Interview: ‘No silver bullet’ in sight for energy transition woes but gas at the heart of low-carbon shift

Many believe there is no one-size-fits-all approach or solution to the energy transition conundrum, as the global energy crisis hammered home the need for all energy sources we can get our hands on, including oil, natural gas, solar, wind, nuclear, and hydrogen. In this energy mix, gas, especially LNG, is carving a spot for itself, as it seems to tick all the boxes required for this era, which is marked by a growing pivot to low-carbon sources of supply. In light of this, Herman Artinian, a senior energy industry executive with 30 years in the game, pointed out during our interview that further investments in a search for more hydrocarbons and new developments hold the keys to meeting the future energy demand not just in the U.S. but also on the global scene.

With heatwaves ravaging the entire globe, fears rose that natural gas stockpiles in the U.S. and elsewhere would rapidly dwindle, leaving producers on the hook for even higher volumes of natural gas extraction. Many, including the American Petroleum Institute (API), are of the opinion that mixed messages and finger-pointing will not move the American energy sector forward to enable it to meet the energy demand growth expected in the future.

The U.S. Department of the Interior (DOI) has been entrusted with preparing a five-year offshore leasing program for the past 45 years to meet America’s energy needs for the ensuing five-year period, detailing a schedule for regular oil and natural gas lease sales, including in the Gulf of Mexico. However, more than a year has gone by since the DOI allowed the previous five-year program for federal offshore oil and natural gas leasing to lapse with no immediate replacement.

API believes this runs counter to the actions needed to bolster American energy production, as it hinders producers and creates uncertainty over further investments in the oil and gas sector. The Biden administration has made repeated calls for more production that would help balance out global cuts and could lower costs for the American consumer, however, some claim that this clashes with the heavy restrictions that have been put on natural gas and oil producers, which has made leasing, drilling, and permitting more difficult.

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In line with this, the broken permitting process is hampering U.S. energy production and further development. While reforms to the permitting process appear to be on the way, many are wondering whether these would enable America to reach its potential when it comes to building out its energy infrastructure. However, most agree that streamlining permitting would benefit the multiple energy sources – not just fossil fuels but also renewables – that the U.S. needs.

If the $157 billion in projects currently sitting in the permitting pipeline are given the go-ahead, these projects are anticipated to provide the energy Americans need to power their lives, in addition to boosting the economy through local investments. Some are optimistic that the recent bipartisan agreements should help move the process along.

In the debt ceiling package from June 2023, reforms to shorten the NEPA review process were included. Previously, permitting took an average of 4.5 years to work through, but those new reforms should unlock roughly $67 billion in energy investments.

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 “U.S. energy leadership is more important now than ever. In addition to ensuring energy security in the U.S., American energy saves consumers money and contributes trillions to the U.S. economy. If America doesn’t take the initiative in stepping up to meet global demand, another country which doesn’t produce energy as clean as we do will,” highlighted API.

In the wake of the U.S. Bureau of Ocean Energy Management’s final notice to hold the next offshore oil and gas lease sale – Lease Sale 261 – for acreage in the Gulf of Mexico (GOM) in September 2023, API filed a motion for preliminary injunction in the U.S. District Court Western District of Louisiana, seeking immediate action from the court ahead of the planned lease sale.

Ryan Meyers, Senior Vice President and General Counsel, commented at the time: “Congress’ directive is clear in the Inflation Reduction Act that the Department of the Interior must hold offshore Lease Sale 261 in the Gulf of Mexico in order to help meet the energy needs of the American people. However, the Biden administration has instead pursued illegal roadblocks, removing more than 6 million acres from this lease sale and imposing new and unjustified restrictions that target American energy workers.

“These actions place U.S. energy security in a more vulnerable position, put American jobs at risk, and jeopardize the strength of the Gulf Coast economy. Today, we are seeking swift action by the United States legal system to require the Interior Department to fulfill its obligations to the American people.”

Despite worldwide efforts to put an end to fossil fuels development, oil and gas are still very much in the game and well-positioned to keep their spot in the future energy mix, especially natural gas, which is often seen as a bridge fuel to a carbon-free world. This raises the question of how operators can slash their carbon footprint while the world continues to burn fossil fuels. It is believed that digital technologies can lend a hand in this endeavor, thus, many oil and gas players are increasingly turning to digitalization to meet the sustained energy demand.

As the energy transition spreads its wings across the world while natural gas entrenches its role as an enabler of a carbon-free world, Offshore Energy obtained views from Herman Artinian, President and CEO of Upwing Energy, a natural gas technology provider. Artinian, who holds a B.S. in Aerospace Engineering from the University of California, Los Angeles, has formed and increased the shareholder value of multiple start-up companies while previously serving as the Executive Vice President of Calnetix Technologies.

He held the role of the Managing Director of Access Energy, a Calnetix subsidiary, from 2011 to 2014, where he was responsible for multiple global licensing deals. Prior to this, Artinian was the Vice President of Business Development for Calnetix spin-off Direct Drive Systems (DDS) from 2006 to 2009 and played a major role in its acquisition by FMC Technologies in 2009.

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The boost in renewable energy is seen as the culprit for lower natural gas prices, which slipped 60% compared to highs witnessed last year, despite increased consumption to combat the sweltering summer heat. During our interview with Upwing Energy’s CEO, the need for natural gas producers to scale up digitalization to boost efficiency and continue to maintain profitability and their slice of the energy mix came to the fore. Otherwise, producers risk being left behind if they do not incorporate digital technology into the production process.

Upwing is developing and deploying a subsurface compression technology to boost the production and recoverability of natural gas from existing wells while lowering emissions intensity. The firm explains that their tool gives operators real-time access in the cloud to previously unobtainable data about well performance, which translates into more efficient operations.

As the International Energy Agency (IEA) underlines that digital innovations lower the cost of energy production by 20%, Upwing’s President and CEO provides more insight during the interview on how leveraging digital tools to tap into advanced well-performance analytics in the cloud is helping producers to get ahead of the demand curve while also curbing the carbon footprint of their operations. So, let’s delve into this. 

• OE: With energy security and climate change woes hitting the world simultaneously, the energy industry is leaving no stone unturned in its quest to ensure both issues will be tackled with low-carbon and green technologies and sources of supply. As a result, natural gas, with LNG at the helm, has already been identified as the fuel, which will play a crucial part during the energy transition era. How does digitalization help in handling the double whammy of energy security and sustainability? 

Herman Artinian: Natural gas is essential to the continued growth and operation of all nations and will play an important role in supporting growing demand as we continue to expand our energy sources. By employing digitally driven solutions, natural gas operators are able to gain a better understanding of the conditions that exist below the earth’s surface.

Advancements to digitalization are creating the opportunity to extract more hydrocarbons from a well in a safer and cleaner way than was possible before. Some of the latest digital tools optimize well performance by providing previously unobtainable information about real-time gas flow, multiphase behavior and downhole pressures. With the ability to analyze data and make adjustments without human intervention, operators can ensure optimal extraction across an array of wells.

• OE: What are the merits of digitalization for offshore and subsea oil and gas applications and in which way would it help lower the environmental impact of the continuous burning of fossil fuels? 

Herman Artinian: Digital solutions can help streamline operations and maximize efficiency. Digitalization helps monitor offshore and subsea locations more remotely and safely. Digitalization can also help to monitor for methane leaks and enables more precise production technology to be installed that can help lower emissions intensity.

• OE: The blame for the heatwaves, which are making the rounds across the globe this summer, is often placed at the fossil fuel industry’s door. However, predictions from energy agencies and analysts indicate that we will need oil and gas for decades to come. Some even claim that these fossil fuels will be needed even after the world reaches net zero. What’s your take on this and how can we curb emissions as much as possible to produce these in a more sustainable manner? 

Herman Artinian: Hydrocarbons will remain a necessary part of the energy mix for decades to come. Natural gas infrastructure not only powers roughly a third of electricity generation in the U.S. but is also used as a key ingredient in everyday essentials such as fertilizer, pharmaceuticals, textiles, plastics, and more. We need to make natural gas affordable, abundant, and sustainable to meet increasing energy demand.

We can work towards this by reducing the emissions impacts at each point along the production and delivery chain. Additionally, it is important that we find technologies that can extend the life of wells and lower emissions intensity of the extraction process. Managing uncapped abandoned wells that leak methane is also a key step in managing sustainability efforts.

• OE: With natural gas stockpiles dwindling at a fast pace, how can producers in the U.S. extract higher volumes of hydrocarbons while cutting GHG emissions?

Herman Artinian: Low-emissions-intensity tools are becoming available to aid in the extraction of hydrocarbons that have been left in existing wells, maximizing their recoverability and aiding efforts to lessen the number of new wells drilled. At Upwing, we use a unique Subsurface Compression System to heighten production of existing gas wells by decreasing bottom hole flowing pressure and causing higher reservoir drawdown.

With the use of the SCS, 8,368 tons of CO2e emissions related to drilling and fracking new unconventional shale wells are eliminated and emissions per million standard cubic feet of produced gas are reduced by 78%. The SCS also eliminates the need for surface wellhead compressors, which are a major source of methane leaks, equating to an average of 280 tons of CO2e per month.

• OE: With the oil and gas prices being down 60% from the highs witnessed last year, how can digitalization help make the higher extraction process profitable for operators?

Herman Artinian: Utilizing digital tools in the extraction process can create greater profitability through efficiency, meaning operators can extract and still be profitable, even when prices are on the lower side. Our SCS technology enables substantially increased production and recoverability of natural gas from existing wells at a dramatically lower cost than has been possible before.

By taking advantage of existing resources, we are able to reduce the need for operators to drill and frack new unconventional wells at a cost of $8.5 million per well. With our all-in calculations, this means gas from wells can be produced with a significantly higher profit margin than operators typically experience today.

• OE: The American energy industry is facing several obstacles when it comes to bringing more energy projects online regardless of whether they are related to traditional fossil fuels or emerging sectors and renewable sources of supply due to the permitting reform challenges and grid bottlenecks. Can digitalization help make such projects, which have been waiting in the wings for years, more viable to get the green light and assist during the decarbonization journey to a net-zero emissions world? 

Herman Artinian: Digital tools enable better data collection and analysis for reporting purposes, allowing projects to be evaluated and approved in a more timely manner by removing the guesswork. They allow for more efficient processes, such as installation, operations, transportation, energy conversion and connection to the grid. Digital tools also provide remote operation capabilities, allowing these processes to be optimized and accelerated.

• OE: Many countries – including the UK and the U.S. – warn that more investment is needed in oil and gas. In the UK, we recently saw that its Prime Minister, Rishi Sunak, announced more oil and gas licenses and potential licensing rounds while in the U.S. many organizations, including 18 energy trade groups that recently wrote to President Biden, are urging the current administration to finalize a new five-year offshore oil and gas leasing program. Is this the right set of moves in your opinion if we are trying to remain on track to reach net zero by 2050, as both of these nations have pledged to do?

Herman Artinian: There is no silver bullet to the energy transition, especially when balancing investments in hydrocarbons and the goal of reaching net zero. Natural gas will always be a part of the energy mix and will continue to play a crucial role in fueling the energy needs of our daily lives and current lifestyles.

We believe that introducing disruptive technologies that improve sustainability and efficiency is the only way to continue to meet demand and work towards achieving ambitious emissions reduction goals. Governments should encourage the market to choose clean solutions to work towards achieving sustainability goals while providing the affordable and available energy people need.

Creating a well-incentivized industry will be the most effective, and we’re most likely to get closer to our energy goals by rewarding companies that can push forward clean solutions that truly work. This is a complex problem, and the answer lies in governments collaborating with industry and educating the public in an unbiased way.

• OE: Are current net-zero targets even manageable at this pace or do we need to revise them to ensure a just transition on all counts? What does a just energy transition entail in your view? 

Herman Artinian: To be successful in achieving ambitious targets, all nations and individuals need to buy in or be fully committed to them. Currently, individual countries are trying to figure out what are the consequences of committing to such goals for their nations and citizens. In our view, a just transition to lower carbon emissions includes many energy sources, including natural gas, to continue to ensure global security and to sustain the energy that is necessary to support our daily lives in the process.

• OE: How does Upwing Energy, as a carbon-neutral company, and its End2End natural gas service help produce gas in a more sustainable manner? Can you tell our readers a bit more about its mission and the ways it minimizes the carbon footprint from operations in a bid to keep the environment carbon-free? 

Herman Artinian: Our End2End Service, which utilizes Upwing’s patented SCS, allows operators to recover more gas from their existing wells and reduces the need for the drilling of new unconventional wells. The SCS  eliminates the need for surface wellhead compressors, which are a major source of methane leaks, equating to an average of 280 tons per compressor of CO2e per month. Additionally, with the use of the SCS, 8,368 tons of CO2e emissions related to drilling and fracking new unconventional shale wells are eliminated and emissions per million standard cubic feet of produced gas are reduced by 78%.

Additionally, Upwing Energy is the first among oil and gas equipment and service companies to achieve carbon neutrality based on the PAS 2060 standard. We include all emission scopes in our annual certification to ensure we are calculating all emissions related to Upwing activities and make a conscious choice to offset through the development of clean energy projects.

Additionally, we have implemented an education program for our team to learn about individual actions we can take now and discuss what adjustments can be made to mitigate future emissions. As a company, our emission-reducing activities include EV charging, low-emission business travel planning, local shipping of goods and services, limited mobile and stationary machine use for testing and recycling of supplies at the end of life and in the office.

• OE: Do you believe that current digitalization techniques that are being applied to optimize the production of natural gas and oil can be repurposed for renewable sectors such as offshore wind or solar?

Herman Artinian: Yes, data analysis in the cloud will be crucial to be able to coordinate large energy projects. Whether they be renewable or hydrocarbon, technology can help streamline processes and collect previously unobtainable data. This data is especially useful when it comes to geological carbon sequestration. Without the ability to deplete the hydrocarbons in an existing reservoir, well owners do not want to volunteer their assets for CO2 injection.

Data provides us with additional insights on recoverability for each gas well, and through proper calculations, we can determine a point in time that makes the most economical sense to convert a well site from natural gas extraction to CO2 injection. Only through data will the right financial models be created to aid in investment.

• OE: Energy experts agree that innovations in energy storage capacity will be key to unleashing the full potential of renewable energy and taking the world over the net-zero finish line. Can digitalization, especially the parts designed to boost offshore fossil energy infrastructure and production process, help with this as well?

Herman Artinian: There is no single solution for energy storage. The problem statement has been around for decades, and the current ‘go-to’ is lithium-ion batteries, yet we are not sure if they will bring us across the net-zero finish line or increase the gap. Digitalization will assist in increasing the recoverability of existing assets that have been discovered and where the infrastructure already exists. Incremental production is not only the cheapest production but in most cases is the lowest carbon emissions production.

• OE: Is there anything you would like to add? 

Herman Artinian: Currently, the U.S. active rig count and drilling activity are at historical lows. While we’re operating on a sourcing delay, energy demand is always constantly increasing. Knowing this, operators need to reinvest in new discoveries and developments to supply future demand. As energy demand continues to climb, we can’t afford to neglect our upstream development activities, or we’ll pay for it in the years to come. 

The reality of renewable sources like wind and solar is that they are not fully controllable when it comes to sourcing. They absolutely play a role in our energy future, however, they’re a specific piece of the pie that will serve alongside existing sources like natural gas. Notably, thanks to new technology like ours, natural gas can check all three boxes in terms of being abundant, affordable, and sustainable, so it will continue to play a crucial role in sustaining our daily lives.

We all agree that energy needs are growing and our society as a whole needs energy to make progress. We seem to disagree on how and where to obtain this incremental energy. It is time that we start agreeing that there is no one simple solution. All solutions from renewables to fossil fuels to nuclear energy to hydrogen will need to co-exist. The sooner we can come to this agreement, the less painful the future of energy will be for society at large.

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Artinian’s views align with those of the CEO of the UAE’s ADNOC, who explains that the world needs all the energy solutions it can get, encompassing fossil fuels, renewables, nuclear, and hydrogen to enable energy security. This was also hammered home by the CEO of the Saudi oil and gas giant, Aramco, who outlined in September 2022 that ramping up oil and gas investments and devising a “more credible” energy transition roadmap was required to usher in a more secure and sustainable energy future.

The U.S. is taking steps to enrich and accelerate its renewable energy market, however, it needs to sort out grid challenges on the supply and demand side, among other things, to fully reap the benefits of renewables. Despite the hurdles in green energy’s path, during one of Offshore Energy’s previous interviews, we came to the conclusion that the U.S. offshore wind sector was poised for growth.

As the world attempts to pivot towards renewables and greener sources while building a more sustainable oil and gas sector, all sources of supply have their designated slice of the energy pie in the evolving energy landscape but natural gas seems likely to take the biggest one in the foreseeable future.

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