Energy startups bringing efficiency, innovation to oil and gas industry
By: Michael Joe, Reporter
December 6, 2016
As the oil and gas industry slugs through historically low fossil fuel prices and compliance with new environment rules, producers and service companies in the energy sector have been diligently looking for strategic ways to operate more efficiently.
Oil producers, in the deepest downturn in crude since the 1990s,have cut costs by scaling back exploration but are getting more from existing wells using new technology. Likewise, the thousands of oil and gas service companies that help producers drill onshore and offshore are streamlining operations to stay competitive.
Add to this the pressure of growing global concerns: climate change and its threat to critical energy and non-energy infrastructure, and conservation and the future cost of energy for economic development. In oil and gas, as elsewhere, the industry itself and the governments that oversee them are adopting more energy-efficient practices and policies.
Finding new ways to operate at a lower cost to the company and the environment is as important as ever. Four emerging businesses participating in The Idea Village’s accelerator program for oil and gas startups are taking aim at inefficiencies in the energy sector.
They are leveraging knowledge and technology, and banking on new efficiencies that their products can bring to the vast oil and gas services marketplace; to complex compliance rules to limit heat-trapping methane gas emissions; and to further advance a technological achievement that has stood the test of time – the combustible engine – to meet global fuel efficiency standards.
For the past 12 weeks, their founders and CEOs have been fine-tuning business plans working on branding and marketing, talking with legal counsel and, of course, meeting with potential investors.
“Adopting new technologies is always a challenge for any industry given the costs and risks. Nevertheless, when companies find something that has the real potential to enhance shareholder value – and it’s safe and easy to adopt – then they will evaluate and adopt more easily,” said Hank Torbert, who leads the ENERGYx program as its entrepreneur-in-residence.
“Innovation drives growth and profits, and all of the energy companies were built of innovation and new technologies,” Torbert said.
Here’s a look at the 2016 cohort of startups as they prepare to pitch their businesses to members of the Southeast Louisiana Energy Initiative, an association of energy industry executives supporting oil and gas development. SELA and The Idea Village sponsor ENERGYx, which is now in its second year.
The company: The Offshore Exchange
The product: A cloud-based online marketplace and logistics management platform for oil and gas production transportation services.
The founder: Brittan Breaux worked in maritime and logistics management for offshore services after earning a naval architecture and marine engineering degree at the University of New Orleans.
The market: Offshore oil and gas producers and service companies looking to optimize resources with a costsharing online exchange for transportation services.
The story: In the midst of the downturn in oil prices, Breaux was working as a logistics manager at an affiliate of Edison Chouest Offshore when he saw an opportunity for oil and gas companies to save money.
Breaux saw half-filled vessels leaving shore with equipment, and empty vessels returning to shore after dropping off their cargo. Seeing all that unused capacity, Breaux sought a way for oil producers and the service companies that build and operate offshore rigs to share in the cost of vessels making runs into the Gulf.
“Where I saw we could make that happen is through a shared logistics model, which means instead of Chevron hiring one vessel and Shell hiring another vessel, they would be able to hire one vessel. With the right scheduling and management that one vessel could do the work of both of them,” Breaux said.
Oil and gas companies see the benefit of this, Breaux said. But the biggest challenge is how to deal with contingencies, respond to schedule changes and emergencies. Delays and unforeseen events like weather are fairly common in offshore oil production.
“Companies don’t want something on our end to mess up and delay them- because drilling operations are expensive by the day and by the hour. That’s the risk they see in this model,” Breaux said.
But Breaux also knows that oil and gas projects consistently overrun their budget and timeline. “So it’s already an issue that you condemn yourself to and I’m saying it’s an issue we can fix,” he said.
Similar to models driving FedEx and United Parcel Service, The Offshore Exchange aims to go further by including the vast network of trucking and railroad transportation services integral to moving time-sensitive equipment to offshore wells and production facilities.
“We have a very antiquated supply chain in the offshore industry, and what we are trying to do is optimize it and provide a platform that lets us replicate other transfer models out there,” Breaux said. “That’s what we want to build – this brain trust of oil and gas logistics.”
The company: Clearistix
The product: A cloud-based software platform, STEPS, connects the oil field to the office and offers an efficient way to capture and send information on billing, activity, safety, compliance and payroll.
The CEO: Steven Toups has worked in executive, financial and operating roles at middle-market companies in health care and in offshore information services.
The market: Mid-market oil and gas service companies hired by onshore producers to handle everything from wellpad construction and drilling to well-stimulation and routine maintenance and monitoring.
The story: During the two-year downturn in oil, the focus on most new drilling shifted to cheaper-to-produce onshore wells made possible by hydraulic fracturing technology- and so would the business that Toups leads.
What began five years ago as a company to get information from offshore vessels back to the office more efficiently was relaunched last year to enter the onshore oil and gas field services market.
With a new brand and a new name, Clearistix offers mid-market service companies in the oil patch a streamlined digital means to get various types of information to managers and supervisors and into back office systems.
“We are running into companies that say, ‘We don’t think things are going to get worse, and we have some optimism that things are going to get better, and I’ve got to figure out what I’m doing now and increase my business with the people Ihave now. So how can we be more efficient?'” Toups said.
Toups added that efficiency demands in the industry are being driven by large oil producers and companies. “You’d be surprised by how much happens with a fax machine, and with people taking a cell phone and taking a picture and sending that into the office,” he said. “And for a lot of oil field service companies, that is still how information is gathered out in the field – onshore and off shore.”
Instead, workers who use Clearistix use tablets or laptops that can work online or offline. “Paper is not smart, doesn’t know what is going on, gets lost, mangled and destroyed. There’s a delay inherent in paper because it’s got to be moved,” Toups said.
Mid-market or smaller service companies, of which there are thousands in the industry, often do not have the resources or even the need to use large enterprise software systems that large companies use.
“We’re not as expensive and what we do we do really well. We spend a lot of time trying to minimize the person in the field’s interaction with the tablet itself, try to minimize click or taps,” Toups said. ‘The oil field service companies can go to their customers and say, ‘We’re doing business in a much more digital way, a more mobile way, more efficient way and a much more accurate way.”‘
The company: ComplyPod
The product: A web-based application, NVIROLeaks, used to catalog and analyze information for methane leak detection and repair.
The founders: Margo Moss, an environmental scientist, and Lee Lemond, an environmental emergency responder, opened a consulting company after working at the Louisiana Department of Environmental Quality and in private industry.
The market: Mid-market companies searching for an easier way to comply with new federal requirements to reduce greenhouse gas emissions in oil and gas production, transmission and distribution.
The story: With 15 years of environmental regulatory compliance experience, Moss and Lemond quit their jobs at LDEQ to start an environmental consulting firm earlier this year.
In building their firm, L&M Environmental Response, they began working on a more efficient way to help clients comply with stringent new Environmental Protection Agency regulations to reduce greenhouse gas methane emissions and ozone-forming organic compounds from equipment used in oil and gas production.
They began building a database to take in monitored results, compare them to the current regulations and create inspection reports and workflow actions for what leak repairs are needed and when.
“A big gap we saw while working at LDEQ was with the facilities and consultants and the way the data was kept and results were kept and how they produced inspection reports,” Lemond said. “We saw this huge gap in how it could be done and how conveniently it should be done and regulatory wise it has to be done.”
When they pitched their idea to participate in ENERGYx, the feedback that they received encouraged them to think bigger.
“Initially, the goal was to create it for ourselves,” Moss said. “After thinking about it, we realized we could make this app and market it to a much larger audience than just our company and clients.”
While the largest oil and gas producers have a staff of environmental experts to handle compliance issues, mid-sized companies in the sector often do not. These companies are “big enough to really get in trouble with these regulations but they are not big enough to have their own experts,” Moss said.
The regulations themselves, which apply to new or modified equipment for now, are complex and daunting, the consultants say.
“A lot of times, it’s not that the facilities are trying to be negligent or want to be out of compliance. These regulations aren’t easy,” Moss said. ‘There’s a threshold where it’s too confusing, too hard, it’s too expensive. And then everyone loses because they open themselves up to liability and fines, the environment is losing because it’s getting dumped on, consumers are losing, everyone is losing. We want to bring that threshold down.”
The company: Haring Laboratories
The product: A cutting-edge hydrogen generator system and electronic control board to make carbon-burning engines utilize fuel more efficiently.
The founders: Chris and June Haring
The market: Companies across the energy and manufacturing sectors looking to meet federal fuel efficiency standard and create better fuel economy and cleaner-running engines.
The story: Among the four startups in the EnergyX accelerator program, Haring Laboratories holds the greatest potential to impact the broadest range of companies and consumers.
In 2006, when the price of gasoline shot up to $4 a gallon or more in some regions of the U.S., Chris and June Haring were running a construction and remodeling business in Florida.
“We had a lot of large trucks and equipment. So we did a lot of research into trying to find a solution to the fuel problem- not the emissions problem at this point,” said Chris Haring, and electronics engineer and inventor. “How do you get more out your fuel?”
They discovered that NASA was using hydrogen to fuel many of its projects because “it basically combusts in one step, whereas gasoline will combust in 7,000 steps,” Chris Haring said.
About 30 to 40 percent of the gasoline burning in a vehicle’s engine is actually used, and the rest is emitted as heat or emissions, Haring said.
Creating hydrogen by electrolysis to use as an efficiency accelerator for engines isn’t new – there are relatively cheap systems available in the market now for your car- but Haring say these systems aren’t consistent and safe, and thus not viable for wide commercial distribution. “You can’t sell something that could potentially blow up in your vehicle,” Haring said.
They started by building small systems about nine years ago, testing them on their own vehicle engines and eventually hundreds of others, investing $2 million of mostly their own money along the way.
A key to advancing the technology was developing a sophisticated control board that could monitor and manage a running engine, and know how much hydrogen to distribute based on the engine’s current load. “You can’t just flow it in willy-nilly. It has to go in surgically. It has to be controlled \and that’s what we have perfected,” Haring explained.
Vehicle fuel efficiency standards adopted by the United States and other countries are asking automakers to improve mileage and significantly cut emissions from vehicles in coming years.
Haring says their system will reduce emissions from engines by 40 to 80 percent and that the technology can work within the parameters of any engine used by cars, heavy trucks, tankers and jets.
Haring’s next challenge is finding the right licensing agreement or partner to produce the systems.
“If somebody licenses it, we’re kind of done,” Haring said. “If somebody says, ‘We want you to make a million of them,’ then I guess we need some money.”