How Dead Oil Fields Became Clean Energy Goldmines
00;00;00;00 - 00;00;22;10
Unknown
Welcome back to energy 101. Today we have prob. What's the full name from Deep Sing Circle. I go by Rob Cole from Eclipse Energy. That's right. All right. And today we're finally having our hydrogen episode. At least in some kind of way. Because as you'll learn, hydrogen is very complex. Diverse. There's different colors to have. You may have heard of that.
00;00;22;12 - 00;00;39;15
Unknown
And I would love to start off talking about that. First, why don't you just kind of give a intro of your story, your involvement in eclipse, your build up to it, and we'll get right to sure. Yeah. So great to be here, man. Thanks. Thanks for the platform. Rob Seiko, I'm the CEO of Eclipse Energy at my background.
00;00;39;16 - 00;01;01;14
Unknown
I'm. I'm a farm boy. From from Canada. I grew up, on a farm not far outside of Calgary. Been in the US for my whole adult life. Started up with Hess Corporation in the Bakken we were developing. This was right before sort of that inflection point of the Bakken. We were developing, the the Bakken out there.
00;01;01;15 - 00;01;19;21
Unknown
It was just a bunch of kids and some smart people in Houston, trying to figure out how to create a basin out of that or create, create a world class asset out of that. From there, I had the opportunity to bounced around the world, worked offshore west Africa, global projects, and a little bit of business development.
00;01;19;21 - 00;01;41;15
Unknown
After that, I went over to NextEra Energy Resources, one of the largest renewable energy companies in the world. I had the opportunity to kind of I want to say, don't want to say pivot, but I had a little one foot in oil and gas, one foot out. We were doing energy strategy and corporate venture capital. Really, really great insights.
00;01;41;15 - 00;01;54;15
Unknown
There was in a team of some, some I was the dumbest one in the team, some really smart people that I learned a lot about. That's always gone to oil and gas. Yeah. I want to be the smartest, I think. I think when you're the smartest person in the room, you're you're in the wrong room at that point, right?
00;01;54;18 - 00;02;26;06
Unknown
So, and then just under two years ago, I moved over to Eclipse Energy. They were they had been around for a couple of years prior to they were doing some amazing stuff, trying to repurpose end of life oil fields and turn them into clean hydrogen assets. And this was at a point where I was looking hard at hydrogen while I was at NextEra, and I sort of starting to see the cracks in the vision of green hydrogen and some of the others.
00;02;26;06 - 00;02;53;29
Unknown
And so we started to look for other opportunities that perhaps solved some of the issues, you know, high cost, high energy dependency, high water volumes required. And really, fast forward and here we are. So. Yeah. Great. So, yeah, you come from being a petroleum engineer to clean tech, right? So, yeah, I mean, there's a few things that come to mind, like how does that work mentally?
00;02;54;02 - 00;03;15;06
Unknown
And then, you know, that sounds like, you know, what kind of what kind of advantages are you bringing to the table coming from, you know, both sides? No, I think it's a great question. I if I was to tell you there was some great plan, there wasn't a I just fell forward. Right. That's really what happened. I think, when my wife and I got married, the idea was, let's just let's not chase money.
00;03;15;06 - 00;03;36;29
Unknown
Let's chase what we find interesting, what we find impactful, and we'll figure it out. And that's really how I ended up where I am. I think oil and gas was tremendous, tremendous amount of value for the I got to say, what, 14, 13, 14 years that I was in the industry. I there's so much that I think we take for granted.
00;03;36;29 - 00;03;55;01
Unknown
And it's kind of funny. I've been watching linemen. I don't know if you watched it. Love it. I think, the finale just came out. Yeah, man, I watched it, as soon as it came out. Billy Bob, Thor. And he's like, he was born for that role, right? He's perfect. But it's so funny to watch that show and sort of.
00;03;55;07 - 00;04;22;17
Unknown
They talk about wild canning. They talk about risk as if it's gambling. But oil and gas has some of the most sophisticated, I think decision matrixes. World class technology, world class people trying to solve some of the most complex problems there are. I mean, you're trying to make billion dollar decisions, with as little data as you have, and you're trying to sort of not only interpolate but extrapolate.
00;04;22;19 - 00;04;40;04
Unknown
And so I think oil and gas there, there's just so many things that have transferred over, you know, as I was I was making the transition out. Now I'm kind of back in because eclipse is, you know, tangentially related to oil and gas. I thought, okay, I don't know if I'm going to use these skills again. And I was a little, you know, sad about that.
00;04;40;04 - 00;05;08;23
Unknown
But you start thinking like I from an operational perspective. But I was a part of a team that saw, you know, the back and go from, what we call, pump and pray a single stage frac to multi-stage fracturing over the course of four years. To see the innovation, this idea, you know, just grow at scale and, and become one of the most prolific oil assets in the world.
00;05;08;26 - 00;05;35;29
Unknown
It was incredible to see the amount of capital that went into it, the amount of risk capital that went into it, and how we pivoted with different sort of, externalities. That couldn't be necessarily predicted, whether it was a change in oil price, etc.. So I think there's so much that has carried over thinking about taking early stage technology to scale up, but also thinking about economics.
00;05;35;29 - 00;05;55;29
Unknown
Right. End of the day, I think one of the biggest issues I saw, when I was doing corporate venture capital energy strategy, look at all these really, really cool and technologies, brilliant people. When you get down to first principles, it's like the technology's cool or what's it going to cost you? Is it going to scale?
00;05;55;29 - 00;06;27;21
Unknown
Is it applicable? Are you actually do you have a solution to a problem, or are you trying to find a problem with the solution that you've already created? Right. So I think starting at first principles, thinking about physics, thinking about economics and scalability, that was a skill that that, oil and gas taught me. I think the other thing that that I've recognized kind of, you know, going through different stages in my career, not to say that I'm a super experienced guy.
00;06;27;21 - 00;06;52;08
Unknown
I'm a, I'm a mid-career guy, but the different stages, is oil and gas teaches you how to think probabilistically, right? It teaches you to think about as many permutations and combinations of outcome. When we think of reserves, we think about low, mid and high p10, p50, p90, probabilistic mathematics to really get a full envelope of uncertainty.
00;06;52;08 - 00;07;23;08
Unknown
Right. So you can assess is the downside worth the risk is the upside. What does that look like. What would we do with that upside. So I think there's so many different things that oil and gas and petroleum engineering has provided so many different school, skills and exposure, that it's been very applicable to this early stage tech, to be able to speak the language that essentially our clients who are oil and gas companies, understand.
00;07;23;08 - 00;07;54;15
Unknown
Right. And also to start framing, our vision accordingly. So not sure if that answers the question, but, it's more like a love letter to the industry. I know, man, I know I and it's it's funny. I don't want to say it's been a love hate relationship, but I think it has. And I think 18 years out of school now and, and in working I, I've gone from, you know, from one side to oil and gas.
00;07;54;15 - 00;08;26;02
Unknown
Oil and gas the other side about, transition to now this place of energy pragmatism. Right. Decarbonization is important. Decarbonization also has a cost, an economic cost. And the only way to effectively decarbonize is to provide energy solutions that are, you know, in the same magnitude of cost or cheaper than the incumbents. And if you can't do that, it's going to be very tough to adopt at scale.
00;08;26;04 - 00;08;53;06
Unknown
Right. So, yeah, I mean, I think I'm, I'm think I'm to a place now where for the time being, I'm, I'm, an energy pragmatist. Yeah, yeah, call it energy realism, which is definitely a big motif of this show. I mean, working in climate tech, clean tech. Do you have people who don't have the energy realize realism mindset, and they prevent themselves from really seeing the whole picture?
00;08;53;09 - 00;09;18;11
Unknown
I think at times I think, you know, there have been we're early stage. So we're, we're we've been raising from venture capital funds. Right. And there are some true decarbonization funds who are doing amazing things and have invested in amazing companies. But, I don't think they have a clear vision of the synergy between oil, hydrocarbons and decarbonization.
00;09;18;14 - 00;09;43;29
Unknown
Right. So sometimes bridging that gap can be very difficult, and it's been impossible in some cases. So, yeah, I'm who am I to say whether they're right or wrong. But I think, some folks feel uncomfortable with kind of, what's the word? I'm looking for a coexistence of the two, you know, hydrocarbons. Hydrocarbons can also be clean if we do it.
00;09;43;29 - 00;10;10;13
Unknown
Right. Right. So we can still decarbonize and continue to use hydrocarbons. And quite frankly, the oil and gas industry has some of the sharpest, most brilliant folks who are the only ones who know how to deal with high capital intensity, complex problems. So it's better we try to get them in the boat with us than try to sort of go our own paths or look at each other as competition.
00;10;10;13 - 00;10;30;00
Unknown
So I mean, we're talking about hydrogen today, but we're also talking about oil and gas because, yeah, two are connected, right? For sure. For sure. So let's take a deep dive. Look at how we produce hydrogen. How do we extract it. Whatever words you want to use because it's it's a little bit more complex and the outsiders might imagine.
00;10;30;00 - 00;10;51;03
Unknown
Yeah. But luckily, the, the press, the media, the PR, whatever you want to say. They cut out of this beautiful way to display it on a literal spectrum of color. So you might have heard of blue hydrogen. Green. Hydrogen Brown. Hydrogen. Pink. Yeah. It turns out it goes all over the place. And, let me just pull up a graphic here so we can really break it down.
00;10;51;03 - 00;11;09;11
Unknown
And I would just love to hear your opinion on. Yeah for sure. All these. All right. So I pulled up a graphic that I thought was just pleasant, nice to look at. And it seems to make the most sense of some of the things I've seen online. So why don't we point at this TV and just be like, you know, what's this do?
00;11;09;11 - 00;11;34;04
Unknown
What's that? What's the difference? And, explain all these colors. Yeah. I think let's focus on the main ones, right. That are in the media. There's so many other different types that aren't as prevalent, yet or probably won't be, including the coal and potentially even the nuclear. But I think I do want to state that I'm not a fan of the hydrogen rainbow for a number of reasons.
00;11;34;06 - 00;12;07;20
Unknown
I think it's great from a visual perspective and from a messaging perspective. But when you get to the brass tacks, it does not do an adequate job explaining the important metrics of each type of hydrogen. So often we talk about hydrogen as this one sort of molecule, which it is that and you hear a lot about green hydrogen electrolysis, which is very expensive.
00;12;07;20 - 00;12;38;07
Unknown
And so when you see, oh, hydrogen is failing or hydrogen projects are more expensive than expected, levelized cost of hydrogen continues to rise. It's generally talking about green hydrogen, right? Because that's been a big push for a lot of utilities for a lot of, folks thinking about how to use excess energy where there aren't off takers, you know, like in, in Oklahoma or even, West Texas.
00;12;38;09 - 00;13;01;18
Unknown
So let's break it down. I think the first thing is green hydrogen, and that's electrolysis. I think most of us who have done high school, chemistry, we saw the teachers put in the electrodes and they were able to produce hydrogen and oxygen. So essentially you're using electricity, you're using power to split water, which is H2O, into H2 and O2.
00;13;01;21 - 00;13;30;10
Unknown
Right? That's literally what it is now. Very, very cool idea. It is clean, right? That's that's I think where we have this big push of electrolysis. You see, a lot of it have been pushed in Europe, but it's very expensive, so expensive that the prices continue to rise. If we look at a totally fully loaded levelized cost of hydrogen, it is probably the highest one, right?
00;13;30;13 - 00;14;01;26
Unknown
I think it really depends on how much the power input costs are. But those are continuing to rise. CapEx continues to increase. But what's all what's often missed is there's a tremendous amount of water, fresh water that's required to generate this hydrogen. So it doesn't come, you know, at no cost to the environment. Water is a precious resource, and often you're fighting for that water against agriculture.
00;14;01;29 - 00;14;31;07
Unknown
People, and so many other uses. And so now all of a sudden, we're trying to use something that's necessary to produce energy, which is also necessary. But there's a trade off there. And we've got to think hard about that. So when we think about the metrics that, that the rainbow should, I think dictate is one is cost green hydrogen is very expensive, right?
00;14;31;09 - 00;14;59;12
Unknown
One is carbon intensity. Green hydrogen is relatively clean. There's obviously CO2 footprint to construction. There's pipelines etc.. But relative to some of the others, it's pretty low. The water intensity is quite high. And that's something that's often missed. Now, as we start to go down and we look at blue hydrogen, let me start with gray actually, because that's simpler.
00;14;59;12 - 00;15;27;03
Unknown
Blue is just has an additional piece to the process of gray. So gray hydrogen is produced when you take methane or natural gas and you put it through steam methane reform. So you put an energy to split C-H for I think there's I'm trying to go back to chemistry was not my strongest subject. I think there's an element of putting oxygen in there, but you have H2 and CO2 that come out of it, right?
00;15;27;05 - 00;15;53;10
Unknown
So it's relatively inexpensive in North America as long as natural gas prices are low, because that is an input cost. Right. The but there's a CO2 aspect. And most I think there's something like 100 million tons a year of, of hydrogen produced. Most of that is gray hydrogen right now. It's used for we'll talk about the uses in a in a bit, but, cost is relatively low.
00;15;53;13 - 00;16;17;26
Unknown
Carbon intensity is high. Not much water use, but the carbon intensity is high. Right. Now, if we look at blue hydrogen, you're trying to actually, I think there's a very elegant sort of process where you're trying to actually capture the CO2 and you're putting it back in the ground, right? Carbon capture sequestration. So you're taking reservoirs that won't see atmosphere deep down in the ground.
00;16;17;26 - 00;16;42;19
Unknown
You're putting the CO2 away. For those who don't know what CCU s is, but it's a very effective way, and it's been done for decades, especially with enhanced oil recovery. But it's a way to mitigate the environmental impact. Now, we talked about the carbon intensity of gray. Blue hydrogen obviously has lower carbon intensity. It's it's more expensive because there's an added process.
00;16;42;21 - 00;17;08;18
Unknown
I think the biggest sort of I don't want to say problem, but, cautionary element here is the input is natural gas. So what you're effectively doing is you're taking this valuable molecule of natural, let's say, methane, and you're putting it through a process and you're actually reducing the net energy, right? Because you're stripping it, you're putting energy in and you're trying to create hydrogen.
00;17;08;18 - 00;17;32;23
Unknown
So you actually have a net energy reduction. And you're also exposed to the cost of natural gas. So North America blue and gray might be relatively cost effective. But if you go down to Southeast Asia or Europe, we saw, you know, a couple of years back, European gas prices were skyrocketing. It was getting extremely expensive to heat, homes.
00;17;32;28 - 00;17;55;03
Unknown
So you're exposed to, the price of natural gas. So those are kind of the two limitations here. But I think what's been very interesting is natural hydrogen. And I'll talk a little I'll call it geological hydrogen, because I think there are a couple elements to it. There's obviously natural hydrogen, which is you've probably been hearing a lot about.
00;17;55;03 - 00;18;17;14
Unknown
There's some there's some, amazing companies out there like Coloma. I think I hear a few others. There's actually a company called Gold Hydrogen out of Australia. They've been wildcat ING for natural gas. So using a lot of sort of oil and gas expertise. But rather than chasing oil and natural gas, they're chasing hydrogen. Which is super cool.
00;18;17;14 - 00;18;45;23
Unknown
I think there's actually a well in Mali that's been producing hydrogen for, I don't want to make numbers up, but I think for over well over a decade, that's the only commercial well, right now. But the upside of this natural hydrogen is tremendous because it's going to be very cost effective. Eventually when you go to development, it's already in the ground, and it's just about bringing it up and getting it to, the, to the market.
00;18;45;23 - 00;18;48;04
Unknown
So.
00;18;48;07 - 00;19;16;17
Unknown
There's other sort of there's actually some cool companies here in Houston that are, that are you doing stimulated hydrogen where they're actually there's natural processes in the ground that created this, geological hydrogen millions of years ago. It's accumulated with the stimulated hydrogen. Companies are doing is they're actually going down drilling, and they're creating the conditions to produce hydrogen the same way that it's been produced naturally.
00;19;16;17 - 00;19;47;24
Unknown
But you don't need to use a it's electrolysis. There's a series of chemical reactions, and you can produce hydrogen by injecting water. And, and forcing that chemical reaction producing hydrogen. So I'll really, really cool stuff. I think when we start thinking about the the risk though is, exploration costs aren't trivial, right? You're having to spend millions and millions of dollars with no guarantee that there's going to be hydrogen.
00;19;47;26 - 00;20;18;14
Unknown
Oil and gas is slightly different. We've been building this oil and gas economy for over a century. We have a pretty good idea of how to look at seismic, how to look at logs, how to understand commerciality. There are a ton of analogs out there. Hydrogen's frontier. Right. So this is absolutely necessary work that we're doing. There's a lot of work yet left remaining right to get to the point where we're in the same condition as oil and gas, with a higher, I think, with a lower risk rate.
00;20;18;16 - 00;20;47;23
Unknown
So there is the exploration phase. I think the other problem with I don't see a problem, the other consideration with white hydrogen or natural hydrogen is you have to go to where the hydrogen is. In some cases it's going to be where there's offtake. In other cases there won't be offtake. So, you know, the whole commercial sort of pipeline is important to consider when you're developing these assets.
00;20;47;25 - 00;21;14;04
Unknown
But that's sort of natural or geological hydrogen. Our technology eclipse energy. We're kind of a chameleon. We have, I think, some risks shared across some of these, Tex, but others that aren't there. I think our focus has always been to start with the problem, right? Or the problem we're trying to solve. One, we've talked about hydrogen.
00;21;14;04 - 00;21;33;24
Unknown
It's generally very expensive. Some have low psi. Generally if the PSI is low, the cost is high. If the cost is low, the PSI is high, carbon intensity is high. And we want to make sure we don't need any water. So that was kind of one of the problem statements. How can we kind of get the best of each world?
00;21;33;24 - 00;21;59;09
Unknown
How can we keep our costs low, our carbon intensity low, and mitigate or essentially zero out water utilization? So that's where we started. And we broke it down into what are the main drivers of each of those carbon intensity main drivers. You're putting CO2 or taking a product that has high carbon, and you're splitting it and putting it out into the atmosphere, right.
00;21;59;12 - 00;22;34;22
Unknown
High cost is because you need a tremendous amount of CapEx to make this real, like electrolysis, and as well a high amount of opex, like whether it's steam methane reform or, or with with natural gas or even power to power the Electrolyzer, and then finally the water piece. So that was one problem. And the other problem, I think, that was emerging in my past life were that you had we've had we've been producing oil for 100, over 100 years.
00;22;34;25 - 00;23;02;11
Unknown
That also means there have been fields that have been shut in and abandoned. And there are there are several more fields that are kind of hitting their economic limit, that are getting ready for abandonment. Now, abandonment is not trivial either. It is a high CapEx, proposition or high CapEx process. You have to go in and abandon these fields, try to reclaim as much as you can.
00;23;02;13 - 00;23;24;14
Unknown
And there's a tremendous amount of liability on the books of a lot of these oil companies. So, you know, we thought, okay, you have these end of life fields. They still have a tremendous amount of oil left in them. The reality is, we're lucky if we get recovery factors of 60% in conventional and in unconventional. So you still have 40% of the oil remaining in the ground.
00;23;24;14 - 00;23;47;27
Unknown
It's just not economic to produce. When we start thinking about unconventional as like the Bakken or the Permian or some of the others, if you get to 80, or 15% recovery, you're lucky. Right? So you still have 85% of that oil remaining in the ground. So you have this wasted product that has no value at the moment to the oil company.
00;23;48;00 - 00;24;17;18
Unknown
But hydrocarbon also has hydro in it, right? Hydrogen. What if we were to take these reservoirs that are considered liabilities and create the right conditions to where we can use my microbes, which we'll get into a little bit later? To eat the oil and, and create hydrogen up in that bubble out. There you go. That's exactly it.
00;24;17;20 - 00;24;41;25
Unknown
We had, we had, employee joking that it should be called brown hydrogen at that point, but, yeah, I guess it's kind of overused. Yeah, I think so. I think so, but that was the concept. It's like you have a problem you're trying to solve from a hydrogen perspective. Cost carbon intensity, water. And you have a problem that oil and gas companies are facing.
00;24;41;27 - 00;25;10;04
Unknown
That's big liabilities. That's big cost. What if we combine the two, utilize existing infrastructure reservoirs that have been producing for decades, so you don't have the exploration risk that you would in natural hydrogen and use this low cost biological solution, biological technology, to produce hydrogen from existing infrastructure. By the way, you don't really need water for that, right?
00;25;10;04 - 00;25;33;19
Unknown
You don't need any potable water for that. And at the end when you're producing hydrogen and if you burn it, you're actually a net water producer at that point because you burn hydrogen and you're creating water, H2O, right. Just the opposite of electrolysis. So, that's really how we've been thinking about it. We had our first of a kind project in California, and it was it got a lot of traction, actually.
00;25;33;21 - 00;25;57;10
Unknown
Bloomberg picked it up for, LA times. But we took this. Well, that had been shut in, I want to say, for five plus years for economic reasons, we we injected our biotech and, we let it sit for a few days, and we proved that you can use microbiology to produce hydrogen in the subsurface. So that was, a tremendous win.
00;25;57;10 - 00;26;20;08
Unknown
It was, I think kind of all the marbles, you know, on the table on that one, because if that didn't work, it was going to be difficult to to give it another shot. But that's kind of fast forward, I think eight months. We've got two more planned in, in West Texas. So we're trying to expand sort of our technology envelope.
00;26;20;10 - 00;26;42;26
Unknown
Actually, it was we're we're a little bit delayed by a week just to some paperwork, but we're planning to deploy that in the next week or two. We're really excited because it's a completely different environment, completely different sort of, oil, that we're chasing different temperatures and conditions. So our team has been working really hard at sort of expanding the potential.
00;26;42;26 - 00;27;08;10
Unknown
There's just so much oil left, and hydrogen can be used in a lot of places. So we want to be able to maximize where our technology is deployable with potential use cases. So yeah, I hope that gave somewhat of a description. Yeah. Of the will by also giving myself a plug. But yeah that was all done. So I think the one thing I do want to add is I don't think it's a matter of different types of hydrogen.
00;27;08;11 - 00;27;36;01
Unknown
Are better than the other. I think the reality is hydrogen is not hydrogen. Production isn't a monolith, and every technology is going to have their own. I think strong suit and certain tax will work in certain places and certain economies for specific reasons, and other techs will work. So I want to be very careful to say that we're the only type of technology that's going to work.
00;27;36;01 - 00;27;55;25
Unknown
I think green works and, will work well in certain areas where there's low, low price and there are incentives. I think white has so much potential to it. Because it's using it's reusing a lot of the tools we've developed over the last century. And if we can make that work, that's that's going to reduce the cost of power for everybody.
00;27;55;25 - 00;28;17;01
Unknown
Right. Blue and gray have their own. I mean, you can place them anywhere. You can pipe natural gas to and produce hydrogen. So if we want to do that in Houston, it's a lot easier to do that than, let's say, an eclipse that requires an oil field to, to produce that hydrogen. So I want to be very clear that one's not necessarily better than the other.
00;28;17;04 - 00;28;41;00
Unknown
Every sort of production method has its strengths. It has its weaknesses. But it's one of those industries where they're all going to win together. We're all going to lose together. So we're all in it together, right? Yep. So why don't we do, like, a step by step of what you're literally doing out in the field? Yeah. You know, whether it's what you're about to do in West Texas or how it went in California.
00;28;41;06 - 00;29;01;24
Unknown
Yeah. Like you show up. What is there is it a drilling rig? Is it a pump jack? Is it a valve? And what what what do you physically doing? What are your tools look like? It's actually super simple, man. We had a pump, jack. No rigs required. We needed just a regular pump. We had a receptacle with our biotechnology.
00;29;01;24 - 00;29;25;09
Unknown
We had a frack tank out there with water. Just because this, it was field water. Non-potable. We mixed our biotech in the frack tank with the circulation pump, and we pumped it, bullheaded it down the casing. We followed it. We chased it with a little bit of, field water. Left it in the reservoir for three days.
00;29;25;11 - 00;29;51;12
Unknown
Keep in mind, this was a this was a first of a kind. We just wanted to prove that we could produce hydrogen. 5% would have been a win. Right? Hydrogen. We produced it back, and we hit a peak of 40% hydrogen. And there was continuous production for. Gosh, I got a double check with my engineer, but we continued testing for about 14 days before we shot it, before we stopped testing.
00;29;51;14 - 00;30;15;25
Unknown
So the results were very promising. Still, we have work to do. It's 40% hydrogen right now. Our goal is to get to 80 to 90%, and that's kind of where we want to be by next year. But that's the first of a kind. We as we start to scale, we're not going to be just using an individual.
00;30;15;25 - 00;30;50;16
Unknown
Well, we're going to be looking at fields. So just to keep it simple, we'll use a conventional oil field with water injection. You've already got water injection field water, non-potable water usually coming back from from the field. And you're putting it back into the reservoir to maintain pressure. We would just sort of slip line our biotechnology into that, water injection system, that biotechnology, and it's going to be continuous feed that biotechnology is going to build essentially a colony, for specific microbes.
00;30;50;16 - 00;31;18;09
Unknown
Right. Specific microbes. We know what they do. We know we've been working in the lab to figure out how to optimize certain how to deactivate others or enable certain microbes and, disable others. And from there, that continuous injection, you're going to start to produce hydrogen from the existing wells. That's how it works, sort of in principle at scale.
00;31;18;12 - 00;31;44;28
Unknown
And when we start thinking about volumes, these are tremendous volumes. We've, you know, the initial I can't release the, the, the rate because it's there under NDA with the operator. But when we get to commercial scale, we're going to be looking at anywhere from 10,000 kilogram grams a day, to 150,000kg a day. That's well, more than enough to in 150 to power major data centers.
00;31;44;28 - 00;32;10;23
Unknown
Right? 10,000. That's great for mobility. I'm trying to remember California's in in that magnitude of total hydrogen used for mobility a day in the whole state right now. So these are not immaterial volumes. These are real dollars for operators to continue sort of producing from their fields. And these are sustained rates. So what we've been we we partnered actually with Weatherford.
00;32;10;23 - 00;32;36;18
Unknown
We announced it in, December. One of the big things we're looking at is operational protocols to ensure that we can maintain this flat production of hydrogen over a period of 20 years. And the reason for that is because the hydrogen that, can be used for multiple things. I guess we could probably we should probably should have talked about that earlier, but let's, let's put a pin in that and we'll talk about the use cases for hydrogen.
00;32;36;20 - 00;33;01;29
Unknown
You can use it for the way it's used now generally is for refining, you know, methanol, oil and gas and few other sort of processes. It's about 100 million tons a year that's produced. And they specifically use the molecule. The molecule can be used to, I want to say replace natural gas for heating. You can burn it and it burns at a high temperature.
00;33;02;06 - 00;33;32;11
Unknown
So where you can't electrify, you can heat. Then there's this sort of electrification pathway right now that's not really in the cards because hydrogen is relatively expensive, right. Especially with green hydrogen. We'll talk a little bit about cost in a bit, but if you can get that cost down to compete with natural gas, you have a very powerful pathway and a decarbonized pathway for electrification.
00;33;32;13 - 00;34;01;09
Unknown
So those are kind of the two commercial avenues we're looking at as we start to produce the hydrogen. And I think that's those are really the two avenues that I think most producers who are chasing sort of the dollar, some dollar 50, per kilogram hydrogen target are chasing as well. But yeah. Yeah. So that's, that's so I think I went from how we're getting it to the field and how we're going to utilize it.
00;34;01;12 - 00;34;22;10
Unknown
But I think there's another piece and you might have to, like, change the order in which we have this discussion, because we should probably talk about cost and what that means. Like what is we talk about dollar per kilogram. We talk about, but it's very hard to compare that to like dollar per MMBtu or dollar per megawatt hour.
00;34;22;13 - 00;34;39;09
Unknown
So do you want to maybe ask a question on that or. Yeah. So I mean, I think one of the maybe not like your layman understands, but people who pay attention more to energy know that hydrogen is further down the road of like, you know, the use cases I think of are like running vehicles and stuff like that.
00;34;39;09 - 00;35;00;15
Unknown
And we already know like it's nowhere close to natural gas, oil and stuff like that. But you know, I see, I see, I get articles and I read newsletters all the time about all these grants and subsidies to people who are making the hydrogen push. It, you know, what can we do to get there even faster?
00;35;00;15 - 00;35;25;02
Unknown
What is our time frame? And like, when it comes to money and all this stuff, like, what are we looking forward to? Time to scale. It really depends. I think that's going to be directly related to one incentives. But to true economic parity. Okay. Talking about incentives, I think the way we've really been focused is we need to make this work without any government incentives.
00;35;25;04 - 00;36;01;21
Unknown
If we can't get to parity with natural gas, for example, or power generated by geothermal, hydrogen won't be a part of the equation the way it was dreamed about, let's say 4 or 5, six, seven years ago. So just to kind of break down the cost and talking about parity, I think there's one sort of number or, one conversion that I like to use, and that's for every dollar per kilogram of hydrogen that's equivalent to, I think, $8.80 per MMBtu of natural gas.
00;36;01;27 - 00;36;26;01
Unknown
Okay. And if we're selling at $5 per kilogram, if we think about green hydrogen, that's do the math. Right. That's over 40 bucks in MMBtu. And if we look at natural gas in North America right now, we're hovering around $3, per MMBtu. There's no freaking way we're going to be able to bridge that gap unless we try to bring the cost down.
00;36;26;03 - 00;36;49;15
Unknown
I think the reason why we're really pushing at re utilizing existing infrastructure is that allows us to bring our cost down, right. Why we're pushing to utilize a waste stream or uneconomic oil is because we don't have to pay for feedstock, and that lowers our cost. So the number we're chasing is $0.50 per kilogram. That's about $4.40 per MMBtu.
00;36;49;18 - 00;37;15;09
Unknown
I think that's that's a huge I mean, if you go to Europe, you're paying a lot more than that for natural gas. Southeast Asia, it would be a solution once we get to the commercial scale that you could use there now and already replace natural gas. But we've got work to do here in North America. When we start thinking about power as well, you need to be below, you know, that dollar per kilogram, that $8.80 per MMBtu.
00;37;15;11 - 00;37;36;24
Unknown
If you want to get anywhere close to, where geothermal is chasing what natural gas currently is, what even coal is now, renewables are. So we really have to focus on getting that cost down. That'd be great, right? Yeah, it would be. It would be. And that's what we're working at, especially if you want to like transition into talking about like data centers and stuff like that.
00;37;36;24 - 00;38;07;00
Unknown
Yeah. I mean besides like what what are some tricks to get the normalize the use cases, right. Like I feel like data centers, it might all kind of line up beautifully to help out there. Yeah, I think data centers is something we've been extremely, I think, embraced significantly for a number of reasons. I think when I took this role, one of the things that kept me up at night and we can talk about hydrogen transport in a bit, is how the heck are we going to get a molecule?
00;38;07;00 - 00;38;35;20
Unknown
How are we going to move it from an oil field to where it'll be used? Right. Some of these are some remote areas northern Alberta, west Texas, certain offshore, West Africa, etc.. Or Gulf of Mexico. The whole idea of deploying data centers has changed the game, because all of a sudden I don't need to move a molecule, right?
00;38;35;26 - 00;39;06;21
Unknown
I can co-locate a data center where I'm producing hydrogen. I can electrify that hydrogen in the field away from population centers. So you're not competing for power. There's a whole bunch of nuances when it comes to data centers and durability, backup power. But just for simple terms, if you can put the data center in the field, if you can burn hydrogen in the field, power the data center with Starlink now, fiber is everywhere.
00;39;06;21 - 00;39;31;09
Unknown
First of all, if it's not there, you have Starlink, right? We partnered with a company called Armada who has a relationship with Starlink. And they could be beaming up data, anywhere in the world. Right. And the other, I think, elegant sort of angle of using hydrogen in the field specifically with our application is when you burn hydrogen, you produce water.
00;39;31;12 - 00;40;00;27
Unknown
And another thing folks don't don't I think people are starting to realize it now is data centers create a tremendous amount of heat and you need water to cool them. And potable water is far easier to deal with and dirty water, right. So these data centers will be competing for water just like electrolysis. But if we can create a scenario where once you burn the water, let it cool, and then use that as a cooling agent in the data center, you've got a built in solution that's very, very elegant.
00;40;00;29 - 00;40;24;12
Unknown
Right. So data centers for us are a great way to think about remote operations or remote fields where there may not be an offtake for the molecule, but we can electrify. And I think every sort of hydrogen producer should be thinking about that. And I think they are, whether, you know, one of the concerns I talked about natural hydrogen is you need off takers.
00;40;24;14 - 00;40;46;13
Unknown
But if you have data centers, there, there's your off taker right on top. Right. So that's something we're very excited about. That's something we're continuing. We have a partnership with Siemens on their and dual fuel turbine. So this would be the idea of electrifying in the field with hydrogen. But you can also use natural gas as a backup.
00;40;46;15 - 00;41;05;02
Unknown
So you already have natural gas in a lot of these fields. And it could be a great sort of backup solution, for our tech. Yeah. It's it's beautiful. How like, you know, bitcoin and crypto started growing or like, oh, it's energy intensive. And then they, they hooked it up to flaring on site. Yeah. And so right. Yeah.
00;41;05;02 - 00;41;25;00
Unknown
Yeah I'm one of the many. And now the big thing is oh no data centers is eating up all the energy utilities. But what if you just put them on site again using the flaring or whatever you're getting from these sites? On, you know, out in the middle of nowhere, far away from your city, away from your home, totally.
00;41;25;02 - 00;41;43;25
Unknown
And it's it's like we're we're kind of finding these solutions because we've been ahead of the game almost in a ways. Hydrogen was ahead of the game and crypto or whatever. Like, it's kind of I mean, I'm oversimplifying it, but it sounds really satisfying how it all worked out. Yeah, for sure, for sure. We got some work to do.
00;41;43;25 - 00;42;06;22
Unknown
There's no doubt about that. I it's not as simple. I mean, data centers to insure them you need a certain super high uptime, right? You have to guarantee that otherwise you can't insure the project. But these are all pieces that we'll put together as we start to scale. And so it's a really exciting prospect. Yeah. I mean, give me, like, a holistic just like what's next I think what's next?
00;42;06;22 - 00;42;31;13
Unknown
I think it's just, As many deployments as possible right now, we are trying to prove that this technology can be deployed at scale. Scalability is is the one thing that scalability, commerciality and being infrastructure ready are the three things we're chasing. So we are trying to get to a point that we can demonstrate our tech work globally.
00;42;31;15 - 00;43;03;15
Unknown
Our tech will produce at the lowest cost point 50 cent per kilogram anywhere in the world, and that we can utilize existing infrastructure, retrofit it as needed, and still keep that cost significantly low while extending the life of these hydrocarbon assets and helping operators sort of kick down the liability, kick down the liability, true. Up their current reservoirs to prevent leakage and and make money while we're at it.
00;43;03;17 - 00;43;23;09
Unknown
What what are you thinking like years wise? You know, we're trying to compete with natural gas. Where. Yeah. You know, we're not trying to deal with, like, subsidies and stuff. Like, we got this, like, we don't need your help anymore. Like what? What year is it where we're like, you know, I think natural gas is always going to have a place as it should, right?
00;43;23;09 - 00;43;41;20
Unknown
It's a it's a great carrier. We've got incredible infrastructure that we need to keep using. A lot of folks talk about putting hydrogen in natural gas infrastructure. There's from a regulatory perspective, that's going to be extremely difficult. And it would be foolish for us to think otherwise. So I timing I don't I don't know if we ever replace natural gas.
00;43;41;20 - 00;44;13;12
Unknown
I think it's not a hydrocarbon or clean. It's hydrocarbon. And right. So our target from a commercial perspective is 2028, 2029. That's really one where we want to be at a TRL nine what's been tremendously valuable for us is that oil and gas companies are looking at this as, hey, we would be open to paying you guys to come and figure out how to make our assets hydrogen assets or clean energy assets.
00;44;13;14 - 00;44;38;21
Unknown
So hydrogen's not the only product we're working on. It's the only one that's public right now. There are plenty of other sort of cleaner energy solutions that we're developing utilizing the subsurface. But it's it's been great because we're getting interest and investment from oil and gas to try and figure out how to solve this problem for them in conjunction with their regular operations.
00;44;38;21 - 00;44;57;09
Unknown
Right. So I don't know if that answers the question. I think it's a very difficult one to answer. But this is kind of our approach in our thesis. Yeah. I mean, it sounds like the future is here and working at it or working at it, and it's thanks to people like Prom and Eclipse Energy getting us there and working at it.
00;44;57;09 - 00;45;04;26
Unknown
We're doing our best. Well, I appreciate you coming on, man. Yeah. Thank you very much. It was great to be here.
