Guest column

Houston oil and gas companies have been hit by more than just COVID-19 — here's what this expert has observed on the industry

The oil and gas industry has been hit by a trifecta of challenges. This local expert has some of his observations. Getty Images

In the matter of a few weeks, COVID-19 disrupted life across the globe, but the oil and gas industry was hit especially hard with the triple impact.

First, there was the direct impact of COVID-19 on the workforce. Next, there was a dramatic drop in global demand as countries and cities around the world issues travel restrictions. Finally, there was a global increase in oil supply as OPEC cooperation disintegrated.

As energy companies raced to set up response teams to address all three concurrent issues, something that no one was quite prepared for was the speed at which all direct lines of communication for the industry were shutoff. Seemingly overnight, industry conferences and events ground to a halt, corporate offices were reduced to ghost towns, and handshakes were replaced with virtual high fives.

To fill this inability to interact, connect, and collaborate as we used to, my company, Darcy Partners, stood up a series of executive roundtables for the exploration and production community to come together and share ideas on how to approach this unprecedented series of events.

Each week, over 25 executives from various oil and gas operators (and growing) gather virtually to share best practices around COVID-19 response plans, discuss the broader impacts of the turmoil on the industry and learn about innovative technology and process solutions others are implementing to help mitigate the impact of the virus and associated commodity price volatility.

We've seen the priorities of these executives shift and evolve with each phase of COVID-19 and the market impact. In early discussions, the main focus was on taking care of their workforce and what plans were being instituted to help minimize the disruption to operations while also ensuring that no one was exposed to any unnecessary risks. Participants shared best practices and policies they had in place for communication both internally and externally as well as their transition to work-from-home.

At later roundtables, the discussion turned to commodity prices and market response. Although this industry is quite accustomed to the inevitable ups and downs, this time is notably different. The market dynamics during this cycle are far more pronounced than in past downturns – largely due to the concurrent supply and demand imbalances coupled with the broader economic uncertainty. Most operators are taking action by making cuts, and some have already decided to shut-in production. Additionally, the importance of technology and innovation came to the forefront, whether discussing tools to facilitate working from home or remote operations to ensure the continued safe operations in the field.

The future is largely unknown; all of the information and analytics and millions of outcomes being modeled do not create the full picture needed for leaders to make the difficult decisions that are necessary. But there are a few things we know for sure. First, there will be an oil and gas industry on the other side of the current turmoil. Secondly, technology will play an increasingly important role going forward. And, finally, the complex issues the industry is dealing with today can be more effectively understood and managed by coming together to share ideas and best practices.

Nearly 5 years ago, Darcy Partners was founded on the premise that there was a missing link in the oil and gas Industry for the adoption of new technologies. Today, there is a missing link for an entirely different reason. Darcy Partners has rapidly mobilized our vast network of operators, technology innovators, investors, and thought leaders to come together and create a shared level of certainty, in an entirely uncertain world. To help leaders make the decisions that must be made and prepare for a new future, one that might not have been expected, but one that the industry will evolve to succeed in.

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David Wishnow is the head of energy technology identification and relationship management at Houston-based Darcy Partners.

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Building Houston

 
 

Business and government leaders in the Houston area hope the region can become a hub for CCS activity. Photo via Getty Images

Three big businesses — Air Liquide, BASF, and Shell — have added their firepower to the effort to promote large-scale carbon capture and storage for the Houston area’s industrial ecosystem.

These companies join 11 others that in 2021 threw their support behind the initiative. Participants are evaluating how to use safe carbon capture and storage (CCS) technology at Houston-area facilities that provide energy, power generation, and advanced manufacturing for plastics, motor fuels, and packaging.

Other companies backing the CCS project are Calpine, Chevron, Dow, ExxonMobil, INEOS, Linde, LyondellBasell, Marathon Petroleum, NRG Energy, Phillips 66, and Valero.

Business and government leaders in the Houston area hope the region can become a hub for CCS activity.

“Large-scale carbon capture and storage in the Houston region will be a cornerstone for the world’s energy transition, and these companies’ efforts are crucial toward advancing CCS development to achieve broad scale commercial impact,” Charles McConnell, director of University of Houston’s Center for Carbon Management in Energy, says in a news release.

McConnell and others say CCS could help Houston and the rest of the U.S. net-zero goals while generating new jobs and protecting current jobs.

CCS involves capturing carbon dioxide from industrial activities that would otherwise be released into the atmosphere and then injecting it into deep underground geologic formations for secure and permanent storage. Carbon dioxide from industrial users in the Houston area could be stored in nearby onshore and offshore storage sites.

An analysis of U.S Department of Energy estimates shows the storage capacity along the Gulf Coast is large enough to store about 500 billion metric tons of carbon dioxide, which is equivalent to more than 130 years’ worth of industrial and power generation emissions in the United States, based on 2018 data.

“Carbon capture and storage is not a single technology, but rather a series of technologies and scientific breakthroughs that work in concert to achieve a profound outcome, one that will play a significant role in the future of energy and our planet,” says Gretchen Watkins, U.S. president of Shell. “In that spirit, it’s fitting this consortium combines CCS blueprints and ambitions to crystalize Houston’s reputation as the energy capital of the world while contributing to local and U.S. plans to help achieve net-zero emissions.”

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