Q&A

O&G exec: Houston is where the future of energy is taking shape

Navigating the energy transition is a relay race, and the baton is in Houston, says this energy executive. Photo courtesy of SCS

Earlier this month, a West Texas-based oilfield equipment provider announced that it was opening an office in the Ion Houston. It's all a part of the company's energy transition plan.

SCS Technologies, based in Big Spring, Texas, has a new strategy and innovation-focused office in the Ion, the company announced last week. The company, which provides CO2 capture measurement and methane vapor recovery equipment for the energy, industrial, and environmental sectors, also announced René Vandersalm as the new COO.

These are just the latest moves for the company as the world moves away from hydrocarbons and toward a greener future, CEO Cody Johnson tells EnergyCapital, explaining that he recognizes Houston has a role in the energy transition.

"This is a relay race – a race that has already started," he says. "Houston is the place where the baton will be handed off – it’s the place where the race is occurring. SCS Technologies is determined to be part of this solution dreamed of and planned in Houston and then executed in the Permian Basin, where we call home."

In an interview with EnergyCapital, Johnson weighs in on the new office and the future of his company.

EnergyCapital: How has SCS’s business evolved amid the energy transition?

CodyJohnson: SCS Technologies was founded to design and fabricate customized Lease Automated Custody Transfer units in the Permian Basin. These LACT units were used primarily to measure the quality and quantity of crude oil at all points of custody transfer. Essentially, SCS Technologies produced the premier "crude cash registers" for the Permian Basin.

As the oil and gas industry has adapted into the energy transition industry, our customers and the communities we operate in have a growing need for SCS Technologies to use our design and fabrication of measurement skids to measure the quality and quantity of CO2 or to design and fabricate methane — and other vent gases — Vapor Recovery Units. SCS Technologies’ design and fabrication expertise in measurement skids, pump skids, and compression skids, coupled with our Permian Basin based training and fabrication campus, ideally positioned us to answer the call to fill the expertise and capacity gap.

EC: How are you preparing for the future of energy?

CJ: Society has been powered for the past 100 years or so by the management of hydrocarbon molecules. The essential tools for that have been and continue to be oil rigs, pipelines, and refineries in large part. This has given society many benefits but at a price to the environment that isn’t sustainable. Over the next 50 years, society will complete a transition away from managing hydrocarbon molecules and towards managing electrons. Those electrons are created by wind, solar, geothermal, or nuclear processes and travel down copper wires. Managing this transition that is already occurring and working together to do it in the near-term future of energy.

As we execute this transition over the next several decades from managing molecules to managing electrons to provide energy, molecule management companies must find ways to reach net zero emissions in their management practices. This means primarily capturing and managing methane vapors and capturing and sequestering CO2. This is starting in 2023 in a meaningful way and needs to continue past 2030 and probably past 2050 to have any chance to meet the globally shared social goal to achieve net zero emissions by 2050 and stay below a maximum increase of 1.5 degrees C in global temperatures.

The clock is ticking, and we are behind. The largest molecule management infrastructure investment in history must happen for us to reach these goals. It's mission-critical as one of the three things we simply cannot fail at to achieve net zero by 2050. SCS Technologies is very focused on being an intentional part of the tremendous supply chain buildout to support the infrastructure buildout.

EC: How does the new office in the Ion support these plans?


CJ: SCS Technologies needs to collaborate with the brightest minds working on the energy transition challenges. To contribute meaningfully to the overall effort and to be the thought leader in the methane vapor recovery and CO2 compression and measurement niche, we need to be at the heart of the energy transition collaboration community. That beating heart is the Ion in Houston.

EC: What role does your new COO, René Vandersalm, play in SCS evolving with the energy transition?


CJ: René is a proven executive in growing mission-critical design and fabrication capacity without sacrificing quality. René’s experience, capabilities, and global network will play a key role in our path forward.

EC: Based in West Texas, SCS has a growing presence in Houston. Why do you see Houston as a leader in the energy transition?

CJ: West Texas has an amazing group of oil and gas professionals and infrastructure. We are proud of that heritage and will always maintain our roots and foundation there. Houston has the only community of engineers, scientists, universities, companies, investors, and key professional service providers that can deliver on the buildout of the molecule management infrastructure required to buy the electron management infrastructure folks time to transition fully to green energy after 2050.

This is a relay race – a race that has already started. Houston is the place where the baton will be handed off – it’s the place where the race is occurring. SCS Technologies is determined to be part of this solution dreamed of and planned in Houston and then executed in the Permian Basin, where we call home.

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This conversation has been edited for brevity and clarity.

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A View From HETI

The combined technology portfolios will accelerate the introduction of promising early-stage decarbonization technology. Photo via Getty Images

SLB announced its plans to combine its carbon capture business with Norway company, Aker Carbon Capture.

Upon completion of the transaction, which is expected to close by the end of the second quarter of this year, SLB will own 80 percent of the combined business and ACC will own 20 percent.

According to a SLB news release, the combined technology portfolios will accelerate the introduction of promising early-stage decarbonization technology.

“For CCUS to have the expected impact on supporting global net-zero ambitions, it will need to scale up 100-200 times in less than three decades,” Olivier Le Peuch, CEO of SLB, says in the release. “Crucial to this scale-up is the ability to lower capture costs, which often represent as much as 50-70% of the total spend of a CCUS project.

The International Energy Agency estimates that over one gigaton of CO2 every year year will need to be captured by 2030 — a figure that scales up to over six gigatons by 2050.

"We are excited to create this business with ACC to accelerate the deployment of carbon capture technologies that will shift the economics of carbon capture across high-emitting industrial sectors,” Le Peuch continues.

SLB is slated to pay NOK 4.12 billion — around $379.4 million — to own 80 percent of Aker Carbon Capture Holding AS, which owns ACC, per the news release, and SLB may also pay up to NOK 1.36 billion over the next three years, depending on business performance.

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