Cover Story:
ESG and Technology
Cover Story:
ESG and Technology
Building an ESG case and presenting the right evidence to stakeholders across the value chain has become a riddle wrapped in a mystery inside an enigma for producers and service providers in oil and gas. So how are they setting about solving it?
(Source: Shutterstock.com and Hart Energy/Melissa Ritchie)
(Source: Shutterstock.com and Hart Energy/Melissa Ritchie)
Len Vermillion, Editorial Director
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f you want answers to ESG in oil and gas, be prepared to join the search party. The answers are hard to decipher, mainly because ESG in oil and gas remains something far from a black-and-white issue with unquestioned solutions. Collectively, the work is being done; it’s just that there isn’t really one right way, one right measurement or one all-encompassing goal between all three prongs of ESG—as of yet.

“There’s a different answer between the E, the S and the G,” admits Sean O’Donnell, managing director with Quantum Energy Partners, one of the largest private equity investors in oil and gas. “Private equity has always had the ‘G’ figured out pretty well in terms of ownership, alignment and control. You’re seeing the conversation in the public market change to catching up on having ESG-oriented scorecards.”

So, the money wants ESG to be a big part of the oil and gas industry. That’s a well-documented fact that satisfies why producers and oilfield service (OFS) providers are scrambling to get their ESG-friendly operations and reporting in order. Just take a look at these articles featured in various Hart Energy media:

But the what and the how remain the enigma. That’s not to say there hasn’t been progress toward finding the right solutions, particularly in the area that has dominated headlines, politics and Wall Street for the last couple of years.

“The real push over the last 24 months for the industry has been a step-function kind of change on the E,” O’Donnell said. “It’s on methane, in particular.”

O’Donnell pointed out the green shoots of metrics for measuring methane mitigation as a catalyst for progress.

“The technology and the operational protocols are now well understood and available,” he said. “There’s also been a refinement of reporting that upstream companies should be focused on. Three years ago, four years ago, there were 1,100 different measurements for ESG.”

ESG and well production
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Nishant Jha, director of Well Production Systems with Schlumberger, talked with Hart Energy’s Len Vermillion about reducing emissions at the well site. View the full interview to hear his thoughts.
That thought probably makes your head spin. Clearly, that’s too daunting of a task for any large major to figure out, let alone a small independent oil and gas E&P. However, O’Donnell said the metrics that matter most have come to the forefront over the last two years.

“The technology and the ability to capture those data, and the ability to quality control those data, and the ability to have meaningful baselines that are common across companies that—in the last 12 months—have been what’s really started to develop,” O’Donnell said. “Investors can start to make relative value decisions.”

Building the case
When it comes to presenting their cases to investors, oil and gas producers rely on the help of the service sector. Luckily, the OFS sector is keenly aware of the importance of ESG in oil and gas. Many have developed their own operations and R&D with ESG in mind.

“For us, it’s embedded in our vision and purpose,” said Lees Rodionov, Global Director – Sustainability, Schlumberger. “The vision is we will define and drive high performance sustainably. The purpose is we create amazing technology that unlocks access to energy for the benefit of all.”

But more importantly, Rodionov said, is that the drive to reach ESG in oil and gas starts at the top and needs to be embedded in the standard operations of a company, whether it is a service company or producer.

“If it’s off to the side, I think it’s hard to manage that triple bottom line they talk about in sustainability—balancing the financial, environmental and social priorities,” she said.

Schlumberger has developed a comprehensive program to address the need for ESG in oil and gas. While she said there is, of course, a strong emphasis on emissions and addressing the industry’s role in climate change, the company’s priorities also address the need for meaningful opportunities to all stakeholder groups: employees, customers, investors and the communities in which it works.

“In layman’s terms, what this is about is taking emissions out of the whole oil and gas value chain—so operations, supply chain, the technology that our customers use—and then also growing our low-carbon businesses outside oil and gas,” she said. “In addition, it’s creating a space for diverse, inclusive, fair local opportunity.”

To Rodionov’s point, ESG is far from a singular focus on climate change; however, in 2021 emissions figures to be the biggest issue for the oil and gas industry, particular in light of a new administration in the U.S. hellbent on reining back in regulations that proliferated in the Obama era, and an ongoing charge toward net-zero in the EU and other parts of the world.

“Our strategy addresses both our historical core portfolio as well as those new avenues for growth in the carbon neutral space,” she said.

Before service providers like Schlumberger can offer help to producers through their services and technologies, they have to address their own carbon footprints. Schlumberger has done that, Rodionov said. Its own ESG program addresses the carbon intensity of its own supply chain, operations, and products and services. But it also addresses the carbon intensity of the technology itself.

“The methodology we’ve adopted to address both the opportunities and the [financial and physical] risks that climate change presents is the TCFD [Taskforce for Climate-related Financial Disclosures] methodology,” she said. “This seems to be the one that there’s some conversion on as a best practice inside the investment community.”

Lees Rodionov bio photo
“We just want to be as efficient as we can and find that sweet spot in planning between environmental impact and the financial and social impact.”
—Lees Rodionov, Schlumberger
Rodionov said Schlumberger has committed to a science-based target and will submit it this year. The target will manage the high-carbon parts of the value chain mentioned earlier.

“Going through the process of setting the target has been really beneficial because it has given us a deep understanding of our footprint in terms of where the emissions are coming from, where we can impact and what’s going to have the most impact,” Rodionov said.

She added that the company is committed to using those science-based targets to help its clients reduce their emissions as well.

Presenting the evidence
What producers will need to pass on when seeking to satisfy tenders is a holistic value chain with ESG needs buttoned up. Rodionov said that starts at home for the service suppliers.

“If I talk about our footprint [and] our operations, we’re looking at the fuel and power we consume primarily in our vehicles and our facilities,” she said. “So, our tactics for reducing emissions in this space are going to be primarily technology-centric around our fleet of 13,000 light vehicles that we would convert to electric. We have facilities that consume diesel and electricity that we would convert to renewable. And then we’d also look for opportunities to drive waste out of the system.”

Rodionov admits that the vast majority of Schlumberger’s emissions fall in the things it uses to deliver operations and the technology itself.

“We have some high carbon inputs like cement, steel and chemicals, but it’s also logistics, third-party equipment,” she said. “The tactics for reduction in this space are going to be around strategic supplier partnerships, looking to partner with suppliers who have similar goals to ours.”

Rodionov said leveraging digital technology is also a prime driver of reducing waste in the supply chain.

“We just want to be as efficient as we can and find that sweet spot in planning between environmental impact and the financial and social impact,” she concluded.

Creating a clean fleet
E-fracs are a seen as a way to significantly cut the environmental footprint of oil and gas wells. How do they compare to diesel and dual-fuel fleets?

In an industry that relies heavily on data, it only makes sense to put the data concerning ESG to the test. One area on the energy transition that gets a heavy dose of dialog these days is the idea of electric frac fleets, or e-fracs. But do they really make a difference in cutting emissions?

U.S. Well Services, a noted provider of electric fleets and Tier II & Tier IV diesel fleets, decided to put it to the test. The company brought in a third party to take measurements and collect data from its existing fleets in the field and the results show that measuring the company’s CleanFleet versus diesel fleets emissions were indeed lowered “in every case,” according to U.S. Well Services CTO Lon Robinson.

So electric fleets do cut emissions, the company concluded. “That’s the story,” Robinson said bluntly.

“We’re the only company out there that’s done this with real data from the field,” said Matt Moncla, chief commercial officer for the company. “It is real data we know is right.”

A U.S. Well Services third-generation Clean Fleet provides 100% electric hydraulic fracturing services to a customer in West Texas. This multi-patented technology has pumped more than 20,000 successful stages across multiple basins. (Source: U.S. Well Services)
U.S. Well Services outlined its findings in a 40-page white paper titled Clearing the Air: The Truth about Diesel, Duel-Fuel and Electric Hydraulic Fracturing Operations. The white paper is authored by Robinson and Vanessa Hordijk, natural gas process engineer with U.S. Well Services.

“We decided we would do a deep dive study on our natural gas turbines and compare them to what we would get for operating with our diesel fleets,” Robinson said. “We took some of our real operational data from a pad in the Permian. We took that data and we looked at the load profile of our turbine, and from that load profile we calculated the emissions using four of the most highly accepted calculation methods.

“We not only did it for each stage [there were 13], but we also did it between stages during the idling period of the turbine,” he continued. “Then we took that same identical load profile and applied it to [different fleets].”

They compared Tier 2 diesel, Tier 4 diesel and a tier 4 dual-fuel.

“We had a really good apples-to-apples comparison,” Robinson said. “In every simulation, our CO2e emissions were less for the turbines.”

Given the evidence, the question turns to whether or not there has been or will be adoption of e-fleets in places such as the Permian Basin. U.S. Well Services already works with several operators around the country including Range Resources, Royal Dutch Shell, Apache Corp. and EQT, all of which provided testimonials in the white paper.

U.S. Well Services can utilize field gas, CNG or LNG to generate power for an entire frac fleet using a 30-MW turbine. (Source: U.S. Well Services)
U.S. Well Services has been using electric fleets since 2014. Robinson and Moncla said the company was the first to put a stage in the ground using electric fleets. The company is now on its fourth generation of CleanFleet.

Robinson added that during the COVID-19 downturn of 2020, all of the company’s electric fleets stayed active.

“We are now getting to put more to work, but there has been continued interest in electric fleets,” he added. “Where we can’t supply electric fleets, we’re putting diesel back to work, but a lot of our customers are anxious to turn to electric fleets.”

So in a world looking for things that will get investors’ attention in an ESG report, e-fleets are ready for their star turn.

EQT made the comment in the white paper that since going electric, it’s taken out 17 MMgal of diesel from its operations, Moncla said. “It’s real,” he added.

With natural gas seemingly on the uptick, Moncla said he believes their e-fleets are built for operations in places like the Haynesville.

A third-generation U.S. Well Services Clean Fleet in the Appalachian Basin provides hydraulic fracturing services for a long-term customer. U.S. Well Services’ first electric fleet was deployed in the Appalachian Basin in 2014. (Source: U.S. Well Services)
“We have 3,000-hp motors, and we have precise control of our pumps,” he said. “We’re not fighting transmissions. We’re not fighting gears.”

Moncla said their equipment is built for that kind of work.

“Obviously, with the higher rates, higher pressures, that’s more fuel burn,” he said. “So it will be way more than half-a-million a month of diesel when you’re talking Haynesville. It will be between $1 million and $1.5 million.

“We know once we show these operators what the fleet’s capable of and the money they can save, that’s going to be a great play for us,” he said.