Yesterday I wrote about some tone-deaf advice provided by Energy Secretary Jennifer Granholm to the oil and gas industry. Granholm advised oil and natural gas companies they must diversify if they want to survive. The Secretary would have been more on-point had she advised them to innovate, because that’s what is inevitably going to happen. History tells us that that is what this industry always does to survive and thrive in a constantly changing world.
The elephant in the living room, of course, is emissions. The industry has been pressured by regulators and activists for decades now to clean up its emissions, and more recently has found itself under increasing pressure from investors and banking institutions to not only cut its methane and carbon emissions, but to be able to publicly document the progress. That pressure has now been extended down the chain to the international end users of the big volumes of U.S. production that is exported each day.
This is where Project Canary, a public benefit B-corp., comes in. As Chris Romer, CEO of Canary told me this week, “Even the oil companies agree that the ESG movement is a 100-ft. tsunami that is only 10 feet out of the water. It’s becoming table stakes now, and in the near future, not only their investors, but the banks are going to insist that the “E” in ESG has to be data-driven. That’s the entire hypothesis of Project Canary.” Basically, Romer believes that companies in the oil industry will no longer be able to satisfy ESG-concerned investors that they’re taking the “E” in ESG seriously by making a pledge to become net-zero by some year out in the future without being able to demonstrate real, annual progress.
Project Canary, which Romer describes as a “trusted, independent data platform,” allows customers to plug their data directly into its platform, auditing the information in real time. At the end of the process, assuming all is in order, customers receive certification that their natural gas production is responsibly sourced.
This, Romer says, provides customers with a leg up in a market whose end users are increasingly focused on these ESG-related concerns. He says that America’s growing Liquified Natural Gas (LNG) export industry will end up being a big driver of upstream adaptation.
“We are creating a differentiated market for natural gas,” he says. “Methane and carbon intensity are important, but they’re only half the story. International LNG customers want natural gas that is low in methane, but they also want to make sure it isn’t natural gas that’s being pulled from a well pad produced by a responsible operator where the water isn’t being dumped in the river. So, it’s not only low methane – soon to be ‘net-zero’ methane – certified by Project Canary, but it’s also rated on our TrustWell platform. TrustWell is sort of like a combined Car Fax/Equifax EFX -0.4% credit score, it is a dynamic rating that will let you know whether that production pad has a holistic ESG rating.”
“We’re going to defend US LNG as the cleanest natural gas on the planet, and we’re going to certify it,” he continues. “We’re going to out-compete the other, dirtier gas from other sovereign countries around the planet who lack transparency.”
But in order to do that, upstream and midstream suppliers of the natural gas to the LNG exporters must also be willing and able to supply that certified gas. The good news there is that Project Canary already has 32 upstream and midstream companies under contract, and Romer says that 30 more are in the pipeline.
Romer also told me that “a few E&P companies are preparing to make net-zero pledges within the next 60 days, and using our platform, they will plan to obtain the carbon offsets needed to meet that goal in real time.” Anyone who has ever worked in the ‘just-in-time-delivery’ world of independent producers knows what a huge selling point the ‘real time’ part of that statement truly is. Because ‘real time’ means efficiency and savings in both time and costs, always the crucial priorities for any E&P company.
For those who are not aware, Chris Romer is a long-time prominent figure in Democratic Party politics in Colorado. The son of former Colorado Governor Roy Romer, Chris served as a state senator from 2006 through 2010, when he ran an unsuccessful campaign for the mayor’s office in Denver.
Obviously, this association with a political party that has by and large not been a friend of the oil and gas industry can be an issue. But Romer is quick to point out that “I’m a Democrat for fracking, and have been for more than 20 years now. This not a new phenomenon for me.”
Romer is passionate about helping the industry maintain its license to operate because he knows it must play a vital role in helping billions of people in developing nations to rise out of poverty. “We need to use that clean natural gas to bring 2 billion people on the planet out of energy poverty,” he said. “Heaven forbid that we lock ourselves into our privileged lifestyles, while the rest of the world can’t get enough energy to improve their lifestyles. We need to do both. We need to decarbonize and allow 2 billion people to get the energy they need to improve their lifestyles. It’s pretty simple.”
The best way to ensure that happens is for all involved to focus on what he refers to as being radically transparent. “A real ratings system must be ruthlessly honest, but it has to be dynamic. Right now, the enemy of the truth is a bunch of greenwashing noise. Our job is to cut through the greenwashing noise and speak truth to power. This industry has to lean into radical transparency to assure its viability.”
As I detailed in my previous piece, talk of “diversification” into somehow becoming players in the wind, solar or some other more politically correct line of business is just a non-starter for the vast majority of oil and gas companies. The oil and natural gas industry has survived for 171 years in this country in large part through innovation and the constant development and adaptation of new technologies. Anyone who understands the industry should expect it to respond in exactly the same way to the huge challenges presented by ESG concerns and a climate change-focused media and political complex.
Project Canary provides us with one clear example of how this tech-driven innovation will come about. There will be many more examples to come.
Read it from Forbes
