A Look in the Rear View, Part II

A Look in the Rear View, Part II

The oil and gas industry’s adaption of renewable energies quickened its pace in 2020 as producers, midstream operators, and refiners rolled out new initiatives and investments to power their operations and reduce emissions. Here’s a look at just a few. Houston-based Occidental, a longtime developer and investor of low-carbon technologies and fuels, announced this month it will design and build the world’s largest carbon capture facility in N.D. The company last Fall completed a 174-panel, 120-acre solar farm in the Permian, which now replaces all grid power and supplies all energy for Oxy’s Goldsmith oilfield operations. Tulsa-based midstream giant Williams in May announced it, too, would add solar to its natural gas transmission and processing operations in nine states. But oil refiners, in particular, have been left with little choice to accelerate their shift from fossil fuels to renewable sources. The fallout from COVID and ever-stringent emissions regulations have prompted the largest to the smallest refineries to convert feedstocks to biofuels, such as soybean oil, fats, and kitchen grease. Time to: adapt, re-think, survive.

What do you think? Learn more about our upstream, midstream, and downstream expertise at www.ReeseEnergyConsulting.com.

 

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The Future’s Midstream Infrastructure Looks Decidedly Different by 2050. Or Does It?

The Future’s Midstream Infrastructure Looks Decidedly Different by 2050. Or Does It?

When Berkshire Hathaway in early July purchased 7,700 miles of natural gas pipelines owned by Va.-based Dominion Energy, the investment group handed the utility giant a new path forward to incorporate more renewable energy in its operations with a goal to generate 100% carbon-free electricity by 2045. The acquisition of Dominion’s pipe, which transports gas from the Marcellus and Utica basins, has added to Berkshire’s existing 16,000-mile pipeline network in a sure-fire bet that natural gas will be the primary bridge fuel for the next 50 years as coal takes its final bow.

The push to transform the fossil fuels industry is now a shove on steroids, no doubt accelerated by COVID-19.  As more regulators and the forces behind them halt new-build pipeline projects, and oil and gas majors reinvent themselves, midstream finds itself at a crossroads to get on board or get off the track. Shareholders and investors are demanding it. But what might the nation’s energy infrastructure look like in a future without crude oil, natural gas or NGLs coursing through its veins?

The majority of U.S. gathering, transportation and distribution pipelines is primarily used for fuels, which includes everything from onshore and offshore crude oil and natural gas, to water, hydrogen, coal slurry, biofuels, NGLs, and other fluids. For Smithfield Foods, the nation’s largest pork producer, sending renewable natural gas (RNG) flowing through pipelines has turned its industry upside down, and in a good way.

RNG comes from a variety of sources, including solid waste landfills, wastewater treatment plants, livestock farms, food production facilities, and organic waste management operations. It’s not a pleasant thought, but pigs produce more methane gas per pound of live weight than any other livestock. That’s a lot of greenhouse gases when you consider Smithfield manages millions of pigs every year. Smithfield in July partnered with Dominion to market that gas from the company’s capped lagoons that trap the methane. Dominion will siphon the methane from Smithfield’s anaerobic digesters and inject it into interstate pipelines to generate electricity. (You can read the tea leaves here.)

Tulsa-based Williams recently announced adding solar installations to power its natural gas assets, with sites under consideration in nine states. Will wind and solar farms soon become part of the midstream space? Whatever lies ahead, natural gas for the foreseeable future will enable the latest innovations that require electricity (a shout-out to Tesla), in addition to heating, cooking, vehicle fuels, manufacturing, industrial processes, and more. Transporting, processing and storing that gas will still require a midstream conduit. That is, until Elon Musk figures out how to SpaceX it right here at home.

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The Money Backers: EIG Global Energy Partners

The Money Backers: EIG Global Energy Partners

In RMR’s continuing series The Money Backers, we give readers a glimpse of who’s who and who owns what in energy’s private equity world.  From the largest to the smallest to the newest, we look especially at those firms making hay in the midstream industry to provide the capital infusion required to give growth projects liftoff.

EIG Global Energy Partners

Formed in 1982, EIG Global Energy Partners is a leading provider of institutional capital to the energy sector globally. A niche investor, EIG has partnered with over 315 energy companies in 36 countries around the world since inception. The firm’s global platform supports seven offices on five continents.

www.eigpartners.com

Wash., D.C.-based EIG Global Energy Partners makes headlines the world over whenever it adds to the firm’s mammoth investment portfolio. As its name implies, EIG provides financing exclusively for leading companies across the energy spectrum, with $33 billion in committed capital. Since its inception in 1982, this private-equity machine has made investments in 355 companies in 36 countries on six continents that include upstream, midstream, infrastructure, power, renewables and resources.

For the sake of brevity, we’ll pare down the list and take a peek at the firm’s heavy hitters in the U.S. midstream space.

  • Aethon Energy is an integrated upstream and midstream company primarily focused on the acquisition and development of assets in the Haynesville shale play.
  • ARB Midstream provides crude oil and gas liquids midstream and marketing/logistics solutions with more than 800 miles of crude oil gathering lines and 1 MMBls of storage capacity. Assets include the Platte River Gathering System in the DJ Basin and the Texoma Gathering System in Okla., and North Texas.
  • Cheniere Energy operates the Sabine Pass and Corpus Christi LNG terminals, along with the 94-mile natural gas Creole Trail Pipeline, the 23-mile Cheniere Corpus Christi Pipeline, and the 200-mile Midship Pipeline currently under construction.
  • Blue Racer owns, operates and acquires midstream assets in the Utica and Marcellus.
  • Kinder Morgan is one of the largest energy infrastructure companies in North America.
  • NGL Energy Partners provides transportation, storage, blending and marketing services of crude oil, NGLs, refined products and renewables.
  • NuStar Energy is one of the largest liquids terminal and pipeline operators in the nation, which stores and distributes crude oil, refined products and specialty liquids.
  • Southcross Energy provides natural gas gathering, processing, treating, compression and transportation services, as well as NGL fractionation and transportation services.
  • USA Compression is one of the nation’s largest independent providers of compression services to customers across the oil and gas industry.

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Carbon-Capture Technology Joins the Midstream Industry

Carbon-Capture Technology Joins the Midstream Industry

We mere mortals in the energy industry can be slow to embrace new technologies even when “adapt and mutate” is the inevitable result. The oil field is going digital. Machine-learning tools predict when drilling equipment will fail. Drones are quickly replacing pipeline walkabouts to ensure safety and integrity. And so many other new advancements are now online or headed our direction to decrease costs, increase production, improve efficiencies, and reduce our carbon footprint in a dramatically changing global environment. It would be fool hardy not to recognize them.

Carbon Engineering

Carbon Engineering is a Canadian-based clean energy company focusing on the commercialization of Direct Air Capture technology that captures carbon dioxide directly from the atmosphere.

carbonengineering.com

RMR today is studying the latest news from Calgary-based Carbon Engineering, which is building what will be the world’s largest carbon-capture plant in West Texas with a $68 million investment from Occidental Petroleum, Chevron, and BHP. The plant will capture as much as 500 kilo tons of CO2 from the atmosphere per year for enhanced oil recovery (EOR) projects and to produce fuel in the Permian Basin. Construction of the plant is expected to begin in 2021.

Now, this seems a bit ingenious, right? Capturing the carbon produced in fracking to inject it back into older or declining wells to extract more hydrocarbons? That’s what Carbon Engineering is banking on. EOR pioneers like Occidental just announced a joint study to assess the viability and design of a carbon-capture facility at the Holcim Portland Cement Plant in Florence, Colo., that will reinject carbon dioxide into the concrete. Carbon Engineering also has announced a $20 million award for the best conversion of CO2 into a scalable product.

What do you think?