Project Canary CEO talks energy transition, the need for renewables and fossil fuels to coexist and tackling Scope 1, 2 and 3 emissions.
By: Jordan Blum, Hart Energy
I’m Jordan Blum, editorial director with Hart Energy here at CERAWeek by S&P Global, and I’m talking to Chris Romer, CEO of Project Canary.
Jordan Blum: So much of the focus with the energy transition is on renewable energy, but just as important is making oil and gas as clean as possible. Can you talk about just how Project Canary comes into play?
Chris Romer: Well, let’s define this energy transition because this is my third CERAWeek and this is really exciting. Look, the energy transition is about energy abundance. We need to cut the crap: the way to get to energy transition is less? No, we need affordable, clean American energy going all over the world. And this is exciting because this CERAWeek has proven to me the energy transition has really started. And Project Canary is a measurement company, we do measurement for MRV [measurement, reporting and verification] to help with methane and with carbon sequestration. We are ground zero for this conversation because we are entering into an era of clean, abundant energy. Renewable is going to play a role, but we’re also going to get to net-zero fossil fuels, and we’re going to get there very quickly with measurement, and we’re really excited about the energy here. I get it, $800 billion worth of tax credits can get a lot of capitalists excited and we are a capitalist.
But having said that, we’re going to get to net-zero with energy abundance. Renewables will play their role, but so will fossil fuels. Those fossil fuels are first going to go low carbon, and then they’re going to go to zero, and then candidly they’re going to go to net positive. What do I mean by net positive? We’re actually going to start solving climate change with reforestation and the ability to remove carbon from the air as we still use carbon from the ground as a way to deliver an abundant lifestyle, not just for us, but for another 2 billion people on the planet. So this is what the real energy transition is all about.
JB: Very good. So a lot of the focus is on responsibly sourced gas, or RSG. How do we implement this practically, and is it applicable to upstream, midstream, downstream, utilities?
CR: Yeah. As the first major player in RSG we thought about trademarking it, and we made a decision not to do that because we want it ubiquitously available. We want all of the gas coming off the US, which it is the cleanest carbon on the planet, to be certified, differentiated, which means it’s responsibly sourced. And so what we do as a measurement company is give people really clear actual data on the methane intensity of their molecules, both oil and gas. And I think that’s super important.
And two years ago there was just the beginnings of this methane conversation, today there’s unanimous agreement. We have to solve this methane issue to continue the social license to operate for this industry. And that’s exciting. That RSG thing is becoming table stakes. What we have found is already with European buyers, I just saw one of the major CEOs of a European utility on the escalator, there’s no question they want to buy clean U.S. gas, but they want it certified, and they want very low methane intensity, and lower than 0.2. So the RSG world is coming and we hope just play the role of the measurement company. I do think the minimum standards to call something RSG needs to be defined by the buy side.
JB: Very good. So obviously what’s key is verification. Can you elaborate a bit on just kind of how this works with Project Canary with the TrustWell system?
CR: Sure. Yeah, well again, we’re increasingly a hardware-agnostic company that provides a digital canopy, so you can correlate satellite data, aerial data, drone data, and site level data. Many of the buyers are asking for site level data because it’s currently the most granular and accurate. Having said that, there’s no one size fits all for every pad. You need to customize the pad, and that’s what we do is to help give measurement; reconciliation of those six or seven data streams, as well as verification so RWE, Uniper and ENGIE, all of whom we know very well as a member of Eurogas, they can look at that on a digital registry and then they can buy exactly the gas they want.
JB: Very good. You hear a lot of companies talking about they’re doing well with Scope 1, Scope 2 emissions. How tricky is tackling the Scope 3 aspect?
CR: Hard. And let’s be clear, let’s get our act together on measuring Scope 1, Scope 2. Let’s get Scope 1 and Scope 2 to zero. And there’s some good companies, shout out to Civitas [Resources], shout out to Diamondback [Energy], who are measuring. We’d like them to measure a little bit more granularly. But let’s measure Scope 1 and Scope 2. But those companies are already announcing that they’re net-zero on Scope 1 and Scope 2. Scope 3 is a different issue, and whether you’re an airline or a utility, that Scope 3 is owned by the next person in the supply chain. We also need to bring that to net-zero over the coming decades, and we will.
JB: Very good. So a lot of companies are putting out these ambitious net-zero goals, and some are measuring well and doing a great job, but then others are doing it without a clear way of proving how they’re hitting their targets. Is that a problem for the industry?
CR: Yeah, it’s a big problem. Let’s be clear about this. All of us saw the Guardian article where 90% of the nature-based offsets were alleged to be inaccurate. Well I heard as somebody quoted, “Well, it’s not 90%, only 70% of them had problems.” That’s a real problem for a company and for an industry trying to build social license to operate for the long term of this pathway. We need to make sure if we say something is a removal offset or is an avoidance offset we can put real hardcore measurement behind that. We need to have the exact same issue for all of these companies because honestly, in today’s date, it’s better to do nothing than to do false greenwashing. And if you can’t measure it, you’re always going to be alleged that you did it poorly, okay? So what we’re coaching people to do is don’t do green washing, don’t overstate what you’re doing, measure it accurately and do very accurate computations that we can stand behind and your auditor can stand behind.
So again, let’s look at what happened when the nature-based offset market was almost frozen up by a singular article and study out of Europe. So we need to make sure that the RSG market is bulletproof. The way to make it bulletproof is measurement, transparency and a lot of data in those registries.
JB: Is that change happening now or do we still have a long ways to go? I mean, how do you see that playing out?
CR: I think we’re in the middle of it, and I think we’re really learning more about what it means to measure Scope 1 and Scope 2, and how to offset it with abatement avoidance, as well as removal based offsets. I think that world is coming, and I think you’re going to hear a lot more about it. You’re going to hear about it from the buy side. We get lots of inquiry, at least a dozen a week, from European petrochemical and chemical companies and industrial companies. They know that they’re going to be at a border adjustment fee on carbon going into Europe in the near future, and so they want to clean up their supply chain of American fossil fuels. Having said that, that CEO on the escalator was very clear, he wants to buy more American gas because he thinks it’s clean and it’s reliable, and it doesn’t come from [Russian President Vladimir] Putin.
JB: Very good. Now obviously it’s important to tackle methane emissions throughout the value chain. Is there an area where it’s hardest to really fix or tackle? I mean, is it flaring, leaky pipelines, power plants?
CR: Yeah Jordan, it’s a great question. I think what we’re viewing is, I think on a prospective basis, on a go forward basis, on large horizontal pads, it’s relatively easy. And then to be honest, the cost is usually half a penny. This is not hard data to get on new wells. I think on older wells, and particularly old stripper wells, it’s something that when we talk about there’s not a one size fits all, I think those are probably left probably aerial measurements, so there is not a singular one size fits all. What we could tell you on the new wells, you could and should be able to get site-based measurements that candidly should have error bars less than single digits. We ought to know exactly what’s going on in that pad. And so I think the way I would say it is it’s kind of based on age and decline curve. Older wells that have gone way down the decline curve are the most complicated to measure simply because the amount of gas coming out of the ground or associated gas. Clearly tanks are a big deal in this world just because the interactions of liquids.
The third issue is pneumatics. … Remember, we’re a measurement company. We also do coaching at this point, and of course we do TrustWell. In the coaching part of it, and we do this a lot with some really excellent companies, most of the top companies are getting rid of many of their pneumatics just to get rid of their leak intensity.
JB: Very good. So is that how we make this economically viable for most companies by not having that one stop shop or one single approach?
CR: Yeah. I mean, let’s be clear. Gas has gone from $7 an [Mcf] down to now $2 plus, so we got to be very frugal in how we do this. And there isn’t a one size fits all, that’s why we went hardware-agnostic, to put the digital canopy so that we can do all of the company’s assets, and we are doing that. What’s really important is you can’t put $30,000 worth of site-based equipment around an old strip well that is just pumping away. We need something that’s cost-effective on each and every well.
JB: Thanks so much for taking the time. For more information visit us online at hartenergy.com.