Smart financial tool from oil and gas industry veterans ensures funds are available to seal inactive wells in the future. Image via Shutterstock.

Think back to when your first friend got their driver’s license. Everyone wanted a ride, but when it came time to fill the tank, pay for repairs and maintenance, or – worst case, perform some autobody work to resolve damage incurred in a fender-bender – the driver usually got caught holding the bag.

For the oil and gas industry, the same thing often happens with old wells that have stopped producing at an economic rate. When production is high and prices are favorable, everyone wants a piece of the action. But as soon as a well’s production slows to a crawl or the bottom falls out of the market (again), investing partners scatter like cockroaches into obscurity, leaving the majority owner with the financial and environmental burden to properly seal up the well.

Just over 100 years ago, the Texas Railroad Commission, which serves as the primary governing body for oil and gas wells developed across the state, enacted the first regulation calling for due care when plugging inactive or otherwise deemed useless wells. The policy laid the groundwork for keeping potential contaminants contained to prevent environmental and safety hazards.

Oklahoma followed suit some 15+ years later, subsequently followed by California another dozen years after that. The remaining states have enacted similar laws within just the last 40 years. But that’s not to say that the industry was not properly closing off wellbores after useful life. Nay, it merely highlights the pace at which regulatory actions move across the nation after inception in a single state.

Of particular note, but perhaps not as obvious, is the time lag between Texas’s first policies demanding the costly, albeit necessary, activities to plug and abandon (P&A) a well and the Asset Retirement Obligation (ARO), an accounting treatment introduced in 2001 that ensures companies recognize and retain the financial liability for completing end-of-useful-life requirements.

Unfortunately, ARO is truly just an accounting concept, so if a company becomes insolvent, there is limited chance the investment necessary to properly P&A a well will be available. This does not bode well for the industry, nor the environment, as valuable hydrocarbons are lost from leaking, seeping, and weeping wells across the country.

Let’s not catastrophize the potential environmental damage here, however. Highly conservative estimates made by the EPA in 2022 claim over 2 million potentially orphaned wells produce methane emissions equivalent to approximately 1% of all cars on the road across the United States. No one argues that this is acceptable, but it does put things into perspective, given that approximately 1/3 of global emissions are attributable to light duty and commercial vehicles on the road.

To bolster the industry with confidence the cash investment necessary for P&A activities will be readily available upon asset retirement, one company looked outside of energy for guidance. Embracing a model most typically associated with life insurance, OneNexus Assurance provides contractual certainty to upstream operators that funds will be available to cover the associated end-of-useful-life costs (depending on the benefit amount purchased, of course).

“Our business model provides the oil and gas industry much-needed peace of mind that capital is available when inevitable ARO funding becomes imminent and offers a preferable alternative to trust funds, surety bonds, and sinking funds as a means of prefunding decommissioning liabilities," says Tony Sanchez, founder and CEO of OneNexus, in a recent release.

The OneNexus approach allows the primary operator to collect monthly payments for end-of-useful-life costs long before the well is depleted from other invested partners.

“OneNexus Assurance is a game changer,” continues Sanchez, “It enables responsible parties to pay towards decommissioning funding in today’s dollars at a substantial discount to the ultimate plugging cost, it guarantees that a pre-determined amount decided by the client is secured for the future, and it does away with the need to chase payments later.”

While this solution does not fully resolve the problem of orphaned wells – the aforementioned 2 million (or less) wells no longer producing but not fully sealed off, either – it does at least guarantee that whomever gets caught holding the bag at the end will find some dollars inside.

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Houston researchers develop strong biomaterial that could replace plastic

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Collaborators from two Houston universities are leading the way in engineering a biomaterial into a scalable, multifunctional material that could potentially replace plastic.

The research was led by Muhammad Maksud Rahman, an assistant professor of mechanical and aerospace engineering at the University of Houston and an adjunct assistant professor of materials science and nanoengineering at Rice University. The team shared its findings in a study in the journal Nature Communications earlier this month. M.A.S.R. Saadi, a doctoral student in material science and nanoengineering at Rice, served as the first author.

The study introduced a biosynthesis technique that aligns bacterial cellulose fibers in real-time, which resulted in robust biopolymer sheets with “exceptional mechanical properties,” according to the researchers.

Biomaterials typically have weaker mechanical properties than their synthetic counterparts. However, the team was able to develop sheets of material with similar strengths to some metals and glasses. And still, the material was foldable and fully biodegradable.

To achieve this, the team developed a rotational bioreactor and utilized fluid motion to guide the bacteria fibers into a consistent alignment, rather than allowing them to align randomly, as they would in nature.

The process also allowed the team to easily integrate nanoscale additives—like graphene, carbon nanotubes and boron nitride—making the sheets stronger and improving the thermal properties.

“This dynamic biosynthesis approach enables the creation of stronger materials with greater functionality,” Saadi said in a release. “The method allows for the easy integration of various nanoscale additives directly into the bacterial cellulose, making it possible to customize material properties for specific applications.”

Ultimately, the scientists at UH and Rice hope this discovery could be used for the “next disposable water bottle,” which would be made by biodegradable biopolymers in bacterial cellulose, an abundant resource on Earth.

Additionally, the team sees applications for the materials in the packaging, breathable textiles, electronics, food and energy sectors.

“We envision these strong, multifunctional and eco-friendly bacterial cellulose sheets becoming ubiquitous, replacing plastics in various industries and helping mitigate environmental damage,” Rahman said the release.

America's only rare earth producer announces $500M agreement with Apple

Digging In

MP Materials, which runs the only American rare earths mine, announced a new $500 million agreement with tech giant Apple on Tuesday to produce more of the powerful magnets used in iPhones as well as other high-tech products like electric vehicles.

This news comes on the heels of last week’s announcement that the U.S. Defense Department agreed to invest $400 million in shares of the Las Vegas-based company. That will make the government the largest shareholder in MP Materials and help increase magnet production.

Despite their name, the 17 rare earth elements aren’t actually rare, but it’s hard to find them in a high enough concentration to make a mine worth the investment.

They are important ingredients in everything from smartphones and submarines to EVs and fighter jets, and it's those military applications that have made rare earths a key concern in ongoing U.S. trade talks. That's because China dominates the market and imposed new limits on exports after President Donald Trump announced his widespread tariffs. When shipments dried up, the two sides sat down in London.

The agreement with Apple will allow MP Materials to further expand its new factory in Texas to use recycled materials to produce the magnets that make iPhones vibrate. The company expects to start producing magnets for GM's electric vehicles later this year and this agreement will let it start producing magnets for Apple in 2027.

The Apple agreement represents a sliver of the company's pledge to invest $500 billion domestically during the Trump administration. And although the deal will provide a significant boost for MP Materials, the agreement with the Defense Department may be even more meaningful.

Neha Mukherjee, a rare earths analyst with Benchmark Mineral Intelligence, said in a research note that the Pentagon's 10-year promise to guarantee a minimum price for the key elements of neodymium and praseodymium will guarantee stable revenue for MP Minerals and protect it from potential price cuts by Chinese producers that are subsidized by their government.

“This is the kind of long-term commitment needed to reshape global rare earth supply chains," Mukherjee said.

Trump has made it a priority to try to reduce American reliance on China for rare earths. His administration is both helping MP Materials and trying to encourage the development of new mines that would take years to come to fruition. China has agreed to issue some permits for rare earth exports but not for military uses, and much uncertainty remains about their supply. The fear is that the trade war between the world’s two biggest economies could lead to a critical shortage of rare earth elements that could disrupt production of a variety of products. MP Materials can't satisfy all of the U.S. demand from its Mountain Pass mine in California’s Mojave Desert.

The deals by MP Materials come as Beijing and Washington have agreed to walk back on their non-tariff measures: China is to grant export permits for rare earth magnets to the U.S., and the U.S. is easing export controls on chip design software and jet engines. The truce is intended to ease tensions and prevent any catastrophic fall-off in bilateral relations, but is unlikely to address fundamental differences as both governments take steps to reduce dependency on each other.

Houston energy tech platform Molecule closes series B funding

energy software

Houston-based energy trading risk management (ETRM) software company Molecule has completed a successful series B round for an undisclosed amount, according to a July 16 release from the company.

The raise was led by Sundance Growth, a California-based software growth equity firm.

Sameer Soleja, founder and CEO of Molecule, said in the release that the funding will allow the company to "double down on product innovation, grow our team, and reach even more markets."

Molecule closed a $12 million Series A round in 2021, led by Houston-based Mercury Fund, and has since seen significant growth. The company, which was founded in 2012, has expanded its customer base across the U.S., U.K., Europe, Canada and South America, according to the release.

Additionally, it has launched two new modules of its software platform. Its Hive module, which debuted in 2022, enables clients to manage their energy portfolio and renewable credits together in one scalable platform. It also introduced Elektra, an add-on for the power market to its platform, which allows for complex power market trading.

"Four years ago, we committed to becoming the leading platform for energy trading," Soleja said in the release. "Today, our customers are managing complex power and renewable portfolios across multiple jurisdictions, all within Molecule.”

Molecule is also known for its data-as-a-lake platform, Bigbang, which enables energy ETRM and commodities trading and risk management (CTRM) customers to automatically import trade data from Molecule and then merge it with various sources to conduct queries and analysis.

“Molecule is doing something very few companies in energy tech have done: combining mission-critical depth with cloud-native, scalable technology,” Christian Stewart, Sundance Growth managing director, added in the statement. “Sameer and his team have built a platform that’s not only powerful, but user-friendly—a rare combination in enterprise software. We’re thrilled to partner with Molecule as they continue to grow and transform the energy trading and risk management market.”