The 2020 election results will take the energy industry one of two paths — toward the energy transition or continuing the status quo. In this guest column, an energy investor assesses the situation ahead of election day. Photo via Getty Images

The United States Presidential election is at our doorstep. The fossil fuel industry is under significant pressure and the outcome of the election could impact the speed at which exploration and production is impacted. This pressure is financial in nature, but also is operational, technological and all wrapped in physics. A mere 12 to 18 months ago, environmental, social and governance influences and overlays on E&P began and are only accelerating.

My company, Riverbend Oil and Gas, is beginning to see the industry rebound from a significant downturn in revenues, activity, and confidence in 2020 due to the impacts of COVID-19 and the OPEC price war earlier this year. The industry is battling with headwinds, including, lack of access to debt/equity capital, transaction valuations, commodity prices, shale well spacing, and other issues, all impairing market conditions.

At present, there is little to no lubrication in the system. With most talking about an oil and gas market cycle that is driven by supply and demand fundamentals over previous decades, now there is more discussion of a contrarian view of those confident of a demand recovery for oil and gas.

Since the start of energy private equity, funds were raised by general partners to support the small cap E&P space, in the late '80s, private equity became a significant participant in the oil and gas upstream space. Private equity firms became great in number as institutions desired exposure to a growing segment of the market outside of merely investing in the oil and gas public equities. This role, 30 to 35 years later, remains essential, but is currently stifled with thoughts of a declining fossil fuel world and with energy representing only about 2 percent of the S&P 500.

Hydrocarbon outlook

Looming headwinds in the fossil fuel industry include The Green New Deal, an accelerating consciousness of the carbon footprint, the Paris Climate Accord, ESG importance, and the growth of renewables. Additionally, the advent of electric vehicles presents a significant new entrant that is causing a substantial threat to oil's monopoly on the transportation sector. A collision of possible futures exists. Currently, around 1 billion vehicles today are using around 30 percent of the world's oil supply with an estimate of 4 million electric vehicles on the roads globally. Some forecasters predict around 400 million electric vehicles in 2040, decreasing oil supply demand by an estimated 6 percent.

These forecasts of human mobility are driven by the nature of human ambition and worldwide population growth. Africa, China, and India are expected to grow significantly through 2100. Moreover, all persons worldwide strive for a better life for themselves and their families — energy drives these ambitions.

Meanwhile, the capital markets for public fossil fuel companies has declined by over 90 percent from 2016 to 2019 with a continued dismal outcome year-to-date in 2020. The lack of cash flow and capital markets will likely drive less U.S. and non-nationalized produced oil and gas volumes and fewer sustainable companies. Many confident analysts predict a looming oil supply shortage in 2021 driven by these factors along with a federal lands development ban and the possible slowdown of fracking. However, others predict that peak oil demand is now and the need for fossil fuels has already reached a peak.

Assessing the candidates

The results of the election are anticipated to have significantly differing implications (should campaigning be a real signal) for the oil and gas industry. While a Donald Trump win would largely represent a status quo for the environment, a Joe Biden triumph could drive towards changes. Implications are wide ranging across the equity, credit and commodities market energy value chain.

It is important to evaluate who will have control of the House and Senate to pass said legislation. The House is expected to remain with the Democrats, comfortably winning at least 224 of the 435 seats. Recent polls have pointed toward a competitive Senate election cycle. The Republicans currently have a 53-47 Senate majority, but a Democrat favored majority of 51-49 is currently predicted.

The next question is whether the filibuster would be eliminated to push legislation through without a super majority needed; meaning Democrats could drive approvals with a 50-50 tie and Kamala Harris's vote. Although polls are pointing toward a "blue wave" for the Democrats, certain moderate democrats in oil and gas states such as Colorado, New Mexico and Pennsylvania may be swayed against major regulatory or legislative threats to oil and gas exploration and production. Additionally, elected authorities in anticipated Republican states such as Texas, Oklahoma, North Dakota, Utah, and Ohio who are home to industry trade groups and fossil fuel companies will play a significant role.

The Biden Administration has discussed several energy-related policies. These include support for climate-friendly legislation, a ban on federal lands and water permits that represented 21 percent of U.S. oil output in 2019, and an increased investment of $2 trillion over four years in clean energy technologies. To put this investment into perspective, total global energy investment from 2017 to 2019 averaged $2 trillion, and Biden's plan would add $500 billion per year. Biden would target roughly two thirds of U.S. carbon emissions focusing on transportation (40 percent) and electricity production (31 percent).

Broadly, the goal is a nationwide carbon reduction to achieve net-zero emission no later than 2050 and transition to a carbon pollution-free power sector by 2035. In order to achieve the 2050 net zero emissions goal, the world requires 2020 COVID-19 sized reductions (8 percent) every other year for the next 25 years. Throughout this energy transition, energy prices are likely to increase, and as a result, the pace of the energy transition will likely reflect the balance of societal demand to reduce fossil fuel usage and the costs (economic, convenience, speed, satisfaction) of doing so.

Renewables and hydrocarbons

In 2019, the U.S. accounted for 15 percent of global CO2 emissions (5,130 MM metric tons of CO2), down 873 MM metric tons since the U.S. peaked in 2007. The large decrease can be attributed to coal-to-gas switching, while wind generation and solar power installations also aided the decline. From 2018 to 2019 alone, coal-to-gas switching decreased U.S. emissions by 140 MM metric tons, driving the largest decrease for the year. While shifting from one end of the carbon-emitting energy spectrum to another, it is imperative to balance costs, plausibility and expectations.

Hydrocarbons can be stored for less than $1 per barrel of oil equivalent, or BOE, while renewables cost $200 per BOE. Total U.S. renewable storage capabilities can provide two hours of national electricity demand which is stored in the utility-scale batteries on the grid and in the about 1 million electric vehicles on U.S. roads. Storage, physics and costs are major drivers for a hydrocarbon partnership as the U.S. transitions to a less carbon-heavy source of fuel. While costs of wind and solar have been driven down by around 70 percent and 89 percent, respectively since 2009, the Betz Limit and Shockley-Queisser Limit do have a governor on further improvements of the current technology and materials. Similarly, subsurface oil and gas reservoirs have similar boundary conditions of physics involving ultimate recovery of resources through natural production, fracking and/or enhanced recovery techniques.

The goal of providing low cost, reliable energy to consumers, enhancing lives and providing better futures can be reached through utilizing hydrocarbon technologies in tandem with renewable sources. A vast amount of investment, research and development is still required in the renewable world, including battery storage, solar/wind efficiency, electric grid expansion and electric vehicle technology/charging stations.

According to the 2020 IEA Energy Outlook, oil and gas represented 55 percent of global energy demand in 2019 and the agency predicts that oil and gas will comprise 46 percent to 54 percent of the energy stack in 2040. This is a relatively flat market share. Coal, on the other hand, cedes market share to renewables and nuclear power, decreasing from 30 percent to 10 percent. While renewables are vital to reaching the U.S. goals of net-zero emissions, hydrocarbons are essential in backstopping U.S. energy needs and ambitions throughout this energy transition. Additionally, on a global scale, cheaply sourced and stored hydrocarbons are essential for emerging economies to advance through existing carbon-emitting infrastructure, eventually leading to renewable alternatives and global carbon reduction.

We remain encouraged for the next decade of growth and performance as we look to identify unique opportunities in the space. In a dynamic oil and gas market, Riverbend has a high degree of confidence to sustain and thrive due to our culture, performance-based team and systems. Riverbend is anchored by vigorous technical subsurface reserve assessments as well as land, accounting and commercial diligence. Additionally, Riverbend, as an energy company, is investing in the alternatives segment, concentrating on materials and services in the wind, solar and battery portions of the value chain. In a world full of human ambition, we see a need for all energy to support undeveloped nations and economies to access the opportunity of the American Dream, pursuing elimination of a "have" and "have not" world.

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Randy Newcomer is president and CEO of Houston-based Riverbend Oil and Gas, a private equity investment group specializing in the energy industry.

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Houston foundation doles out $700K for Texas chemical research

fresh funding

Houston-based The Welch Foundation has issued $700,000 in additional funding to support chemical research through two of its newest grant programs.

The foundation has named the recipients of its Welch eXperimental (WelchX) Collaboration Retreat and Pilot Grants and the Welch Postdoctoral Fellows of the Life Sciences Research Foundation Grants.

The WelchX grants were awarded to teams of two Texas researchers who presented "innovative and collaborative ideas" addressing challenges in the clean energy space, according to the foundation.

Researchers from Texas universities gathered in Houston earlier this summer to discuss the theme “Chemical Research for Grand Challenges." They then paired off into nine teams and submitted proposals for the $100,000 pilot grants. The seven selected teams, several with ties to Houston, and their research topics include:

  • Yimo Han, Rice University, and Yuanyue Liu, The University of Texas at Austin, “Stabilizing Copper Electrocatalysts for CO2 Conversion”
  • Ognjen Miljanic, University of Houston, and Indrajit Srivastava, Texas Tech University, “Ping-Pong' Afterglow Luminescence in Self-Assembled Molecular Cubes”
  • Raúl Hernández Sánchez, Rice University, and Andy Thomas, Texas A&M University, “Accelerating Magnetic Resonance Imaging Contrast Agent Discovery via Rapid Injection NMR: Improving the Detection of Lithium for Disease Diagnostics”
  • Benjamin Janesko, Texas Christian University, and MD Masud Rana, Lamar University, “Cyber Twin Chemical Ensembles for Near-Infrared-Emitting Graphene Quantum Dot Therapeutics”
  • Ivan Korendovych, Baylor University, and Dino Villagrán, The University of Texas at El Paso, “Selective Bio-Inspired Electrochemical Probes for PFAS Analysis and Degradation”
  • Samantha Kristufek, Texas Tech University, and Kayla Green, Texas Christian University, “CIRCUIT: Critical Ion Recovery using Conductive and Ultrafiltration Intelligent Technology”
  • Fang Xu, The University of Texas at San Antonio, and Hong Wang, University of North Texas, “Visualize Molecular Adsorption on Supported Ni-porphyrin Model Catalysts via Substitute Effect”

The Welch Postdoctoral Fellows of the Life Sciences Research Foundation provides three-year fellowships to recent PhD graduates to support clinical research careers in Texas.

The foundation previously announced that it would name fellows from Rice University and Baylor University who would receive $100,000 annually for three years. This year's recipients and their research topics include:

  • Teng Yuan, Rice University, “Unlocking New Chemistry of Nonheme Iron Enzymes for α-Amino Acids and γ-Lactones Synthesis”
  • Katelyn Baumler, Baylor University, "Crystal Growth of Ln2Fe4Sb5 Phases Toward the Study of Novel Quantum Properties”

“As these programs become more established, it is thrilling to see the new research our awardees are exploring,” Adam Kuspa, president of The Welch Foundation, said in a news release. “The Foundation is very pleased by the applications that we continue to receive describing exciting new research projects to advance chemical research.”

This additional funding comes on the heels of the foundation doling out $27 million for chemical research, equipment and postdoctoral fellowships earlier this summer. The foundation made 85 grants to faculty at 16 Texas institutions at the time. Read more here.

How a Houston company is fighting anxiety, insomnia & Alzheimer’s through waveforms

mental health

A Houston-based company is taking a medicine-free approach to target brain neurologically associated with mental illness.

Nexalin Technology’s patented, FDA-cleared frequency-based waveform targets key centers of the midbrain to support the normalization of neurochemicals through a process known as Transcranial Alternating Current Stimulation (tACS). Delivered via a non-invasive device, the treatment gently stimulates the hypothalamus and midbrain, helping to “reset networks associated with symptoms” of anxiety and insomnia. Early clinical evidence suggests this approach can promote healthier brain function and improved sleep.

Through its recently appointed scientific advisory board (SAB), Nexalin also aims to target Alzheimer’s disease with a clinical development pipeline supported by published data and internal data from studies involving its proprietary DIFS technology. Nexalin’s Gen-2 SYNC and Gen-3 Halo headset delivers the DIFS, which is a waveform that can penetrate deep brain structures implicated in cognitive decline and mental illness.

The board includes experts in neurology, neuroimaging and neurodegenerative diseases with Dr. Mingxiong Huang, Dr. David Owens, and Dr. Abe Scheer coming on board. Nexalin plans to initiate new Alzheimer’s-focused clinical studies in the Q3 2025 by incorporating cognitive testing, imaging biomarkers, and guided metrics to assess treatment efficacy and neural activation.

“I am excited to work alongside Nexalin’s leadership and fellow SAB members to help guide the next generation of non-invasive neuromodulation therapies,” Huang said in a news release. “The intersection of neuroimaging, brain stimulation, and clinical science holds enormous potential for treating neurodegenerative disease.”

Recently, Nexalin’s proprietary neurostimulation device moved forward with a clinical trial that evaluated its treatment of anxiety disorders and chronic insomnia in Brazil. The first of Nexalin’s Gen-2 15-milliamp neurostimulation devices was shipped to São Paulo, Brazil, and the study will be conducted at the Instituto de Psiquiatria University Hospital (IPq-HCFMUSP). The shipments aim to support the launch of a Phase II clinical trial in adult patients suffering from anxiety and insomnia. The Nexalin Gen-2 15-milliamp neurostimulation device has also been approved in China, Brazil and Oman. Its Gen 1 device first received FDA clearance in 2003, according to the company's website.

The company also enrolled the first patients in its clinical trial at the University of California, San Diego, in collaboration with the VA San Diego Healthcare System for its Nexalin HALO, which looks to treat mild traumatic brain injury and post-traumatic stress disorder in military personnel and the civilian population.

Nexalin previously raised $5 million through a

public stock offering.

Houston innovation hub announces first cohort for energy-focused accelerator

Powering Up

Energytech Nexus, a Houston-based hub for energy startups, has named its inaugural cohort of 14 companies for the new COPILOT accelerator.

COPILOT partners with Browning the Green Space, a nonprofit that promotes diversity, equity and inclusion (DEI) in the clean energy and climatech sectors. The Wells Fargo Innovation Incubator (IN²) at the National Renewable Energy Laboratory backs the COPILOT accelerator.

The eight-month COPILOT program offers mentorship, training and networking for startups. Program participants will be tasked with developing pilot projects for their innovations.

Two Houston startups are members of the first COPILOT class:

  • GeoFuels, housed at Houston’s Greentown Labs, has come up with a novel approach to hydrogen production that relies on geothermal power and methane decomposition.
  • PolyQor, which converts plastic waste into eco-friendly construction materials. Its flagship EcoGrete product is an additive for concrete that enhances its properties while reducing carbon emissions. PolyQor’s headquarters is at Houston’s Greentown Labs.

Other members of the COPILOT cohort are:

  • Birmingham, Alabama-based Accelerate Wind, developer of a wind turbine for commercial buildings.
  • Ann Arbor, Michigan-based Aquora Biosystems, which specializes in organic waste biorefineries.
  • Phoenix-based EarthEn Energy, a developer of technology for thermo-mechanical energy storage.
  • New York City-based Electromaim, which installs small hydro-generators in buildings’ water systems.
  • Chandler, Arizona-based EnKoat, an advanced materials company whose flagship product, the IntelliKoat System, is a patented two-layer thermal and weather barrier roof coating for flat and low-slope commercial buildings.
  • Calgary, Canada-based Harber Coatings, which manufactures electroless nickel coating and electroless nickel plating.
  • Dallas-based Janta Power, which designs and makes 3D solar towers.
  • Miami-based NanoSieve, a developer of gas remediation technology.
  • Palo Alto, California-based Popper Power, which has developed a platform that turns streetlight networks into resilient, maintenance-free distributed charging infrastructure.
  • Buffalo, New York-based Siva Powers America, developer of small wind turbines for farms, utility companies and others with annual energy needs of 300,000 to 2 million kilowatt-hours.
  • Los Angeles-based Thermoshade, which specializes in cooling panels for outdoor environments.
  • Waukesha, Wisconsin-based V-Glass, Inc., developer of a vacuum-insulated glass for affordable high-efficiency windows.

“These startups reflect the future of energy access and resilience innovation,” said Juliana Garaizar, founding partner of Energytech Nexus. “By connecting them directly with partners through COPILOT, we’re helping them overcome the ‘pilot gap’ to build solutions that scale.”

The startups will run pilot projects along the Gulf Coast for their inventions.