The environmental, social, and governance (ESG) movement gained significant traction last year, especially in the energy sector. For many oil and gas company executives, meeting ESG metrics are seen as a cost of doing business, since this often necessitates operational changes that may reduce efficiency. Such changes are seen as inflating operational costs, thereby reducing profitability. The reality may be different. It is possible many ESG changes can become tools to improve profitability, as hydrocarbon customers begin prioritizing low-carbon fuels.

In the European Union, the current push for allowing natural gas to be classified as a “green” fuel has been met with debate over what will become the definition of a low-carbon fuel. The role of natural gas as a transition fuel in the shift to a complete green energy economy is now being acknowledged. Although natural gas emits roughly half the CO2 of coal when burned in power plants, the gas infrastructure is also associated with methane leaks, a powerful greenhouse agent. If those emissions are counted, natural gas isn’t as environmentally friendly. The question is what should be the emissions cutoff for natural gas in order to be labeled green – 270 grams of CO2 equivalent per kilowatt-hour, or only 100 grams?

U.S. liquefied natural gas exporters are finding the need to document the CO2 content of their shipments to be able to sell it to some European customers. Securing the requisite documentation that their gas is low carbon is critical for their ongoing business. Although natural gas has always been differentiated and priced by its BTU content, CO2 content is emerging as a new price characteristic. If low-carbon natural gas is priced at a premium to high-carbon gas, this distinction becomes a powerful profit incentive for producers and marketers to secure the instrumentation readings substantiating the difference in gas cargos. Having those readings certified will boost producer profit potential as low-carbon gas will carry a price premium and enable the creation of carbon offset certificates further boosting profit opportunities.

Throughout the history of the petroleum industry, two factors have driven the value of hydrocarbons. First is their distance to market, as less transportation expense is incurred. Second is the quality of the hydrocarbons, which determines the final product output mix that can be derived from it, and thus its commercial value, and the worth of the raw material input. For example, the carbon-rich oil sands of Canada have always sold at a significant discount to traditional light crude oil because of their distance to refining centers and their limited marketability since fewer high-value petroleum products can be created from the bitumen.

The ESG movement is accelerating the value creation of low-carbon hydrocarbons.Truth in advertising will be demanded by customers.Thus, a large market opportunity documenting the carbon-content of fuels is emerging, not just to satisfy ESG metrics, but because this data can create profit opportunities for producers and marketers.Profits drive technological innovation.

For this Company Spotlight, we interviewed Validere’s Co-Founder and CEO (Nouman Ahmad) and SVP of Marketing (Ben Tao) about how the company is improving how the oil and gas industry collects, aggregates, and validates real-time, dynamic data sources to make better informed commodity pricing and operational efficiency decisions to maximize profitability. Validere is a leading data and analytics SaaS provider that is digitally transforming the world’s largest supply chain to be more sustainable and efficient. For more information on Validere, please visit validere.com.

Background: : In 2013, Nouman and Ian Burgess, who had recently earned his PhD at Harvard for his development of a nanomaterial that identified numerous characteristics of liquids more effectively than existing instruments, decided to be business partners. As they were trying to decide which industry to tackle first with this nanomaterial technology, the……..…..READ MORE

8minute Solar Energy (“8minute”) is one of the largest solar developers in the country. Since 2009, 8minute has successfully put 2 GW of solar projects in operation and currently has over 18 GW of solar and 24 GWh of energy storage projects under development. This strategic fundraise will help 8minute continue to operate and grow its attractive portfolio of clean energy assets, focus on technology innovation and advanced solar plant design, and to begin building projects on its own balance sheet.

Related Press Release: 8minute Solar Energy Closes $400 Million in Financing from EIG

Qnovo develops intelligent battery management software and predictive analytics that improve battery performance with enhanced health and safety. By augmenting battery chemistry with computation and learning software, Qnovo enables batteries to safely charge faster with extended battery longevity. Over 150 million smartphones globally use Qnovo's software products. Qnovo will use the new capital to scale their software products into electric vehicle production and support growing demand from grid stationary storage systems.

Formed in 2010 and based in Houston, Encino Environmental Services, LLC is an emissions performance testing and monitoring firm that specializes in combustion analysis, leak detection and repair, continuous emissions monitoring systems, and advanced environmental data platforms for the measurement and minimization of emissions to support regulatory compliance and environmental, social, and governance strategies and objectives. EnCap’s investment was made in partnership with Encino’s primary sponsor, BP Energy Partners, LLC.

SparkCognition is a global leader in artificial intelligence and allows organizations to predict future outcomes, optimize processes, and prevent cyberattacks. Following the $123 million Series D funding round, SparkCognition achieved a unicorn valuation in excess of $1.4 billion, bringing the total capital raised to $300 million. Proceeds from the Series D round will accelerate sales and marketing efforts, amplify research and development investments, and facilitate organic and inorganic growth.

Validere is a leading data and analytics SaaS provider that is digitally transforming the world’s largest supply chain to be more sustainable and efficient. Validere’s Product Data Cloud enables energy companies to aggregate all commodity inventory data into a complete, accurate, and auditable repository that allows them to create a real-time digital fingerprint of the molecule. Phoenix Energy Marketing Consultants is an intellectual capital corporation specializing in optimization of transportation and marketing of crude oil, natural gas, NGL, and sulfur production of junior and intermediate producers in Western Canada using a trusted advisor/long-term relationship and value-added model. The acquisition of Phoenix supports Validere’s core strategy to reduce friction across the energy supply chain by enabling Validere to translate its data-driven insights into action for its customers.

Related Press Release: Validere Acquires Phoenix Energy Consultants

Energy Technology Musings

Transitioning ESG From a Cost to a Profit Tool