accounts for only 1% of the total hydrogen supply and is primarily a byproduct of chlorine production through electrolysis 22

using renewable electricity. Dedicated green hydrogen production is even less, representing around 0.04% of the global output. Nevertheless, high ambitions exist to upscale green hydrogen production. The private sector “Catapult initiative” aims to achieve 25 GW of electrolyzer capacity by 2026, up from 0.3 GW today. The total project pipeline for electrolyzers in the coming decade is in the 60-80 GW range. The reason for this optimism is that renewable hydrogen could break even on costs with gray hydrogen before 2030 in optimal regions. The cost of green hydrogen can be broken down into two components: the renewable electricity price and the electrolyzer's cost. Recent IRENA analysis suggests a significant cost reduction potential for electrolyzers to 200-400 USD/kW within the next ten years, based on optimization of materials choice, re-design, and economies of

HYDROGEN CAN COMPLEMENT OR EVEN REPLACE NATURAL GAS IN PIPELINE SYSTEMS, THUS ENABLING CARBON MITIGATION IN BUILDINGS AND INDUSTRIAL HEATING SYSTEMS.

scale in electrolyzer manufacturing. A combination of low-cost renewable power and low-cost electrolyzers can yield green hydrogen at 1.5 USD/kg. Yet supporting policies will be needed to “buy down” green hydrogen. Figure 1: Green hydrogen will be cheaper than blue hydrogen by 2040-2050

Note: Key assumption – electrolysers load factor = 4200 hours (48%), conversion efficiency 65% Source: IRENA analysis

Analysis

Even at 1.5 USD per kilogram, green hydrogen is a premium fuel, translating to 12 USD per one thousand British thermal units (MBTU), compared to 2-4 USD/MBTU for natural gas in the United States. This price gap translates into an economic value of avoided climate damage of more than 100 USD per every tone of CO2. While low-cost natural gas might favor blue hydrogen, concerns remain, however, regarding the upstream methane emissions and the CO2 storage efficiency. Existing blue hydrogen projects are cases where CO2 is used for enhanced oil recovery. No systems are yet in place to monitor the fate of underground CO2 and potential leakages. Blue hydrogen projects will need to prove their carbon neutrality and still withstand scrutiny. The latest IRENA scenarios assume one-third blue and two-thirds green hydrogen by 2050. The total hydrogen volume may increase two to five-fold, depending on climate ambition levels in line with the Paris Agreement of well below two towards 1.5-degrees.

THE COST OF GREEN HYDROGEN CAN BE BROKEN DOWN INTO TWO COMPONENTS: THE RENEWABLE ELECTRICITY PRICE AND THE ELECTROLYZER'S COST.

Figure 2: Source of hydrogen – today and 2050: A shift to clean hydrogen in a 2-degree scenario

Source: IRENA analysis

Moving forward, hydrogen-based commodities such as green ammonia, renewable methanol, and direct reduced iron may gain prominence. At the same time, hydrogen can complement or even replace natural gas in pipeline systems, thus enabling carbon mitigation in buildings and industrial heating systems. Several pilot projects are currently being undertaken in Europe, for example. While hydrogen may not be a low-cost option for decarbonization, its role in combination with low-carbon technologies in global decarbonization is evident, particularly in industry, heating, and heavy-duty transport. Green hydrogen represents

a paradigm shift that may affect future natural gas prospects. The impact on the United States energy sector may be profound. What we need is an enabling framework and enhanced International cooperation that facilitate a sustainable energy transition. IENA’s Collaborative Framework for Green Hydrogen was established to accelerate this transition globally. Around 65 countries and private sector key players such as the Hydrogen Council regularly engage on our platform. Standards and certification for green hydrogen are topics that have been identified and are currently being elaborated on. 25

Analysis

Blue Planet –

a CCUS solution of Material Scale for Energy Sector Emissions

By Rodney Schmidt, Vice President, Corporate Development, Blue Planet Systems Corp & CEO, Blue Planet Technologies Canada Ltd.

he planet is dealing daily with the increasingly costly effects of climate change, spurred by the volumes of CO2 entering the atmosphere annually. For decades energy industry stakeholders have pursued technologies to reduce these emissions, including investing in carbon capture and sequestration (CCS) to capture and sequester carbon in underground reservoirs, as well as others to improve efficiency in energy usage. While these efforts have made some progress, solutions for capturing and sequestering significant carbon volumes have included a sizeable financial burden for companies, governments, and/or consumers. Equally, the improvement in this area so far has not kept up 26

Video Interview

Analysis

with the need for solutions that can materially reduce the amount of carbon entering the atmosphere annually. With carbon emissions, a primary concern in energy production, oil & gas companies, power generators, and other large infrastructure companies are recognizing that Blue Planet’s technology holds the potential for material CO2 capture and storage while generating positive economics. Chevron Corporation, Mitsubishi Corporation, Knife River Corporation, and Kamine Development Corporation have already engaged with Blue Planet as investor partners to deploy the technology on a global basis.

Where to permanently store captured CO2 to start making a material difference in the atmosphere? In recent years, efforts have accelerated to find new ways to capture carbon from the earth’s atmosphere – direct air capture (DAC), for example – and equally to generate new solutions to store carbon. Technologies that address the “utilization and storage” aspect of Carbon Capture, Utilization and Storage (CCUS) have been gaining momentum 28

and visibility. Specifically, technological solutions for where carbon can be stashed permanently are garnering increasing attention. To address the issue of utilization and permanent storage and to progress on solving the carbon capture materiality problem facing the planet, Blue Planet has developed a technology that converts captured carbon into manufactured limestone aggregates for usage in concrete.

Why aggregates? One of the largest markets on the planet is the global market for aggregates in concrete. Aggregates make up anywhere from 60-75% of a unit of concrete. Overall aggregates volume requirements are roughly 55 gigatons per annum, and almost 70% percent of this is for concrete applications.

Aggregate Market by Application Concrete 68% of global aggregate production is used in concrete 2

Road Base & Coverings Others

Source: www.grandviewresearch.com

Not only is the aggregates market of significant scale, but it is also, in essence, a “non-depletable reservoir” for carbon storage. The ongoing demand for aggregates is fueled by the demand for concrete to satisfy economic development, urbanization, and population growth. On top of demand growth, many countries are also facing 29

Analysis

the need to replace aging infrastructure. Blue Planet’s technology is designed to capitalize on this demand for concrete – and the annually renewed carbon storage reservoir that concrete represents – by utilizing captured CO2 to manufacture aggregates that can be permanently stored in concrete. Another essential feature of Blue Planet technology is that it enables flipping the economic paradigm from focusing on capturing and storing carbon for the lowest unit cost to how to do so for a profit. In Blue Planet’s business model, CO2 is one of the critical material inputs to creating its aggregates, where CO2 accounts for as much as 42% of the mass per unit of the finished product. The technology does this while eliminating the costly step of CO2 purification. Once produced, Blue Planet aggregates can be sold into traditional aggregate markets on a competitive basis. In short, Blue Planet’s technology is employed in the 30

context of a stand-alone, profitable business based on the sale of aggregate, focused on maximizing profit from those sales, rather than minimizing the negative financial impact of storing CO2.

Figure 2

CO2 The average CO2 content of Blue Planet aggregate is 42%, only 2% less than natural lim estone

Ca+

Why energy and infrastructure players are getting involved For years the energy sector has been seeking an economic solution for capturing and permanently storing material amounts of CO2 emissions. So far, most of the technologies that have been deployed at scale, such as underground injection

$+100/T (Pro fit)

in depleted reservoirs, require significant upfront investment with negative financial returns and additional investment for continuous monitoring of the injected CO2. Even in cases where CCS projects have proven successful, questions remain on whether all of the initially injected CO2 will remain permanently sequestered. Figure 3 Blue Planet’s technology provides energy companies throughout the value chain the potential to profitably capture and permanently store material volumes of CO2 emissions. CO2 capture – whether point source or via direct air capture – at energy production facilities like refineries, LNG terminals, midstream, and upstream operations, gas- and coal-fired power generation, and emerging operations such as blue hydrogen production, are potentially suitable opportunities for its application. Furthermore, it is an emissions solution for other heavy industry including cement, steel, and aluminum. All are opportunities for this technology to scale carbon capture globally and improve atmospheric carbon reduction goals.

Figure 3

Comparison of CO2 Reduction Technologies CO2 to Fuel

CO2 to Plastic CO2 to aggregate

Carbon Prive * (full system cost) in $/ton CO2

Legend

CO2 to EOR

CO2 as Fertilizer

1-5 million tons/year** 300 million tons/year

CCS $(-100)/T(Cost) Low

Climate Change Mitigation (i.e. permanently sequester CO2)

High

Power

Keeping the Lights On: How Transmission Reform Can Spur a More Cost-Effective and Resilient Grid By Rob Gramlich - Executive Director, Americans for a Clean Energy Grid

Last month, three winter storms hit the U.S. South, leaving 4.5 million people and many businesses without power. The events caused at least $195 billion worth of property damage and killed over 80 people.

Video Interview

exas was hit particularly hard by the cold weather and experienced widespread power outages as the state found itself with many resources that were knocked offline. While states to the north of Texas experienced the same weather pattern, they were able to import much more power from other areas. Texas' grid failure had many causes; however, a pivotal piece to this failure was its limited transmission connections to neighboring states and regions. A regionally connected grid would prevent price spikes, save lives, and keep the lights on. It would connect areas with abundant energy sources to regions with high demand and allow areas with generation to spare to ship capacity to those areas in need.

TEXAS' GRID FAILURE HAD MANY CAUSES; HOWEVER, A PIVOTAL PIECE TO THIS FAILURE WAS ITS LIMITED TRANSMISSION CONNECTIONS TO NEIGHBORING STATES AND REGIONS. Texas's situation is a stark reminder that America's transmission grid is outdated and too inefficient to support a modern economy. Most of the nation's transmission lines were constructed in the 1950s and 60s and have a 50-year life expectancy, meaning the current grid is operating well-passed its intended lifespan. This is increasing electricity bills for all customers and making the country more vulnerable to grid outages and national security threats. 33

Power

There are significant policy roadblocks in how we plan, pay for, and permit transmission, which are stunting grid development. In the last decade, regionally planned transmission investments have decreased by 50 percent, and almost no new interregional lines have been planned. The current system requires individual generators to pay for shared network upgrades, which has discouraged project developers from connecting to the grid. At the end of 2019, 734 gigawatts of proposed generation were waiting in interconnection queues nationwide. This current cost allocation method and associated queue logjam disproportionately affect renewable resources as these projects are located in remote areas and require more transmission to reach the grid. 34

A REGIONALLY CONNECTED GRID WOULD PREVENT PRICE SPIKES, SAVE LIVES, AND KEEP THE LIGHTS ON. IT WOULD CONNECT AREAS WITH ABUNDANT ENERGY SOURCES TO REGIONS WITH HIGH DEMAND AND ALLOW AREAS WITH GENERATION TO SPARE TO SHIP CAPACITY TO THOSE AREAS IN NEED.

significant reduction of customer electricity bills. In a study looking at transmission interconnection in the Eastern U.S., the authors found that transmission expansion would cut consumer electric bills by over $100 billion cumulatively, decreasing the average electric bill rate by more than one-third; saving a typical household more than $300 per year. A modernized transmission system would also make America's grid more secure, reliable, and resilient. In the face of local resource failures, regional transmission operators would be able to pull from an array of available generation sources to avoid outages. The ability to share electricity between regions will become increasingly necessary as the share of renewable energy on the grid rises.

As a result, renewable projects that enter the queue are often left with unreasonably high network upgrade costs, and developers drop out to avoid paying them, which prevents job creation, especially in rural areas where many of these projects are located. As climate change increases the severity and frequency of natural disasters, the nation's electric grid must receive proper upgrades and resiliency investment. In our report, Planning for the Future: FERC's Opportunity to Spur More Cost-Effective Transmission Infrastructure, we urge the Federal Energy Regulatory Commission (FERC) to modernize our transmission system by reforming regional and interregional planning and cost allocation methods. Adopting these transmission policies would deliver considerable benefits to America, such as the

AS CLIMATE CHANGE INCREASES THE SEVERITY AND FREQUENCY OF NATURAL DISASTERS, THE NATION'S ELECTRIC GRID MUST RECEIVE PROPER UPGRADES AND RESILIENCY INVESTMENT. The Texas crisis is still being investigated and was likely, in part, due to inadequate foresight and resiliency investment up and down the gas and power production and delivery systems. But interregional transmission connections helped their neighbors to the north, and in fact, they tend to support any region when it is hit hard by severe weather. These benefits can only be realized if grid capacity is upgraded to meet this need. FERC has the opportunity to spur transmission investment to modernize the grid and to improve resiliency, lower customer costs, and lead the nation toward decarbonization. 35

Power

Sustainable Marine’s first next generation tidal platform in Nova Scotia, Canada By Jason Hayman

Video Interview

Sustainable Marine CEO

The ocean is the world’s largest untapped energy source contained an estimated 3-Terawatts of power. The amount of tidal energy which is technically harvestable lies somewhere around the 1-Terawatt mark, and is largely located near islands and long stretches of coastline. Sustainable Marine CEO Jason Hayman explains how the firm’s next generation tidal platform - recently unveiled in Nova Scotia, Canada - offers a future portent to clean ocean energy forming part of the world’s first floating tidal array. 36

idal energy is one of the oldest forms of power known to man. There are two main types of tidal power: tidal stream and tidal range. The difference between high tide and low tide is known as tidal range. Until recently, the only way electricity has been harnessed from tidal range is through construction of tidal barrages containing turbines across the mouth of estuaries that have large tides. Tidal lagoons work in a similar way to barrages by capturing a large volume of water behind a man-made structure, which is then released to drive turbines and generate electricity. Separately, tidal instream power takes advantage of currents in the sea that flow as the tide moves in and out.

THE OCEAN IS THE WORLD’S LARGEST UNTAPPED ENERGY SOURCE CONTAINING AN ESTIMATED 3-TERAWATTS OF POWER. THE AMOUNT OF TIDAL ENERGY WHICH IS TECHNICALLY HARVESTABLE LIES SOMEWHERE AROUND THE 1-TERAWATT MARK, AND IS LARGELY LOCATED NEAR ISLANDS AND LONG STRETCHES OF COASTLINE.

Power

A KEY ADVANTAGE OF TIDAL ENERGY IS ITS PREDICTABILITY AND RELIABILITY WITH DAILY, BI-WEEKLY, BIANNUAL, AND EVEN ANNUAL CYCLES OVER A NUMBER OF YEARS. BESIDES, TIDAL ENERGY ONLY REQUIRES WATER SPEEDS ONE-TENTH OF THE SPEED OF WIND TO PROVIDE THE SAME POWER FOR THE SAME SIZE OF TURBINE SYSTEM.

Tidal instream turbines, such as Sustainable Marine’s PLAT-I system (PLATform for Inshore energy), are similar to wind turbines but use fast moving tidal streams instead of the wind to generate electricity. An important benefit of tidal stream systems is their low environmental impact, with an ability to deploy platforms incrementally, without the need for widescale civil construction. The PLAT-I technology offers an innovative take on tidal energy through a floating platform, which is the first of its kind in the world. Its 38

ACROSS THE ATLANTIC, CANADA HOLDS AN ESTIMATED 35GW OF TIDAL ENERGY - ENOUGH CLEAN POWER TO DISPLACE OVER 113 MILLION TONNES OF CO2, EQUAL TO REMOVING OVER 24 MILLION CARS OFF THE ROAD.

modular design enables it to be easily assembled on-site and launched without any specific water depth requirements. Meanwhile, the system is moored with a turret configuration allowing it to ‘weather-vane’ with the tidal flow. PLAT-I’s turbines are mounted on SIT Deployment Modules (SDMs) allowing them to be quickly raised above the surface for inspection and maintenance, while also reducing draft during transit. A key advantage of tidal energy is it predictability and reliability with daily, bi-weekly, biannual and even annual cycles over a number of years. Energy can be generated both day and night, while the density of water also provides unique benefits. With water being 837 times denser than air, a 5-knot tidal current has the same kinetic energy density per metre squared as 87km/h of wind. As a result, tidal currents have immense energy density. This means tidal stream turbines can be smaller in size compared to wind turbines, generating the same volume of energy with 53pc smaller rotor diameters. 39

Power

Tidal energy only requires water speeds one-tenth of the speed of wind to provide the same power for the same size of turbine system. At higher water speeds in a flow of 4 to 5 metres-per-second – which are ideal tidal stream conditions - turbines can typically access around five times as much energy per rotor swept area as a similarly rated power wind turbine. A number of world’s superpowers benefit from strong tidal resources with many countries now making significant investments in the market, including the USA, Canada, UK, China, Japan, South Korea, Australia, New Zealand, Chile, France and Sweden. Back in 2014, the global tidal energy market was valued at around $480million but experts now believe this will surge to circa 11.3bn by 2024. The UK alone holds around 50pc of Europe’s tidal energy resource, with studies estimating it possesses a total of 25 to 30GWs - enough to supply around 12pc of UK’s current electricity demand. The majority of which is located in the Penthland Firth near the Orkney Islands and Severn estuary (which has between 8 and 12GW), with the estuaries and bays of the north west experiencing a similar volume and the east coast a further 5 to 6GW. Across the Atlantic, Canada holds an estimated 35GW of tidal energy - enough clean power to displace over 113 million tonnes of CO2, equal to removing over 24 million cars off the road. The Minas Passage area of the Bay of Fundy, which is the end destination for Sustainable Marine’s floating tidal array, attracts around 7GW of the nation’s tidal power, which could power two million homes – or all of Atlantic Canada. As the tidal industry prepares to take larger and faster strides than ever before, continued public and private sector support will be crucial to ensure the delivery of full-scale demonstrations on route to commercialisation, helping unlock the full potential of this rapidly evolving clean technology. 41

Power

Utilities Partner to Enhance Access to Electric Vehicle Charging By American Electric Power (AEP)

On March 2nd, six of the country's largest utilities agreed to partner to develop fast-charging corridors throughout the Midwest and Southeast. The Electric Highway Coalition will ensure that electric vehicle (EV) drivers have access to a corridor of charging stations across a significant portion of the U.S. 42

merican Electric Power (AEP), Dominion Energy, Duke Energy, Eversource Energy, Entergy Corp., Southern Co., and the Tennessee Valley Authority (TVA) announced the plans to provide EV drivers with access to EV DC Fast Chargers along frequently traveled interstate roads. Each company will provide EV charging solutions within their service territories as part of an unprecedented effort to create convenient travel solutions for electric drivers. "Adoption of electric vehicles and the transformation of the nation's transportation system is underway, and it is essential that AEP is a meaningful and active part of this transformation. Being a part of the Electric Highway Coalition is a foundational component of that engagement," said Lisa Barton, executive vice president and chief operating officer of AEP. "This effort is very timely given the recent electric vehicle announcements from leading auto manufacturers and the need to address long-distance travel for our EV customers. I am proud of the Coalition's leadership

THE ELECTRIC HIGHWAY COALITION WILL ENSURE THAT ELECTRIC VEHICLE (EV) DRIVERS HAVE ACCESS TO A CORRIDOR OF CHARGING STATIONS ACROSS A SIGNIFICANT PORTION OF THE U.S.

Power

ADOPTION OF ELECTRIC VEHICLES AND THE TRANSFORMATION OF THE NATION'S TRANSPORTATION SYSTEM IS UNDERWAY, AND IT IS ESSENTIAL THAT AEP IS A MEANINGFUL AND ACTIVE PART OF THIS TRANSFORMATION. BEING A PART OF THE ELECTRIC HIGHWAY COALITION IS A FOUNDATIONAL COMPONENT OF THAT ENGAGEMENT.

Lisa Barton, Executive VP and CEO, AEP

Power

in this area and our ability to coordinate in such a short period of time." Each station will be equipped to charge EVs in approximately 20 to 30 minutes. For added convenience, these stations will be strategically positioned along major highway routes as a direct result of collaboration amongst the partnering companies and leveraging existing and planned compatible DC Fast charging stations. The partner companies' employees will also benefit from the partnership, as several partners have begun electrifying fleet vehicles. This corridor will allow employees using EVs to travel efficiently through their respective service territories, with access to convenient charging stations. To solidify this partnership, each utility agreed to a specific set of principles that allow for ongoing collaboration between the companies and prioritize EV drivers' needs. 46

"We saw the opportunity to address a concern of some customers around purchasing electric vehicles, namely range anxiety and the future charging needs of our own electric vehicle fleet in our service territories," said Phil Dion, vice president, and chief customer officer. "Last fall, our senior management team agreed and recognized that this proposal could be improved if we could partner with neighboring utilities to create an electric vehicle corridor for our customers. I am very proud of how the team, led by Jeff Lehman and the operating company EV leads, took a concept and quickly turned it into something that will greatly benefit our customers. " Dion also shared that the partnership speaks to the industry's ability to create

THIS CORRIDOR WILL HAVE SIGNIFICANT BENEFITS FOR OUR CUSTOMERS, OUR COMPANY, AND OUR COMMUNITIES. IT SHOWS HOW UTILITIES CAN COLLABORATE WITH EACH OTHER TO ADDRESS ONE OF THE KEY BARRIERS THAT PREVENTS CUSTOMERS FROM PURCHASING AN ELECTRIC VEHICLE.

Phil Dion, CCO, AEP

solutions for customers and how the corridor will make choosing EVs more feasible for customers. "This corridor will have significant benefits for our customers, our company, and our communities," said Dion. "It shows how utilities can collaborate with each other to address one of the key barriers that prevents customers from purchasing an electric vehicle." As a result of the partnership, millions of drivers will soon have access to the corridor, with initial site deployment scheduled for the third quarter of 2021. 47

Upstream

Down to the Last Drop: Innovations in Thermal Enhanced Oil Recovery 48

By Jose Wilfredo Molina, president and founder of Nakasawa Resources jwmolina@nakasawaresources.com 49

Upstream

ur world has, in some senses, grown smaller. There are fewer and fewer unexplored corners or new oil fields, and the world's energy needs are only rising. This makes it increasingly important for companies to extend the lives of their existing reservoirs, extracting every possible drop from each oil field to extract the billions of barrels of already discovered oil that has been impossible to reach – until now. Traditionally, companies have relied upon primary and secondary extraction to recover oil from wells. Still, according to U.S. Department of Energy studies, this leaves half to three-quarters of the total oil reserve behind. Given this low level of efficiency, companies have turned to enhanced oil recovery (EOR) in recent years. Unlike the primary and secondary methods, which simply displace oil to the surface or extract what's already there, EOR relies upon changing the oil's properties to facilitate significantly extraction. There are multiple methods for accomplishing this, generally falling into three main categories: thermal recovery, gas injection, and chemical injection, though there are less common microbial and novel options as well. Thermal EOR (TEOR) is the primary EOR process for heavy oil extraction and one of the most common in the United States, accounting for over 40% of its EOR production. It seeks to reduce oil viscosity to allow easier flow to the surface by introducing heat on the reservoir level, most commonly by introducing steam. It is not, however, without its challenges. It has historically required a relatively large surface footprint, demanded a great deal of water, and resulted in carbon dioxide emissions from the steam generation process – as well as significant capital investments. Its relative newness and high costs 50

TRADITIONALLY, COMPANIES HAVE RELIED UPON PRIMARY AND SECONDARY EXTRACTION TO RECOVER OIL FROM WELLS. STILL, ACCORDING TO U.S. DEPARTMENT OF ENERGY STUDIES, THIS LEAVES HALF TO THREE-QUARTERS OF THE TOTAL OIL RESERVE BEHIND. meant many companies did not want to use these solutions. But some of this is beginning to change. TEOR has undergone a transformation, and this process of innovation and improvement is something I am passionate about. I believe that reducing startup costs, run time, and feedwater usage are essential to ensuring we maximize recovery in every oil field and limiting the environmental impact of extraction throughout the process.

THERMAL EOR (TEOR) IS THE PRIMARY EOR PROCESS FOR HEAVY OIL EXTRACTION AND ONE OF THE MOST COMMON IN THE UNITED STATES, ACCOUNTING FOR OVER 40% OF ITS EOR PRODUCTION.

The name of the game is "efficiency." The less room a solution requires, the less water it needs. Similarly, the less time it needs to run, the better it will be for total costs and environmental impact. This has been the challenge Nakasawa Resources took on with some of its latest innovations, the Super Matroid Heater and Super Matroid Cyclone, which seek to turn TEOR into a mobile, cost-efficient, high-efficiency solution. To that end, it provides a steam quality of at least 95%, uses 12% less feedwater and fuel gas, and increases oil production by over 15% compared to conventional OTSG techniques - all

Upstream

THE SUPER MATROID HEATER AND SUPER MATROID CYCLONE SEEK TO TURN TEOR INTO A MOBILE, COST-EFFICIENT, HIGH-EFFICIENCY SOLUTION. TO THAT END, IT PROVIDES A STEAM QUALITY OF AT LEAST 95%, USES 12% LESS FEEDWATER AND FUEL GAS, AND INCREASES OIL PRODUCTION BY OVER 15% COMPARED TO CONVENTIONAL OTSG TECHNIQUES.

while saving up to 25% in operational costs and streamlining the entire process. Though it may not sound imperative, steam is at the core of many TEOR solutions, so any improvements in its usage cascade throughout the project. Higher quality steam can result in significant improvements to crude oil production and substantial reductions in feedwater usage. Modern solutions even avoid generating waste or effluents that could damage the local environment where steam injection operations are performed and reduce greenhouse gasses' concentration. Efficiency, optimization, and environmental focus are all critical for ensuring the energy industry can meet the growing global energy demands while retaining its social license to operate. It is no longer enough to rely on primary and secondary extraction or dismiss environmental concerns. Today's energy industry needs to be as efficient and green as possible, and that is what the latest TEOR solutions can help companies do. It is time for us to stop compromising and make the most of the oil fields we have, down to the last drop. 53

Upstream

Physics shapes corporate strategy in the Shale Revolution

By JP Chevriere – CEO Transmar Consult Inc. Anabel Daily – President Daily Thermetrics

Upstream

ize matters in nature and business; larger is not necessarily better than small. The laws of biology and physics apply to the corporate world. The capability to adapt and act to new conditions separates leading organizations from the rest. The Shale Revolution is affecting oil and gas (O&G) operators and service suppliers. Several examples explore how to improve organizational strategies and survive in the ever-changing global O&G market.

SCIENCE TRUMPS STRATEGIES Changes in physical size alter the shape of any animal. The same is true for organizations. Using geometry rules, the surface area of an object, animal or business, increases by powers of two or with the square of its diameter. Any item's mass or volume, such as a business, increases with the diameter's cube. As the diameter increases from 2 to 3 to 5, the mass grows from 8 to 27 to 125. Mass always grows faster than the surface area of any animal or organization. What does this mean? A company's size, structure, and strategy are all interconnected. When the size of an industry or company changes, different policies, strategies, and organizational structures are required. A "right" or "wrong" size does exist for industries and companies. Unfortunately, the Shale Revolution shifted many O&G operators and contractor firms into the "wrong size" category, thus resulting in many failures.

UNDER THE RADAR The Shale Revolution is a United States (U.S.)-based phenomenon. O&G producers had discovered shale reserves. But, drilling technologies failed to develop the shale geologies cost-effectively. Several small, independent oil companies knew the value of shale reserves. They directed significant R&D 56

efforts to fine-tune a new fractionation solution— hydraulic fractioning or "fracking." It is the key to stimulate O&G flow in shale fields effectively. These small companies lacked the size and resources held by major oil organizations. But, they had plans and flexibility. These innovative companies used hydraulic fracturing to costeffectively produced shale O&G fields. The Shale Revolution transformed global O&G production almost overnight. More importantly, the Shale Revolution occurred because leadership recognized

THE CAPABILITY TO ADAPT AND ACT TO NEW CONDITIONS SEPARATES LEADING ORGANIZATIONS FROM THE REST. SEVERAL EXAMPLES EXPLORE HOW TO IMPROVE ORGANIZATIONAL STRATEGIES AND SURVIVE IN THE EVER-CHANGING GLOBAL O&G MARKET.

opportunities and seized the advantages possible through hydraulic fracturing. Size matters in business dynamics The magnitude of changes from the Shale Revolution is quantitative and qualitative. Moving from a small- to medium- or large-size business is not straight nor linear. A medium-size business is not a larger-sized small business. The differences between small, medium, and large companies are qualitatively profound. Size and limits. Insects are among the smallest living creatures. Structurally, an insect's hard skin 57

Upstream

holds its mass. Tiny pores in the hard skin allow air molecules to nourish the insect's organs. So, why are there no insects as large as a cat or dog? Physics dictates why insects remain small. If an insect grows significantly, its mass would grow by powers of three, while the skin area only grows by powers of two. For a large insect with a greater mass, the skin is much thicker; consequently, air molecules travel a longer distance. Unfortunately, this distance is too great, and the larger-size insect suffocates. Consequently, small insects with hardened skins are the "right" or optimum size. If insects were larger, then they would require a skeletal structure like a mammal. Moving from hardened skin to a skeletal system requires an evolutionary jump. There are optimum sizes for insects and mammals; thus, there are "right" and "wrong" sizes for companies. Unfortunately, too many O&G operating and service companies are the "wrong" size. 58

SIZE SHAPES STRATEGY A small-size firm can do things that a large company can’t, as proven by the Shale Revolution. A smaller organization can make quicker decisions, is less complex, and is more agile. Conversely, a large company with enormous resources can do things beyond the capability of small outfits. It can fund long-range R&D projects, undertake global projects, or compete in multiple business markets. Consequently, different size firms need various strategies and structures. Different strategies and company sizes offer additional opportunities and threats. For example, gravity is no threat to a normal-size human. A 6-ft man can fall to the ground without harm. However, a 50-ft goliath falls to the ground and is undoubtedly dead from the event. For a small creature like a mouse or spider, gravity is a non-threat. The small do not fear gravity; however, the large creatures do.

A SMALL-SIZE FIRM CAN DO THINGS THAT A LARGE COMPANY CAN’T, AS PROVEN BY THE SHALE REVOLUTION. A SMALLER ORGANIZATION CAN MAKE QUICKER DECISIONS, IS LESS COMPLEX, AND IS MORE AGILE. CONVERSELY, A LARGE COMPANY WITH ENORMOUS RESOURCES CAN DO THINGS BEYOND THE CAPABILITY OF SMALL OUTFITS.

COMPANY SIZE DETERMINES THE COURSE Large-size animals and companies have inherent advantages. Their surface area represented by multiple markets provides risk diversification. Furthermore, a large-size company has ample financial resources and political connections. Smaller firms have other advantages and must adopt strategies and organizational structures that fit their core strengths. Biological and physics concepts can help guide the needed changes that contractors and O&G operators of all sizes must address. Can the O&G operating companies create new business models and adapt to a shale-driven market? Will service companies develop the "right" size, strategy, and structure? The answers to these questions are still unknown. There is enough light for industry leaders to see that change is necessary.

However, enough darkness remains for those who prefer to delay evolving with new conditions.

ABOUT THE AUTHORS J. P. Chevriere is founder of Transmar Consult, Inc., a leading advisory to the global energy and industrial sector. He is a member of the Board of Directors of Appleton Partners and is a Director of LOGO, a Paris based optical company, and Rice University Global Forum Board. Mr. Chevrierre holds a BS degree in engineering science with honors from Temple University, an MS degree from the Massachusetts Institute of Technology, and a PhD from the Universite de Paris. Anabel Daily is president and CEO of Daily Thermetrics, a Houston-based heat management manufacturing company serving the hydrocarbon and aerospace industries. Dr. Daily holds a doctorate in medicine and an MBA from Rice University. 59

Midstream

Improving economic outlook, summer demand likely to up Mexico natural gas demand 60

Video Interview

OUSTON (ICIS)--First-quarter 2021 marketed natural gas transactions and volumes are so far down on the year after a record-breaking Q4 '20 period, but upward revisions to GDP forecasts and the peak summer demand season mean greater future consumption. Gas marketers delivering into Mexico reported 516 transactions in January and February versus 611 for the same two months of 2020, right before the first coronavirus case was reported in the country. This according to data available from energy regulator CRE.

By Claudia Espinosa Editor Energy Mexico, ICIS

• ICIS, Mexico regulator indications stay in range of each other • Early 2021 gas marketing starts slowly after record Q4 '20 • Volumes of gas marketed likely to increase in coming months

An increase is likely for the following months of data as economic activity increases and the peak summer demand season approaches. Electricity demand for cooling ups plants' gas demand most from late May to September. July, August and September are usually when gas consumption increases most, and with more vaccinations being distributed, the economy and energy consumption are expected to grow through the rest of 2021. This barring circumstances like a lack of effectiveness of vaccines against possible new coronavirus strains. 61

Midstream

Q4 '20 RECORD Transaction and volume numbers for gas marketed in January and February were down from the same months last year after a record number of transactions were observed for November and December 2020. This as the economy recovered from its worst GDP drop on record during the Q2 '20 lockdown.

Nearly 350m GJ of gas were transacted during the first two months of 2021, a figure below the prior two years but still above 2018. Gas consumption will most likely increase incrementally in April and jump in late May to usual peak summer levels. This may mean total volumes marketed could end up reaching or surpassing the 2019 record. 62

indicators for three demand centres reflect market fundamentals despite liquidity issues caused by a lack of implementation of open access rules and unresolved right-of-way conflicts for connecting pipelines. These issues are unlikely to be resolved this year. Late 2020 and early 2021 ICIS LGPI figures for Monterrey, Mexico City and Guadalajara remained in close proximity to regional IPGN figures from CRE. CRE bases their figures on data from gas marketers active in Mexico.

NORTHEAST CRE's early 2021 IPGN figures averaged from monthly transactions reported by marketers show the industrial states in Region III continue to pay low prices. The January IPGN for Monterrey was $3.18/MMBtu and it climbed to a record-breaking $19.63/MMBtu during February because of the winter emergency. The ICIS LGPI shows that under more normal market conditions, prices for Monterrey would have been around $2.92/MMBtu in February.

PRICES TO FALL DESPITE FEB FREEZE CRE's national IPGN gas price data spiked in February because of the unusual market conditions caused by the winter emergency in key supplier state Texas. ICIS locational gas price indicator (LGPI) data shows CRE's average regional 63

Midstream

The number of transactions executed in January and February in CRE's Region III were up by seven from last year and reached 109, boosted by a greater number of transactions reported in February. Total volumes also increased on the year.

CENTRAL The ICIS January LGPI for Mexico City of $3.74/MMBtu averaged within 3% of CRE’s IPGN of $3.86/ MMBtu for Region V, which includes Mexico City as well as 10 small surrounding states. The region centered around the country’s capital continues to be severely impacted by coronavirus, but it receives the greatest volumes of marketed gas out of any of CRE's IPGN regions. Region V recorded a drop in transactions and it was accompanied by a decrease in volumes as well this year. In contrast with the 257 transactions observed in January and February of last year, Region V recorded only 182 this year. Volumes fell year on year from 103.3m GJ in January and February of 2020 to just 80.8m GJ during those months this year. 64

CENTRAL-WEST MEXICO In contrast, Region IV recorded a drop in transactions but an increase in total volumes for the first two months from 25.2m GJ in January and February 2020 to nearly 26.3m GJ this year. The region recorded 70 transactions for the period last year and only 41 this year. These figures match the expectation that more volumes would be marketed in this region with greater use of the so-called Wahalajara pipe system. ICIS' January Guadalajara LGPI of $3.35/ MMBtu was within 4% of the CRE’s January IPGN of $3.49/MMBtu for its Region IV.

Mexico’s central-west region has among the highest potential for more marketing because of Wahalajara’s idle capacity and its connectivity to industrial Guadalajara and nearby CFE power plants.

Downstream

O&G industry 2021 comeback: Expect a big change The global oil and gas (O&G) industry continues to recover from the COVID-19 pandemic and 2020 supply/demand swings. Consequently, major integrated O&G companies are revising their 2021 spending.

By Stephany Romanow, Global Energy Writers

Downstream

he global oil and gas (O&G) industry continues to recover from the COVID-19 pandemic and 2020 supply/demand swings. Consequently, major integrated O&G companies are revising their 2021 spending. Climate change and less-carbon-intensive operations are part of the budget-balancing. The American Petroleum Institute (API) released a proposed framework to address the risks of climate change.1 Building a lower-carbon future requires a combination of government policies, industry initiatives, and continuous innovation, according to API President and CEO Mike Sommers. The O&G industry has made significant progress in reducing emissions. However, market-based policies and actions are needed to achieve a netzero carbon world: • Accelerate technology innovation to reduce emissions and still meet growing energy needs. • Advance cleaner fuels to provide lowercarbon choices for consumers. • Endorse a carbon-price policy.2

NET-ZERO CARBON NEEDS A MULTIPRONGED APPROACH Companies making major transformations need time to develop new solutions, create tax and performance standards, and demonstrate and apply innovative solutions. More importantly, transforming into a net-zero-carbon organization requires significant investment. Following 2020 demand destruction, O&G companies are cautiously rebuilding operations. New budget modifications address 68

Downstream

ever-changing market conditions and the progressive shift to lower-carbon operations. Yet, during this transition, shareholders still expect profits from O&G companies. Likewise, consumers demand reliable supplies of transportation fuels and other hydrocarbon-based products. The energy-mix transition is a complex problem. Numerous elements are involved, as shared by Chevron: "Our energy transition strategy is focused on actions that are good for both society and shareholders," Chevron Vice President of Strategy and Sustainability, Bruce Niemeyer.3

ACCELERATED TECHNOLOGY INNOVATION MUST OCCUR Extensive investment and research and development (R&D) are critical to commercializing innovations aimed at the hard-to-decarbonize sectors—commercial transportation, power generation, and heavy industry.4 Carbon capture, utilization, and storage (CCUS) is an existing technology to reduce carbon dioxide emissions and is used for enhanced oil recovery applications. Deployment of CCUS solutions is still lacking. To develop CCUS hubs, consortiums of 70

industry operators, technology developers, and investors equally share the funding and project risks. Next-generation CCUS development requires clear, long-term policies and tax credits that support investment by consortiums. CCUS can manage carbon emissions from all major industrial sources, not just the O&G industry. Economic opportunities must be attainable in any carbon-capture project. Achieving a market price on carbon will enlist market forces and spur cost-effective carbon-emission reduction efforts.5

CLEANER-FUEL OPTIONS FOR CONSUMERS Growing global demand for lower-carbon fuels is propelling changes in refinery feedstock choices and processing options. Multiple low-carbon-fuel standards require increasing

availability of waste oils and fats decreases, O&G industrybacked R&D is exploring algae, agriculture, and forestry wastes as future feedstocks. Again, low-carbon fuels and petrochemical solutions require innovation, sensible legislation, and policy support.6

O&G REMAINS A MAJOR PART OF THE GLOBAL ECONOMY The O&G industry will be part of the energy mix for many decades. Governments, consumers, and investors are demanding carbonemission reductions and lower-carbon-intensity energy. From the outside, it appears that O&G companies are not transitioning fast enough. Major O&G organizations are "leaning in" on climate change while still supporting society's present and future needs. For example, the O&G industry is exploring lower-carbon (blue and green) hydrogen production for refining operations and future transportation fuel. Breakthrough solutions, time, investment, and sensible policies are needed to achieve a net-zero carbon world.

ABOUT THE AUTHOR inclusion of renewables into the transportation fuel markets. Renewable diesel is an emerging solution to reuse existing refinery assets and meet low-carbon-intensity requirements. Unlike biodiesel and ethanol, renewable diesel is a drop-in fuel. More importantly, it is compatible with current vehicle engines. Switching operations to renewable diesel processing repurposes less-efficient refining assets. In addition, it provides economic incentives through merchant sales of lower-carbon fuels. For refiners, it is a winwin. Renewable diesel replaces crude oil with vegetable oils and animal fats. As the

Stephany Romanow is a downstream industry expert with over 25 years of experience in process operations and publishing. She is the founder of Global Energy Writers (GEW), a Houston-based group that works closely with professionals involved in the global energy and petrochemical/chemical industries (globalenergywriters.com). GEW assists engineers and subject-matter experts in sharing their technologies, experiences, and insight through varying media. Previously, Stephany directed the technical content for the downstream publication Hydrocarbon Processing as Editor and Senior Process Editor. She published over 100 articles and editorials and is a featured speaker on hot-button issues for the downstream industry. Stephany holds a BS degree in chemical engineering with a minor in petroleum engineering.

1 "API outlines path for low-carbon future in new climate action framework," March 25, 2021 2 Ídem 3 "Chevron reinforces plan to deliver higher returns, lower carbon," March 9, 2021 4 "ExxonMobil outlines plans to grow long-term shareholder value in lower carbon future," March 3, 2021 5 Óp. Cit. API 6 Ídem 7 Slater, Neil James, "Oil and gas industry doubles down on transformational green investments, despite crash in confidence," January 26, 2021

Infrastructure

The XR trend: why is it so crucial? Noticing the XR trend of industrial enterprises committing to the adoption of AR/VR/MR to improve safety, efficiency, and costs? COVID has radically altered business outcomes and accelerated the need for companies to enhance their training, sales, marketing and internal communications.

Fresh graduate, Chad Hoang, testing ExxonMobil VR build in the XR Showdown™.

Infrastructure

By Karen Snyder Managing Director & Producer, TYM Studio & Digital Media

Video Interview

Lecturer, University of Houston

ou can see this trend from multiple sources. Research firm Frost & Sullivan forecasts that the global market for AR/VR technologies will reach $661.4 billion by 2025 (2021). A 2021 field service industry survey by Librestream notes 54% of enterprises are planning an increase in their AR investments with 82% planning at least a 20% increase. The U.S. Space Force is also developing VR training for national security satellites (Washington Post, 2021). ExxonMobil worked with students to create a VR electronic engineer training simulation and AR warehouse parts placement app during the XR Showdown™ (2020). Juniper Research predicts software providers are moving beyond video calls into interactive tools for collaboration (think serious video games for events and communications). Also, healthcare is leaping into video games. The FDA approved the first video game as prescription medication last year. Texas Children’s Hospital in partnership with TYM Studio is developing the world’s first hospital at-home care video game. Dr. Susan Blaney, Director of the Texas Children’s Hospital Cancer & Hermatology Centers, notes, “Our hope for the future of serious games in healthcare is that we can integrate them into the daily care of our patients and have our outcomes be optimal.” Microsoft just released Mesh to enhance virtual collaboration for Hololens 2 (AR Talks, 2021). Facebook unveiled more VR tech with additional

hand tracking (The Guardian, 2021). And let’s not forget all the new and upcoming hardware choices such as Tilt Five, Varjo, HTC Vive, Vuzix and more.

XR IS ABOUT COMMUNICATION TO YOUR BRAIN XR is not about being cool. It’s number-one value lies in how your brain receives and processes information. Your brain is trained to process 3D information in the physical world. Moving into a digital 3D experience helps your brain process more information which makes for better synapse connections (i.e. memories). The more your brain lights up with synapse connections from processing inputs (sound, sight, touch, movement, written words), the higher the possibility of long-term memory retention. This is why VR training has been proven for longterm memory retention. VR completely envelopes the user with 360-degree visuals, sounds, movement, and written words -- everything the brain likes to eat up and process. Pricewater House Coopers released a study that noted that training employees with virtual reality is 4X quicker than traditional methods. Plus, it’s cheaper with average training costs of $195 per trainee when using VR versus $207 to $265 with traditional methods (2020).

PLAY AND STORY = QUALITY BRAIN SCARS Your brain loves to be surprised and to discover things. It lives for the chemical rush of humor, mystery or a cool fact to mull over. Scarring the brain with a good chemical rush means a long-term memory is made. Developing training, sales, marketing, 75

Infrastructure

and internal communications to take advantage of “play” and “doing” is extremely important to outcomes. Dr. David Putrino, the Director of the Mount Sinai Abilities Research Center has an entire study about how play helps unlock the brain to better absorb information. Putrino notes, “We ran a sixweek rehabilitation in which half the participations played a game while the other half did traditional rehab. The results highlight that the same dosage of therapy, if it’s done in a fun environment, goes further than if delivered in an environment that is not fun.” Sadly, many enterprise organizations totally miss this advantage. Leaping into virtual reality without a quality story just means the bad 76

habits of horrible PowerPoint will follow you into the virtual space. Forget the headset, more companies need to focus on creating a meaningful experience.

TEACHING XR DEVELOPMENT All this rush towards enhanced technology communications means lots of new jobs. Someone has to be hired to create XR within an enterprise. A team to handle 3D art production, video game engine programming (which are used to code most of these simulations), and user experience design. This is no easy task. Showdown collaborations produced by TYM Studio with companies and partners throughout Houston have been helping bridge the gap of training and placing young talent in these new jobs. The 2019 Healthcare Games Showdown™ involved student teams creating healthcare video games for Texas Children’s Hospital, AT&T Business, and Mount Sinai Abilities Research Center. The 2020 XR Showdown™ with presenting sponsor ExxonMobil had students creating VR/AR/MR for serious use.

NEED MORE CASE STUDIES, TALENT OR INSIGHTS? Documentaries of the Healthcare Games Showdown™ and the XR Showdown™ will premiere at Studio Movie Grill theatre during the Houston Tech Rodeo. Plus, young talent will be on-hand to showcase XR demos. Together we can transform XR communications. tym.studio/HoustonTechRodeo

About the author Karen Snyder, MFA Snyder is a Professor of Digital Media at the University of Houston and the Managing Director of TYM Studio. TYM Studio™ is a collaboration between numerous professors and professionals to provide students with paid work and real experience that drives ingenuity and job growth in technology and digital media industries. By developing innovative and empowering internships, we seek to bring value to employers, our programs, our communities, and our students. 77

Women in Energy Sofia Gomez Durham Head of Shipping Americas, Equinor

Corporate policies supporting gender diversity: a must in the energy sector It is a well-accepted fact that access to energy brings economic development and technological advancement, and with development comes opportunity. Opportunity to make the world a better place and opportunity to increase diversity and inclusion in our businesses and communities.

n developing countries, increasing access to energy may provide young girls access to education and ultimately, better living conditions. In developed countries, changing to cleaner and sustainable forms of energy may create new business opportunities and career paths for women. It is for those reasons that I am proud to say I work in energy. I learned the expectations of being a woman very early on in life, growing up in a traditional Latin household. My mom worked very hard as a doctor,

but she had a strong support system in place with family, friends, and household help. Little did I know in my teens and early 20’s how challenging this task of “being a woman”, working in a foreign country, away from everyone I knew, would be. I started my career in oilfield services. I worked in remote locations around the world, including the North West Territories and the middle of the dessert in Oman. At times, these locations had no access to basic services such as a restroom. I always requested challenging assignments, knowing that it would lead to rapid progression in my career. Because I had access to education, I was fortunate enough

ALLOWING A FLEXIBLE WORK SCHEDULE, WHERE EMPLOYEE’S PERFORMANCE IS MEASURED AGAINST DELIVERABLES AND NOT AGAINST DEFINED HOURS AT A DESK IN A SPECIFIC LOCATION, ALLOWS PEOPLE OF ANY GENDER TO TAKE CARE OF THEIR FAMILY NEEDS, WHILE STILL PROGRESSING THEIR PROFESSIONAL DEVELOPMENT.

Women in Energy

to not face many of the difficulties women in countries with a low GDP, such as mine, must overcome. However, most of my challenges came later in life when I realized that the modern workplace, especially in the US, is not well suited to support balancing the responsibilities of an ambitious career with those of having a family. Proud as I am of having worked my entire career in Oil and Gas, I must acknowledge that there are still many barriers to diversity and inclusion. Although we have made significant progress in the last decade, there is a continuous need for improvement. There are, of course, many dimensions to diversity. There is diversity of thought, background, experience, ethnicity, age, gender; sexual orientation, and national origin to name a few. In this piece, I will focus on one topic related to diversity, specifically in energy companies: the adoption and implementation of corporate policies that support gender diversity. 80

Among the many different policies that support diversity, studies suggest that the two most important are parental, not maternity, leave and flexible work. These two policies are key to improving diversity, and without them, many other efforts may prove fruitless. One of the many benefits of giving equal amount of paid time off to both women and men, is that it prevents women from being left behind by their male counterparts when they take time off

Video Interview

Credit: Equinor

I BELIEVE THAT THERE ARE TWO TYPES OF COMPANIES IN OUR INDUSTRY: ONES THAT HAVE UNDERSTOOD THE NEED TO SUPPORT GENDER DIVERSITY AND INCLUSION; AND THOSE THAT PUBLICLY ACKNOWLEDGE THAT GENDER DIVERSITY IS IMPORTANT BUT HAVE DONE LITTLE TO NOTHING TO ADDRESS IT. Sofia Durham - Head of Shipping Americas, Equinor

Women in Energy

IN MOST SOCIETIES, WOMEN ARE STILL RESPONSIBLE FOR A LARGE PERCENTAGE OF HOUSEHOLD DUTIES. AS A RESULT, THE ABSENCE OF FAMILY-FRIENDLY POLICIES THAT ARE EQUALLY APPLICABLE TO BOTH GENDERS, PERPETUATES BIAS AGAINST WOMEN IN THE WORKPLACE AND PERMIT MEN TO OPERATE UNDER LOWER EXPECTATIONS. the absence of family-friendly policies that are equally applicable to both genders, perpetuates bias against women in the workplace and permit men to operate under lower expectations, forcing a large percentage of females to prioritize families and leave the workforce. In this context, I believe that there are two types of companies in our industry: ones that have understood the need to support gender diversity and inclusion, and thus have begun implementing parental leave and flexible work; and those that publicly acknowledge that gender diversity is important but have done little to nothing to address it.

Credit: Equinor

work, after the birth or adoption of a child. Allowing a flexible work schedule, where employee’s performance is measured against deliverables and not against defined hours at a desk in a specific location, allows people of any gender to take care of their family needs, while still progressing their professional development. Furthermore, McKinsey’s 2020 Women in The Workplace study found that women have been disproportionally affected by the COVID crisis, and that the lack of flexibility in the workplace is one of the key reasons’ women are pushed out of the workforce. It is especially important to note that these two policies have the most impact at a time in life that coincides with a career’s tipping point. Most professionals in their 30’s and 40’s receive demanding management roles while balancing the burden of raising a family and taking care of aging parents. In most societies, women are still responsible for a large percentage of household duties. As a result,

subtle and can’t be directly confronted and eliminated. However, I believe that, as we continue to bring awareness, implementation of policies such as the ones described above and especially as many more women reach top levels in different organizations, we will effect significant change. I have worked in companies in both groups. Now, I am fortunate to work for a company that not only has policies that place it in the first group, but has been caring and courageous to build a culture centered around diversity and inclusion. The difference that this has made in my personal and professional life is unparalleled. Whereas before I constantly questioned if it was worth to keep pushing my career forward at the expense of my kids, my marriage, and my psychosocial health. I now feel confident that I can achieve my professional goals while caring adequately for myself and my family. It is for this reason I believe we must continue to push towards change, and demand that companies in the second group start progressing towards a more forwardthinking and inclusive work environment. Gender bias is a difficult subject to address. There is no metric or KPI that can be attached to “inclusion”. In many circumstances, the evidence of bias is

About the Author: Sofia currently works as a Head of Shipping Americas at Equinor. Sofia is responsible for a team of 6 people composed of charterers and ship operators. The Shipping Americas team manages the time charter fleet and spot charter vessels for the trading organization. Before her current role, Sofia accumulated extensive experience in oil and gas upstream and midstream business development, operations management, client relations and project management, In her midstream business development role she drove growth projects from an technical and commercial perspective. Her main focus was in crude, fuels and LPG in North and Latin America. In her operations roles she was involved in a variety of unconventional and conventional projects including developing new upstream completion projects from the ground up for clients in different regions such as North America and Middle East. Sofia completed the INSEAD Global Executive MBA class of 2016 graduating with Distinction. 83

Users

Howard University Announces 20-Year Energy Partnership with ENGIE North America By Howard University

oward University, one of the nation’s top-ranked universities, has solidified its relationship with ENGIE North America by executing a long-term agreement for the design, construction, operation, and maintenance of a new central utility plant on Howard’s campus in Washington, D.C. The new central utility plant will provide both electric and steam services for buildings on campus. “Guided by our shared ‘Howard Forward’ strategic vision, Howard is taking a proactive approach to strategizing and modernizing the University’s aging steam plant. Our partnership with ENGIE, to address one of the campus’ more critical infrastructural risks, will not only move our existing steam plant into the 21st century but provide a blueprint for other HBCUs in their efforts to reduce vulnerabilities and become more energy-efficient,” said Howard’s Executive Vice President and Chief Operating Officer, Tashni-Ann Dubroy, Ph.D. 85

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GUIDED BY OUR SHARED ‘HOWARD FORWARD’ STRATEGIC VISION, HOWARD IS TAKING A PROACTIVE APPROACH TO STRATEGIZING AND MODERNIZING THE UNIVERSITY’S AGING STEAM PLANT. OUR PARTNERSHIP WITH ENGIE, TO ADDRESS ONE OF THE CAMPUS’ MORE CRITICAL INFRASTRUCTURAL RISKS, WILL NOT ONLY MOVE OUR EXISTING STEAM PLANT INTO THE 21ST CENTURY BUT PROVIDE A BLUEPRINT FOR OTHER HBCUS IN THEIR EFFORTS TO REDUCE VULNERABILITIES AND BECOME MORE ENERGY-EFFICIENT. said Howard’s Executive Vice President and Chief Operating Officer, Tashni-Ann Dubroy, Ph.D.

Under this agreement, ENGIE will design and construct the new plant and, once complete, provide operations and maintenance services over the next 20 years. This long-term partnership will result in safe, reliable operation and resilient service for Howard’s students, faculty, and other stakeholders, while at the same time reducing the campus’s carbon footprint and furthering Howard’s energy efficiency goals. ENGIE began construction in late February, with expected completion in late 2022. 86

“Howard University is an incredible leader in the constellation of Historically Black Colleges and Universities across the United States,” said Serdar Tüfekçi, head of large campus partnerships at ENGIE North America Inc. “It is fitting that Howard University has taken this bold step to lead towards the energy transition. ENGIE North America is proud to serve the

community’s long-term vision of creating a utility system that is resilient, reliable, and affordable for the University and its stakeholders.” The new, modern steam plant will be a combined heat and power (CHP) plant, which will generate 3540 percent of the University’s electric consumption on site. This technology produces a single energy source that generates electricity or power at the point of use and utilizes exhaust heat that would

THE NEW, MODERN STEAM PLANT WILL BE A COMBINED HEAT AND POWER (CHP) PLANT, WHICH WILL GENERATE 35-40 PERCENT OF THE UNIVERSITY’S ELECTRIC CONSUMPTION ON SITE. 87

Users

HOWARD UNIVERSITY IS AN INCREDIBLE LEADER IN THE CONSTELLATION OF HISTORICALLY BLACK COLLEGES AND UNIVERSITIES ACROSS THE UNITED STATES. IT IS FITTING THAT HOWARD UNIVERSITY HAS TAKEN THIS BOLD STEP TO LEAD TOWARDS THE ENERGY TRANSITION. said Serdar Tüfekçi, head of large campus partnerships at ENGIE North America Inc.

typically be lost in the generation process to be recovered and recycled to produce steam. After managing numerous challenges related to its aging energy distribution infrastructure, the University sought a new solution in 2018 that would completely overhaul the existing central utility plant. ENGIE worked alongside the University on a feasibility study that included a site investigation and recommendations for near-term and long-term solutions for the system. The shared goal was to develop a cost-effective, energy solution to ensure 88

safe operations and eliminate the risk of future campus closures stemming from problems with campus utilities. Founded in 1867, Howard University is a private research university that is comprised of 13 schools and colleges. Students pursue more than 140 programs of study leading to undergraduate, graduate, and professional degrees. The University operates with a commitment to Excellence in Truth and Service. It has

produced one Schwarzman Scholar, three Marshall Scholars, four Rhodes Scholars, 12 Truman Scholars, 25 Pickering Fellows, and more than 165 Fulbright recipients. Howard also produces more on-campus African-American Ph.D. recipients than any other university in the United States. ENGIE North America Inc. offers a range of capabilities in the United States and Canada to help customers decarbonize, decentralize and digitalize their operations. These include comprehensive services to help customers run their facilities more efficiently, optimize energy and other resource use and expense; clean power generation; energy storage;

and retail energy supply that includes renewables, demand response, and on-bill financing options. Nearly 100% of the company’s power generation portfolio is low carbon or renewable. Globally, ENGIE S.A. relies on their key businesses (gas, renewable energy, services) to offer competitive solutions to customers. With 170,000 employees worldwide, customers, partners, and stakeholders, we are a community of Imaginative Builders, committed every day to more harmonious progress. 89

Interview

Jose Wilfredo Molina President and Founder, Nakasawa Resources www.nakasawaresources.com/en/

Enhanced oil recovery and new international business opportunities In interview with Energy Capital, Jose Wilfredo Molina president and founder of Nakasawa Resources talks with us about the company’s Enhanced Thermal Oil Recovery (EOR) solutions, the new Super Matroid Heater and the Super Matroid Cyclone. Besides, Mr. Molina shares with us the benefits of Nakasawa’s recent partnership with ENERPROGROUP to develop more international business opportunities. ENERGY CAPITAL - COULD YOU TELL US ABOUT NAKASAWA RESOURCES' ENHANCED THERMAL OIL RECOVERY (EOR) PROCESS? JOSE WILFREDO MOLINA - Nakasawa Resources has designed a solution that increases efficiency and lowers operating costs by using steam injection. Nakasawa’s latest thermal enhanced oil recovery (TEOR) innovations, the Super Matroid Heater (SMH) and Super Matroid Cyclone (SMC), allow for increased heat transfer to the reservoir and greater thermal efficiency by improving surface- and reservoir-level steam quality to increase 90

Interview

reservoir productivity. This innovative oil recovery technique ensures increased profit from produced oil while using less feedwater, resulting in higher overall value projections. The SMH and SMC involve controlled condensate separation and remixing with a sprinkler mixer, using automated processes and tools like automatic control valves to obtain steam with a quality of at least 95%. This means there is no loss of condensate, and the total mass goes to the system outlet and injection point. These systems can operate with feedwater with high total dissolved solids (TDS up to 10,000 ppm) without losing water condensate or thermal energy in the saturated condensate. It will continue to produce steam with a quality of at least 95%, making steam injection with the SMH and SMC an efficient and very profitable EOR process. Both the SMH and SMC can be used in Cyclic Steam Stimulation (CSS) projects, where they increase the recovery factor of heavy crude

oil reservoirs by delivering high-quality steam to the bottom of the wells. Both solutions can also be used in Continuous Steam Injection (CSI) projects, such as multiple or single array CSI and SW-SAGD/SAGD; HASD.

EC - HOW IS THIS PROCESS DIFFERENT FROM OTHER UPSTREAM TECHNOLOGIES USED IN THE SECTOR? JWM - Developed in line with its quest to reduce carbon emissions by increasing production, Nakasawa Resources has developed the cuttingedge steam generation technology, the Super Matroid Heater (SMH) and Super Matroid Cyclone (SMC), to offer the following unique benefits: • Steam with a quality at or above 95% • 12% less water consumption • Over 15% increase in oil production compared to conventional OTSG techniques. • Up to 25% savings in operational costs.

Additionally, the SMH and SMC systems are completely portable, complying with land transportation regulations. This allows them to be easily moved between equidistant injection points within an oil field or over urban roads. One key differentiator in the implementation of the SMH technology is the service offered by the company. Nakasawa Resources is dedicated to ensuring its client success by building a technical alliance that starts with project strategic design and continues through to its implementation, maintenance, and monitoring. Furthermore, Nakasawa always adapts to client financial needs, working to help them access the SMH technology that can further their TEOR project development. Through its Global Steam Injection Center, Nakasawa Resources provides full EOR project implementation services, including the human resources and consumables needed to ensure successful EOR in both new and mature heavy oil wells.

EC - IN THIS REGARD, COULD YOU TELL US ABOUT THE SUPER MATROID HEATER AND THE SUPER MATROID CYCLONE? JWM - Nakasawa Resources has two TEOR solutions available, designed to fit differing client needs. • The Super Matroid Heater is a complete system, dedicated to generating and injecting high-quality steam into oil wells. Its advanced technology encourages additional oil production, reduces costs, and decreases operating time through a more sustainable, and thus a more profitable, process. • The Super Matroid Cyclone is available for customers who already have a conventional once through steam generator (OTSG) but are looking to boost their productivity. The technology implemented in the SMC can be adapted to any conventional OTSG and will guarantee the same results as the SMH. Both technologies are dedicated to generating and injecting high-quality steam into oil wells. 93

Interview

This encourages additional oil production, reduces costs, and decreases operating time, resulting in a more sustainable and profitable process.

EC - HOW IS THIS TECHNOLOGY HELPING NAKASAWA RESOURCES ADVANCE ITS ENVIRONMENTAL AND SUSTAINABILITY GOALS? JWM - Nakasawa’s Super Matroid technology is aligned with our vision of a sustainable future. With the SMH, we seek to reduce environmental impacts while optimizing oil production. This system helps contain the negative impact of conventional OTSGs through strict combustion gas emissions controls, reducing their concentration. Unlike a conventional stream separator, which is installed at the steam discharge line’s outlet, there is no loss of condensate or thermal energy with Super Matroid technology. This uses up to 12% less feedwater and combustible gas, thus enhancing sustainability. This excellent advantage and environmental contribution not only guarantees operational savings, but also reductions in combustible gas and treated water supplies. In addition, the innovative SMH and SMC systems do not generate waste or effluents that could damage the environment near the steam injection operations. Lastly, optimizing oil recovery extends reservoir life cycles, minimizes environmental impact, and ensures a more profitable project in a socially responsible way.

EC - IN WHAT WAYS THE RECENT PARTNERSHIP WITH ENERPROGROUP WILL HELP NAKASAWA DEVELOP INTERNATIONAL BUSINESS OPPORTUNITIES? 94

JWM - The two-year partnership will allow Nakasawa Resources to enhance its offerings in integrated technical services and EOR project portfolios in all the markets where ENERPROGROUP is established, specifically Indonesia, Malaysia, Brunei, and Uzbekistan. The official agreement grants ENERPROGROUP the right to act as Nakasawa Resources’ exclusive agent in these four countries. This collaboration will also help continue driving awareness of Nakasawa’s Global Steam Injection Center, allowing companies worldwide to benefit from our wide range of services and products. This includes offerings such as reservoir analysis, variable monitoring, and control; SMH installation; and oil production optimization, as well as many others.

EC - WHAT AREAS WILL THIS PARTNERSHIP COMPREHEND? JWM - The alliance between the two companies represents a step toward significant technological advances in the industry, specifically in TEOR. It will allow both companies to enhance their offerings in integrated technical services and EOR project portfolios. The partnership will focus primarily on offering oil companies high-quality EOR technology that will make their processes more efficient and profitable by extending the life of mature oil reservoirs and recovering already discovered resources that were previously out of reach. The two companies will collaborate on integrated

projects in existing ENERPROGROUP territories, offering Nakasawa Resources services such as: • Drilling and completion • Surface facilities • Steam injection services • Operations, surveillance, and maintenance 95

Doing Business

Greener Upstream in North America for the years to come? Technology Upgrades, M&As and Farmout Strategies 96

By Energy Capital

ast year was undoubtedly a challenging one for the energy industry. Hit in various fronts, like the rock bottom crash of oil prices, plunged demand of petroleum subproducts, and an increased push towards energy transition, the upstream sector needed to embrace resiliency particularly. The vaccine rollout across the world, plus a strict production discipline from top producers, helped shape a substantial recovery. With prices

back at a healthy $60 per barrel average and demand slightly going back, there are several business opportunities to leverage in 2021 in the upstream sector. According to IHS Markit, North American onshore E&P CAPEX spending in 2021 will reach $108 billion, compared to the $84 billion spent in 2020. In addition to the vaccine's distribution enthusiasm, most experts agree that economic recovery will happen in the second half of this 97

Doing Business

year, and demand for crude oil and petroleum subproducts will increase. However, these trends will depend on financial health factors and new statutes derived from the energy transition. In this regard, what do upstream companies need to leverage in order to grow, and where must investors and developers focus in 2021 and beyond?

OFFSHORE OPPORTUNITIES IN THE U.S. GULF OF MEXICO Oil production and overall offshore upstream activities in the U.S. Gulf of Mexico were perhaps the most resilient of all. The zone experienced both the COVID-19 strike and the most disruptive hurricane and tropical storms in recent history. However, the GoM remained relatively unscarred during 2020. According to Wood Mackenzie, production just dropped 4% compared to 2019 levels, and no major projects were canceled. The Energy Information Administration (EIA) forecasts that production in the GoM is set to increase for the next two years. During 2020, crude oil output averaged 1,6 MMb/d. Over 2021 those levels could reach 1.71 MMb/d; and even further 1.75 MMb/d in 2022. The oil and gas drilling services market had a 57 billion size in 2020, and it is expected to grow to $183,9 billion in 2021, which is more than a 100% increase. Its compound annual growth rate (CAGR) for this year is expected at 25,5%, mainly due to companies rearranging their operations and recovering from the COVID-19 impact. By 2025, the market will reach $227.77 billion, at a CAGR of 5%, according to a Reportlinker's report. Notably, one novel trend in the sector has been 3D visualization use. These systems can generate a 3D model of a wellbore and real-time drilling data to monitor and optimize drilling processes. With such technology, companies can hit substantial cost savings of up to 20% and reduce non-productive drilling time by 20 percent. 98

Remarkably, these systems integrate themselves with the asset via software to make more precise and accurate placement of drilling rigs, thus making extraction safer. Some major companies offering 3D visualization technology are eDrilling, Hexagon, Mechdyne, and Landmark. One success story of this technology is the drilling of the Puma West project, located in the GoM, more precisely in the Green Canyon Block 821. Conducted by Talos Energy, Chevron, and bp, the companies drilled the well to a depth of 23,530 feet and found high-quality oil in the site. Through advanced seismic 3D imaging, the companies managed to drill efficiently and safely at such depths with a small environmental footprint.

CANADA'S M&A TREND: FROM THE SECTOR'S GROWTH TO FINANCIAL CONSOLIDATION Upstream projects in Canada are expected to rise in 2021. However, this increase would probably be modest considering 2020's demand crash due to the global health pandemic. Accordingly,

the Canadian Association of Petroleum Producers forecasted a 14% increase in upstream investment this year, thus, amounting to about $3.36 billion. Mainly, near-term forecasts provided by the Canada Energy Regulator (CER) signal production will remain stable for the next five years due to growing heavy oil output in Saskatchewan and tight oil in Alberta. The latter trend follows producers' preference to target wells with a quicker return on investment (ROI), higher tight oil production rates, and a low decline of heavy oil reservoirs. Condensate production in the country will mainly come from Alberta and British Columbia. Newfoundland will gradually decline its offshore oil output since no discoveries were forecasted in the evolving scenario by 2025. Nevertheless, CER pointed out that additional discoveries and developments could change these trends. In this regard, investment is moving differently from previous years' trends. While rising oil prices would have been a cue to increase upstream investment and look for growth in past years, most companies are currently focused on quickly returning capital to investors through share buybacks or dividends. Thus, the sector is now looking after fast revenue opportunities, and M&A moves are now highly ontrend. For instance, Cenovus Energy Inc.'s $4.8 billion takeover of Husky Energy Inc. in October 2020 and Whitecap Resources Inc.'s acquisition for $550-million of Torc Oil and Gas in December 2020 signal that companies may look for growth through consolidation rather than upstream investment. Environmental concerns are also influencing companies' approach to the sector. For instance, oilsands operators are expected to remain cautious for ecological reasons and leverage technology to lower greenhouse gas emissions instead of growing production. Through carbon capture, use, and storage, pure 99

Doing Business

solvents use, in-pit extraction, and energy efficiency solutions, the industry could advance its sustainability efforts while remaining competitive. Therefore, opportunities are coming for sustainability providers as well. Canadian start-up Carbon Engineering announced earlier this year that it would help Occidental Petroleum build a plant that will capture and bury 500,000 metric tons of CO₂ each year. Another example is the technology being developed by Canadian Natural Resources Limited at its Horizon Oil Sands mine to separate oil sands ore into its parts within the extraction pit of the operation, requiring less heavy equipment.

REGULATORY UNCERTAINTIES LEADING TO FARMOUT OPPORTUNITIES IN MEXICO Mexico's offshore segment is likely to dominate the upstream market up to 2025 since potential hydrocarbon resources in the country are abundant in shallow water, deep water, and onshore fields. In this sense, and similarly to Canada, the innovation of 100

new technologies will trigger unconventional drilling, mainly looking to enhance oil and gas production while assisting to reduce the cost of operations. Mordor Intelligence expects that, in turn, these technical decisions can further promote the market's growth in the coming years. For instance, companies such as Chevron Corporation, Royal Dutch Shell Plc, Total SA, Repsol SA, and Premier Oil PLC., among others, have already secured blocks in the country to explore and produce oil and gas. Through these investments, Mexico's oil and upstream gas market is expected to grow at a CAGR of more than 1% during the next five years. Nevertheless, the high volatility of oil prices can hinder market growth. Besides oil prices' volatility and market uncertainties, upstream companies in Mexico should be aware of regulatory changes under the country's current administration. According to the global law firm Mayer Brown, considering this factor may lead companies to embrace crossborder M&A consolidations. However, potential sellers and purchasers should acknowledge new

risks associated with antitrust clearance and adverse effect provisions related to timing and anti-corruption processes. In fact, regulatory uncertainty is currently a major threat for investments in Mexico. Although the National Hydrocarbons Commission (CNH) has remained a neutral player in this regard, the Environmental and Energy Security Agency (ASEA) and the Federal Electricity Commission (CFE) have fiercely contended other participants (such as TC Energy, Carso, Fermaca, and Ienova) with environmental and anti-corruption claims to declare null and void clauses in awarded contracts. Nevertheless, and as Mayer Brown states, there are some silver linings within this regulatory revisionism. Thus far, CNH's performance has been vital in defending investment interests, holding an open approach to promoting discussions among industry participants. Also, the fact that E&P contractors have been able to continue with their operations without any major obstacle despite anti-corruption revisions is a good signal for upstream players interested in participating. Finally, companies in the sector could leverage farmout opportunities with Petróleos Mexicanos (Pemex). Even though farmouts are not the first choice for the current administration, there may not be many other feasible alternatives given Pemex's current financial status. Thus, CNH is currently working to approve new farmout opportunities in the Burgos, Tampico-Misantla, and Sabinas-Burro Picachos Basins.

CONCLUSION The U.S. Gulf of Mexico area represents a key business opportunity in North America, particularly in the drilling services market and the 3D imaging technology delivery. For upstream companies in Canada, fast consolidation opportunities will trigger M&A moves

(a healthy option to achieve resiliency and secure immediate deal value) and infrastructure upgrades to reduce environmental impacts. Mexico's ample deep-water reserves will lead well-fitted companies to comply with the regulatory revisionism that the current administration is embracing. Moreover, this could be an opportunity to establish long-term strategic and beneficial farmouts. In brief, low-cost production, technological improvements, and creating a solid platform for M&As will be critical for upstream companies in the following years. The most efficient, technologically competitive, environmentally friendly, and low-cost producers will most likely be the ones in a position to harness the opportunities that a transitioning economy is giving them. 101