Oil and Gas Startups Podcast

0:00 what's going on? Well, I just welcome back to another episode of the Welling SRS podcast. We've got my queue in the house. What's going on, George? Great to be here. I'm excited. You're in

0:10 town for Sarah week. We're able to snag you. I mean, we need to make this happen for quite some time. So thank you for joining us. Pleasure. It's been my pleasure to get out of Sarah week for

0:18 this podcast as well. We've got all the big wigs in town. Um, you know, you Bill Gates was, you know, he's been making his keynotes and rounds with Daniel Chirian. And, um, who else is in

0:30 town? There's a bunch of other people. We got all the executives. Yeah. Every energy can be imagined. Totally. Yeah. I'm sure. Any other big Silicon Valley names you've seen? Oh, that's a

0:39 question. Well, Bill Gates, if he's, that still counts clearly. Yeah. Um, no, I don't think I've seen big Silicon Valley names. Grand home, say anything crazy this week? Nothing crazy.

0:50 Nothing crazy. No, no, as far as I would analyze it, nothing crazy. I think, I mean, they're clearly taking things in, in, in the right Well, I did notice as well there was another panel

1:03 which I attended with close to eight CEOs of the oil companies, of the chevrons and the exons and the petroborasses under the banner of

1:14 OGCI, and a vast part of that conversation was around methane. So that was quite good to see because obviously that's what we're doing, trying to address methane, and it's great to see that the

1:26 industry is now taking methane very seriously. So my first time at CIRA was last year, so that I can't say what it would have been five years ago, but I can imagine what it would have been in

1:38 comparison to now talking about methane. So the conversation has evolved very rapidly, and I think it's obviously you read sustainability reports, returnings reports, it's obviously a high level

1:50 bullet point for pretty much every company. Yeah, and I think there's a logic in it as well, and that's the point we've always been making as MIQ, and when we started this, it's not bad. that

1:60 there is clearly an incentive to kind of deal with methane. Methane. Methane.

2:06 Tomato tomato. Tomato tomato. And I've noticed as I'm here more days, I'll start to flip around, so this will probably get worse at the end, is that it can be addressed actually quite

2:18 straightforward by the industry. It's existing technologies, existing methodologies, and it's a huge number that can be addressed. So I can also see a total logic for the industry to take up this

2:31 challenge to address methane. Yeah. So on that, what is in my queue? So good point. So MIQ stands for methane IQ. So we're all about methane. And methane and oil and gas is a principle one.

2:46 Reason being, as I was just alluding to, it's a huge number, that's out there actually And I had actually retired. I used to work in financial markets and trading markets. And then a former

3:00 colleague of mine called me up and say, George, we need to look at me saying I'm a you mean gas No, no the leaks from the gas during the production and this was 2019 and we had some trouble finding

3:11 good numbers and then we tried to do What in banking terms is cool? What's what's the size of this thing? What's the back of the envelope calculation?

3:21 And we figured out okay because methane is 80 times more potent than carbon dioxide when it's released. It's like this is a huge number And conclusion is it is basically the equivalent So so all the

3:34 leaks and oil and gas in the whole system globally is the equivalent of all the cars on the road globally And it is eight times all the the full aviation sector So I know there's a lot of attention

3:45 around okay, can we put hydrogen in planes can we do saffin planes? Can we put batteries in planes and huge amount of headlines on that and as an engineer super exciting to talk about these

3:56 technologies? but I'm also coming from what's the impact. And so here we've got methane in oil and gas alone. Again, with existing technologies, we can address it. And the size of what we can

4:09 address is eight times the aviation sector. And so we've kind of created this goal that we think by 2030, we can address a big part of that. And that would be the equivalent of taking one billion

4:22 cars off the roads. I'm sorry to say, but that's way more than what Elon Musk is going to achieve So by then, and I'm not saying EVs over the long term is clearly going to have a huge impact as

4:33 well, but the potential impact of methane is, of solving that is enormous. So we've got to do this to buy ourselves time. And that's really, really interesting. Do you know what the number is

4:43 for United States alone? Like I'm trying to compare the United States versus global, I think - Yeah, so a lot of this is based on imprecise numbers on top of my head, United States where the

4:57 production is going. up as well. I don't know, probably in methane emissions. It's less than 20 of global, but it'd be in that kind of order of magnitude. I'd have to look it up clearly, but

5:09 anywhere between 10 and 20. Because there are lots of other oil-producing gas-producing nations. But the United States, if I just look at

5:22 gas production, what is it now? Almost 100 BCF a day Global gas production is about four times that. And on oil, I don't think the market share is large. So yeah, we eat that kind of number. So

5:33 yeah, if you look at the US alone, that potential is enormous. And the interesting thing on the US as well, one can't these days look at each region in isolation anymore. And yesterday, there

5:47 was many discussions around this. Because obviously, the US exports gas and oil, but especially gas via LNG. And there's a lot of scrutiny abroad. especially Europe, but Japan is, I've had

5:59 recently discussions with Japan and Korea on this and they want to lower the methane emissions of the gas they're purchasing. So everything is connected these days. Why is it connected? Well, it's

6:09 global climate change problems. So what happens in the United States influences Europe and vice versa. So

6:16 we've approached this globally. So what we've set up with MIQ is to create that global transparency, that global system. So that the companies can act upon it. Yeah, so your mission is to lower

6:30 the methane emissions. How do you guys accomplish that? What's the mechanism? Yeah, so the mechanism is called certification. But the driver is the theory of change, as one calls is, is that

6:42 market forces are very efficient when correctly designed and when markets forces work well. So the certification is the method underlying to create those market forces and so forth. What we're doing,

6:54 we are certifying facilities or assets, different names of operating companies, and they will be certified on their methane emissions. And we'll probably come to how that's done in the detail, but

7:06 the way it works is they then get given a grade. And that's not different than an energy efficiency grade, for example, when one buys an appliance. And that grade,

7:17 then the company now knows, and this is an independent certifier, ie. MIQ says, okay, so-and-so production facilities, an A grade or a B grade or a C grade, reflects the methane emissions.

7:29 What then can happen, that company can now sell gas to their buyers with that information attached, because that's now been vetted, certified. The buyer, and coming back to market forces, the

7:43 buyer can now make a choice. They can make a choice saying, I want certified gas, or I'm good with any gas, and there might be a price differential, I'd rather have the A grade because that's the

7:54 number where I want to stop and maybe I'll pay a bit more for this. And so what we're doing is giving the buyers a choice, just like you have in other parts, because what that will imply is that

8:06 once you have that choice, you drive the change, because the buyers will say, I want to have the up to a C grade, for example. That's what I'm buying. And previously, currently, they didn't

8:16 have the choice before certified gas arrived. They didn't have the choice There's parallels to this in the electricity markets. In the US, there's a concept called REX. So it's buying renewable

8:26 electricity that works via certificates as well. So there's quite a lot of parallels with that. The buyers, such as Google Microsoft, decide to buy all their electricity renewable. That's a

8:37 choice they can make that drives the market towards more renewable electricity. So very similar here, this will drive the markets. The markets will drive the operators to lower their methane

8:48 emissions. I have so many questions. There's so many different directions we can go in this. Oh no. Let's dive into, let's dive into your background. You know, I know you said that you were

8:58 pretty much retired, you got sucked back in. I did. You're hard charging on this mission. Where did you spend your career? Did you come from energy, you come from finance? Both, okay.

9:08 Actually, yes, by training, I'm a Dutch citizen, but

9:14 I grew up in Europe and then ended up in London, worked there for quite a long time for about a decade for a BP, the oil company, and BP is quite a big oil and gas trader. So I ended up on their

9:26 trading floors via internal program, loved it. I'm like, I'm staying here. This part of business, that's me, the vibe, the challenge, the buzz of it, and so on. And then from there, I went

9:39 into, which happens a lot in the physical trading business, then from there, I ended up at Goldman Sachs and JP Morgan, doing similar jobs, but more on what's called derivative side. Um, so

9:51 basically, uh, here you would say, I've spent a lot of my time in Wall Street in London, we say, in the city, uh, but it's, it's the equivalent, um, and then including similar jobs, then,

10:02 uh, in the last one I did was for Centrica, which is big, uh, utility in, in the UK and with global reach as well. It's a big gas buyer, for example, as I was looking after, after that,

10:14 equivalent would be here in the U S would be Florida light power or one of those style companies So in a way, my background has been seeing the different parts of what actually MIT is doing, where

10:27 you need the financial side of things, the tradability of it, but also how does the operator side of things work and what does the buyer need, which was my last experience.

10:38 But yes, I did, then after that, I retired. I needed to go skiing. I needed to go winter thing mountain biking So I didn't want to be too old for doing much more of that.

10:50 Yeah, then a former colleague of mine, she called me and four years later, I had no intention coming back. The only reason she convinced me was because this is a very different objective. And

11:02 it's, yes, I'm working, but actually it's more my hobby, my passion to do this. So I'm loving every day of it. So did you found it, Mike, or would you brought in kind of after the idea was

11:13 already settled? The idea was there, but not settled at all was like, not even a piece of paper when I joined Okay, but it was like, we might need to do a thing called certification. Yeah, so

11:23 walk me through kind of like maybe what the original thinking was and then how it evolves, things changed so quickly in the beginning stages of something trying to, you know, your manifest in this.

11:33 Yeah, it's like, what is like, what is that kind of like this mechanism? So like, why did you guys settle upon certification? Yeah, there's a lot of different ways. Yeah, there's a lot of

11:41 different ways. And it's like, in, in sustainably, it's called to the theories of change and so you do see a lot of other NGOs, for example, or advocacy groups that will say, no, we need to

11:55 get regulation is the way forward. And so they will do a lot of advocacy to change the regulation. And it's one theory of change. Other theories of changes, let's go and protest. That's another

12:07 theory of change. How do you want to bring along that change? Our theory of change is that

12:12 the markets are efficient, and specifically, methane bodies lacking to kind of create this abatement is the information. Because methane leaks, it's like hundreds of leaks left and right and

12:25 center at the operators level. And the question here is like, it literally comes down to how long is a piece of string? What's the exact measure that is good, less good, better? And so with

12:37 certification, what we bring in is, okay, here are your yardsticks, your KPIs, your metrics. And I'll go away and trade on it, transact on it, invest on this, which is and butter in the

12:50 industry. That's how the oil and gas industry operates because if they have a metric or a benchmark to compete with, they will. That's how this works. So our theory of change came very much from

13:01 that. We need to create a market. And again, based on precedence, such as we've seen in renewable electricity. And so this was a coming together of Rocky Mountain Institute in Boulder, together

13:14 with Systemic, which is an environmental consultancy in London. And that's where the idea started and very early on, they contacted me and we need somebody with all that experience to set this up.

13:25 And then, yeah, we decided to call that MIQ to operationalize this, because the operationalizing part is key here. It can't just stay in what I call an ivory tower, a piece of paper on a website.

13:39 That's interesting. But how do we do this in the reality? And that's That's kind of where we are now, so the first live certification was. only early 22, maybe late 21, so two, two and a bit

13:54 years in now. So it was zero before that.

13:59 EQT was one of the first ones and Exxon joined on one of their facilities as well. Since then BP's done older facilities, REPSO, North East, and several independent as well, pen energy for

14:12 example. And so now we've reached in two years and a bit the stage where we are certifying more than 20 of US gas, which is an enormous quantity, especially in two and a half years. Yes. And

14:28 we're very pleased to see that because it means companies are picking this up, that competition is starting and the next stage is to bring these with those companies to the buyers. So yeah, that's

14:41 kind of roughly in the summary So I'm curious, like with with EQTB one of the first. Obviously, it would be the largest natural gas producer in the US. What was the pitch to them when this was

14:51 just an idea, it wasn't commercialized yet? How was this original concept received? Yeah, so it's interesting you say that, because originally it was a concept. And still now, when we go and

15:03 speak to people outside of the US, they say,

15:07 What are people doing outside of the US? Now our answer is, Well, it's working in the US. Yes, your facility might be slightly different than the one in the US, but that doesn't matter So, the

15:16 first one is like any starting market is kind of complicated, but I think the concepts appeal to people because there

15:35 was a realisation happening then that you need an independence to state what the methane emissions are of a facility or of a company. You can't, in the past, it was the companies themselves who did

15:41 their own reporting, and including the EPA reporting in the US, that is also one's own number. But the realization was that society doesn't necessarily follow that anymore. And that's before you

15:53 go into, okay, methane emissions, there are lots of different methodologies, which one's is it? And then one is comparing apples to oranges, to mandarines and whichever ones. So that's where

16:04 MIQ kind of provided that kind of yardstick, that framework. And because I think some of the companies like EQT, who are, who've got low methane emissions, then they can come out confidently.

16:18 Well, MIQ has done the audit. MIQ is certified, so this is correct. And I think that helps those companies to prove their credentials to their buyers, to their stakeholders. And then where we

16:33 are coming from, that then drives others to have to follow.

16:38 And so it is very much what we're looking for is these tipping points and I think in the United States we've had the first one clearly as we've now certifying 20 of chaos. I'm really curious, I mean,

16:51 that's over 20 certified in the US in two and a half years, how you were able to build such trust and rapport in an environment where, so we've already established that everybody's talking about

17:04 everybody's thinking about it, but if you peel back one level below upper management and you get into where the rubber meets the road of actually doing it, you know, talk to all these different

17:13 technology providers, talk to all these different entities and it's like everybody has this question of like, what is the emissions tech stack of all these various technologies that you need to

17:22 accomplish all the things that you're talking about, right? Walk me through your methodology on like, kind of give me high level of like this certification, right? grade like A through F. Okay,

17:35 so A through F.

17:38 And how do you guys go out and give these grades and these certifications? Yeah, so I mean, you're right. There are many opinions on is the flyover from so-and-so company better than the handheld

17:50 camera from so-and-so company,

17:53 or hey, satellites will just see it anyway. So there's a lot of debate happening in there. The approach we have taken is we aren't creating the framework. So obviously we're not selling the

18:04 technology, that would be a conflict if we were to, but also we want that market to work. There's many fast-growing companies in the US doing methane, detection and monitoring and measuring

18:18 technology. So what we are doing, we're setting the standards. To get that A-grade, one needs to do, for example, four times a year, a flyover of 25 kilos per hour of detection level Now,

18:33 that's what we've written in the standards. Equally, one might have a company that says, well, actually, what if I do this 12 times a year, but with a detection limit of 50 kilos? Because I've

18:43 got this other provider and that's what they can do. And it's cheaper, for example. And that's the one I prefer to work with or it works better in my area, for argument's sake. What we then

18:52 created is equivalency tests. So whereby different technologies can be allowed, but you have to prove to basically the auditor via the standard, that that technology gives the similar qualitatively

19:05 results. And so we are what's called technology agnostic. And it's deliberate because what I want to do is for this to grow fast, and for this to grow fast, it needs to be scalable. It needs to

19:18 be hyperscalable, basically. And hyperscalability means that I don't want to spend my time trying to build the right technology, which might be the wrong technology in two years anyway. There's an

19:29 ecosystem out there of technology providers Equally, we don't do the audit. That's a third party. there are auditors out, we will accredit them. So we will say to prove that auditor is good, but

19:41 it means we can grow much faster. I don't have to create a whole team of auditors. So, and also, I don't wanna run a company of that many people anyway, but we kind of create the glue if you want

19:53 to, and then people work around that. So it's not only from a credibility perspective, that is key, because it means there are no conflicts The other advantage is this can scale, because there

20:06 are, give or take these days, we work with about 30 of these technology providers, we've built up as well, a dozen plus, all the firms that we work with, that's not us, they scale. And so

20:20 again, coming back to, we want the markets to work. We create the glue for the markets to work, and that's where we stop, for example. One of the things you mentioned, there have been other

20:30 groups who've come into the space, who are certifying things, but they were also providing technology. little bit of a conflict in my opinion and opinion of a lot of other people and so it's good

20:39 to hear that you guys are technology agnostic. I did have a chance to go to your website prior and kind of see all the technology providers very familiar with pretty much the entire list. So it's

20:49 awesome you're working with all the best people that are out there. And there's some really good people in there. I'd had

20:55 about three years ago I visited one of them and I still remember this was quite an innovative technology and was in their offices which was more like oh this is Skunkworks it's like bunch of engineers

21:08 tinkering away and I was like well this is super exciting and this company since then has done I think their first sort of second fundraising so they're all growing and it's almost like yep we're not

21:20 going to have a favorite child here I'm going to be clear because with technology agnostic but it's great to see these companies growing and I'm going to say this as as a European, the vast majority

21:31 of them are US-based, that's where the innovation is taking place.

21:35 Now, there are some companies as well in other spaces, but I also think this is an opportunity, this is a space that's going to grow. I can see the innovation from a market's perspective, from a

21:47 technology perspective is taking place here. And I think that's going to create opportunities on a global scale, because it's a global problem. So even if the where I'm coming from, and you asked

21:58 me the exact percentage on the US, which I probably should know, but I can't remember, is I'm not interested in just solving the US, because that percentage is too low for the real problem, which

22:11 is everywhere. So we need this ubiquitous technology, this underlying framework that everybody just understands, where I want to end up is people don't think about this anymore. Just like, I

22:22 don't know when this debate happened in production, when people with debating health and safety measures, there must have been a moment in history when do we put in the hard hats or not? And uh.

22:33 what is it, Caterpillar shoes working on the rigs? I don't know when that happened, but it must have been a tough debate at the time. Nobody thinks about that anymore. You just put it on the hard

22:41 hat. And so I wanna end up in a world where one just certifies, one starts to lower the emissions, a buyer will just want that information. It's just part of doing business. Yeah, on the

22:54 certifications on the grades, how did you come up with the initial standards? Right, how do you determine what is, like how do you determine the difference between an A and a C? Yeah, yeah,

23:06 yeah. Well, that's a very thoughtful question. I need to try to dig into my memory there a bit. So

23:13 what we did do a lot of studies around what's already available. So there were some, a lot of signs to be paid. So kind of what probably was feasible with existing technology. And what is also,

23:22 what is too difficult, potentially with existing technology? So we do have three pillars in total in the standards. So it's quite holistic from that perspective. So the first pillar is around

23:37 what's called an inventory, which is based upon, okay, how many valves? Where are they? What's the typical leak of such a valve? It's called a mission factors approach. Do that properly.

23:47 Because in many cases, it's not done properly, which is why the order is key to do that properly. Then the second part is around, okay, we all know those numbers are not precise enough, but it's

23:57 a starting point Then the second one is on the technologies. And so that's where we then set these norms, like for example, on the A-grade, it's different than the B-grade and so on. But then we

24:09 also have a third part, because we realized when we designed it, even with those two combines, it might not be enough to get sufficient confidence in the data. So there's a third part, and that's

24:21 called a company practices. And we will rank the companies on how they apply, for example, LDAR, it's called lead detection repair programs, how fast do they repair their leaks. how did it deal

24:33 with tank unloading? Do they even discuss methane in their management meetings? And the pending on where they are, and all of this is very precisely coded. And that's actually key in our standard.

24:46 It is coded all this. Because if you involve an auditor, it needs to be precise. It can't just be like, let's just see where they end up. No, no, no, no. The difference between A-grade and a

24:56 B-grade and C-grade is very crystal clear in the standard. The standard being just to be clear on that, that's a 100-page document. It's on our website. But the order just used that to determine

25:07 is it A or B. And so we bring those three elements together. Each of them, there's a point system against them. And then it might be, for example, that on pillar one and two, you have a C-grade

25:21 and a C-grade. And on pillar three, it's a D-grade. That will be a D-grade overall, okay? But the company knows. precisely what they need to go to get that part to a C grade. They also know

25:34 what they need to go from a C to a B. And so what we're discovering almost is that our standard in the protocols and the fact of going through the audit helps companies to improve. It's like a

25:47 blueprint. What do I need to do next? And it becomes clearly that people, we want people to compete to go towards A grades. Yeah.

25:57 But that's what the oil industry is used to. Because I don't know, I was also in the refining space at the time. And are we first quartile or are we second quartile? I was like, oh, we need to

26:07 be in first quartile. That's how decisions get made in management. And so it's a bit the same, give people that, that, that kind of comparison benchmark. Numbers work, basically. So is an A

26:19 grade today, the standards of that, the exact same as an A grade 12 months from now? So the answer to the goalposts are not going to move. No, I don't know, because I mean, an A grade is okay,

26:31 if I purely bring it down to the essence now of what's the methane intensity. So

26:37 it might be that some of the technology tweaks are changing over time as maybe technology becomes more available or cheaper. So that, and I want maybe in three years to say it's really cheap, might

26:50 as well do this 12 times a year rather than four times a year, but we are not even thinking that through to be honest. The key is ultimately the grades, because what happens as well, when the

27:02 seller transact the gas with the buyer, the information of the methane emissions is printed on there, per certificate. So for a top-of-mom memory, I think the C-grade is 37-ish grams per MMBTU,

27:16 so 37 grams of leaks per MMBTU produced of gas. So that information is on there, okay?

27:26 and expressed back again into percentages, that C-grade is 02. To put that in perspective, that's for production. In perspective, the average in the US, and we've done studies on this with a

27:38 company called Kyros and Highwood, don't fly over, so it is in measurement-informed, what we call is 10. So C-grade is amazing. It is one-fifth of the average of the United States An A-grade is

27:52 at 005, that

27:55 is 20 times better. So coming back to what I said earlier, we think we can solve 70 or 80 by the end of this decade. And then the big picture is, we've dealt with this, is the average of the

28:08 world and the US, and some of these numbers are a tiny bit up for grabs, somewhere above 2, let's call it, okay? So if we get the upstream people to below 02, that's pretty good, we're done.

28:25 By the time you're in A-grade, it's near zero definitely. So honestly, I am not going to care about, oh, that should be 001 is like rounding errors now. Yeah. And I know opinions might be

28:39 different on that, but I'm looking at the bigger picture. I wanna go from 2 to 02 and to maybe lower. Yeah. That's the bigger picture that we need to go to. So let's talk about how this is being

28:49 received in the market, right? So I'm an operator, my gas is certified. What is the obviously outside of feeling like we're doing the right thing? What are we, are we getting more for our gas

29:02 than we would naturally? And if so, do any numbers around that? So we're seeing several consequences. So first of all, this is early start of the market and we've ramped up massively the

29:16 certified gas to this 20 of US gas supply is that there's several effects that the companies are seeing is. One, in some cases, we're even seeing, then this is with companies where this private

29:29 lending involved is they can now go to their banks and say, look, I'm certified, somebody else is saying, I'm low methane. So what we're seeing is the financials and insurance companies are

29:38 starting to appreciate that. And that's a message that we also - Are they gonna break on entrance premiums? Sorry? Do they get a break on entrance premiums? As a result, maybe? I think that's

29:48 where it should go. Okay. So, and it might go there or it might be that, well, if you have not got methane of a certain level, then I'm actually not lending you anymore, or then I'm not sure if,

30:00 so those conversations are taking place, I think.

30:04 And then the second effect is the

30:08 premium on the gas. From what we are hearing is anywhere between a cent and five cents. Now, at the same time, there is, at the moment, quite a lot of certified gas available and the buyers,

30:20 they are learning about these concepts. Because first, we had to build to the concept of certified gas. Now we're in the stage of educating the buyers and the buyers. That includes the utilities.

30:30 That includes via the utilities, the PUCs. That includes the large buyers. That's going to be quite soon. The ammonia producers, for example, fertilizers, producers. And then the last one,

30:40 which is also key for the US is the LNG exporters. And so what we're now seeing, and this is suddenly turning around this year, we're seeing, I'm seeing a lot of LNG demand, for example, coming

30:51 back on wanting to understand these numbers. I think that had disappeared a bit. We were slightly disappointed with that over the last two years. But you have to see it in the context of the war

31:01 with Russia. The Europeans in the rest of the world were scrambling for gas. Any gas, any price. And that's calmed down now. That war is still ongoing, unfortunately, but the supply chain, the

31:14 supply situation has clearly calmed down gas prices are back to normal. And I can see the European saying, I need to know the emissions of my gas. And actually, I don't want to buy the average

31:24 emissions. I want to buy much lower emissions. So it's a market that's going through phases. I don't know, one could say we're in the iPhone one, something maybe two phase. That doesn't mean the

31:36 whole market is adopting this yet. So these stages will happen. Are you seeing more traction with public companies versus private companies due to hopefully seeing possibly some ROI and the

31:48 appreciation of the stock price? Are you meaning on the operator side or on the. On the operator side, yeah. I think we've got a spread amongst the operators that we work in ways, it's different

31:58 drivers, that's for sure. So I think on the private ones, it's more the banking relations, those kind of levers, and then we're seeing private equities who also just want to stop doing this.

32:10 This is where the world is going. With public companies, I think it's slightly different drivers because they're more exposed, for example And then we're seeing different drivers between, for

32:20 example, the. Large branded IOC's international oil companies and the large producers which are not as consumer branded so there's slightly different drivers But ultimately, I think what's also

32:34 happened last year and this was very different from when I started in 2019 We had to talk a lot about methane. Why methane? What is methane explaining methane? We don't have to do that. That's

32:45 much. So methane is now part of The narrative we need to address methane and oil and gas is one of the most logical ones It's where we can get the most effect. Yeah, the other effects of methane

32:57 are in agriculture But that's going to be a longer road probably and landfills. Yeah So now that we understand the incentive on the seller side What what's the incentive on the buyer side to come in

33:07 pay this premium from the certified gas? I think the on the buyer side. It's first of all currently They don't know the emissions of the gas they're buying without certified gas and the actual

33:19 information attached via a certificate seat scheme. They're almost shooting in the dark. And so the best estimate is the average and in the US that's high. And in many other countries, that's a

33:29 high number as well. So going to specific language, what scope one emissions for the operator is for the buyer, they scope three emissions, it's part of what's happening upstream. And so far,

33:42 they've all been doing the accounting for CO2, which is relatively straightforward to calculate. But not for me thing, coming back, you need a methodology. And so that's what we've introduced.

33:52 So that is one effect is at least having a number. And then secondly, where the market is now that A or B or C rated gas in the United States, that is lower than the averages. And so buyers, gas

34:05 utilities, fertilizers, they have different choices to make of how they're working towards their net zero targets. However, they have defined these And so they use concepts such as, I don't know,

34:18 RNG for example, some use carbon offsets. And now we're also talking about certified gas, for example, because the bang for buck, to be honest, on certified gas is actually quite good. And I'm

34:31 comparing three different concepts. They've each got in sustainability land, different terminologies and effects and so on, probably way beyond this here. But that's how buyers look at it. Other

34:44 possibilities that I'm going to electrify or I'm going to install windmills instead of burning gas in my power station So they have a lot of possibilities to look at. And so certified gas is now

34:54 another lever they can pull. But the nice thing about certified gas, they can do this at scale because of this multiplier effect of the

35:05 82 times when you run the calculations. And there is no limitation on or at least currently on the quantum of gas one can do. Let's say you buy 100 in volume of gas per year if you want to, bye.

35:20 RNG against that, you're going to be limited to a couple of percent because we can't produce enough of this. It's always going to be smallish volumes across a system. Certified gas, you can buy

35:31 all your volume because that's lowering the means and emissions in gas, which the oil producers can do. And anyway, 20 is there already. So again, the impact of certified gas can be very high And

35:44 then there's another important point is that when you buy certified gas, the upstream emissions are not being or lower emitted versus the other concept is afterwards, you could also offset. But

35:58 offsetting is qualitative, not as good as avoiding the emissions. And so that gives a lot of potential for the buyers. And that's what we're looking forward to pick up over the coming years So on

36:12 the offset side, having had a lot of conversations there, and I know it's evolving, so things may have changed in the last six months. But. Um, for, for quite some time, whenever you're buying

36:21 offsets, essentially what you were getting was an email with attachments of PDF saying, this is your offset. It wasn't, it's, it hasn't historically been a fluid marketplace where it's like,

36:31 you're certain, it's, it's like almost like there's like no security in that. And it can just be like this whole fraudulent offset market, right? Whenever you're actually buying certain financial

36:40 gas, like, what, like, what are you, what are you getting? Yeah. I say it's a good, I mean, it's one of, I, I had to, I traded some carbon offsets in my previous life And I wasn't

36:49 necessarily a big fan on some of the complexities involved around that. And on the, oh, pakeness of, of some of it. Um, and so with the MIQ design, we've gone to the way this needs to be very

37:02 clear to people. Where do they find the information? It needs to be trustworthy. Otherwise the whole system will just fall down. Uh, so you raise a very good point. Um, so for that purpose, we

37:11 have a concept called the digital registry. Um, and the way it works is that, uh, let's say an operator, EQT, for example, certified gas to whichever utility in the US, they both have accounts

37:24 within that system. And the certificates will go from EQT to buyer X, Y, Z. Buyer X, Y, Z then comes to us and said, Hey, yeah, I'm going to use this. I'm going to claim it. It's called,

37:35 because, hey,

37:37 I've got consumption here. Those certificates will then be canceled, disappear from the registry. And so the loop is closed. They can't be used again anymore And so that's also why we've

37:48 standardized this with an A, a B, a C, a D rating, rather than different kind of measures and it making too complex. So yes, qualitatively, there could - and we don't want - so some people

38:03 might say, oh, I want to buy the - I'm just going to use EQT now again. The EQT A-rated gas versus, I don't know, BP's A-rated gas. It's the same. It's A-rated And so it is that, that is the,

38:18 the, key of this design. Because otherwise the traders and the commercial people won't pick this up. If you look at financial markets, you need that fungibility, just like oil trading or Henry up

38:30 trading. Everybody knows what Henry up is, because that's the midpoint where you trade, and then you trade spreads from there onwards. So for us, it's a bit the same. You need

38:41 to have an A, B, B, then everybody will just get on with it and forget about it. And that's where I want this to get to, that

38:47 the buyer will know what a B-grade means, and the seller will know the trader in between, the marketer in between, and then it becomes part of daily life. Because the key is that the

38:58 decision-making for buying gas sits with traders and commercial people. It does not sit reading a yearly report of an ESG report. There are no consequences of that. So we want to bring that

39:12 information to the actual decision-makers so that they push that. all day offer it and then the markets will will do their work so you two and a half years in where do you guys where do you see

39:25 yourself in five years what is your hope well i'm going to retire again by

39:31 that's for sure but yeah 2030 is our target that we want to have the vast majority of of these running on the on the global scale and then and i'm i'm still very uh not just optimistic i think

39:42 realistic i'm Dutch we're realistic people that's just how we operate um that this is going to happen uh because of again the availability of the technology and so on and companies are picking this up

39:54 um so we want to have this uh embedded in uh lng trading systems for example a cargo gets delivered somewhere in the world boom people deliver the certificates with it don't even think about it

40:05 anymore decisions get made on what's called uh methane intensity or carbon intensity on a daily base everywhere globally i think there will be some pockets on a global basis where it might not. get

40:17 to traded markets. Now we're talking about quirky countries such as the middle of Kazakhstan, for example, because that gas stays locally or some parts of Russia. I think our theory of

40:31 change is that if we do this in the parts of the globe where there's enough trading and so enough pressure happening, that actually it lowers the access to technology. Over time, because of

40:44 technology transfer, it just happens in an industry like oil and gas, it will happen there anyway. Because by the time they want to replace their valve, because it's broken, they're going to have

40:53 to buy the new model of the valve, which takes this all into account, because that's been the pressure in the more advanced tradable

41:02 markets. I love it. You guys have a lot of partners like we already talked about. If there's any other technology providers out there that have something really neat, super cutting edge, how do

41:10 they work with you guys? They come to us, basically Yeah. And, um, I mean, we sometimes have the problem not to go too geeky and to kind of get too interested in this, but we love it. There

41:22 are lots of, on a monthly basis, we get at least one, two, three new companies coming our way. There's a lot of innovation happening in this space, which we totally encourage for that to

41:35 continue. Because I think that's the key, that keeps happening. Where we are now is not necessarily where we're going to be in five years

41:44 And that debate in technology is taking place. And it was a debate, I think, a couple of years ago, where some technology, obviously logical technology companies will do their pitch on which

41:56 technology. And I think that got a bit too stuck in this type of technology is the only solution. No, it isn't. There is no silver bullet. And quite often what we see in some of the

42:08 certifications are like three, four, five different types of technology involved and need to be combined and technology might be different if. There are mountains or there's lots of trees or it's

42:17 too hot or there's snow or you're on the water or not on the water, not a lot of wind. So you need different technologies and I think that's where this will keep evolving. And then, yeah, a big

42:31 question Mark hangs around, for example, in my view as well, for example, on satellites and there's more and more of satellites being launched. John Arnold had that new technology that he was

42:41 talking about on Twitter that is like super, super accurate, so everything in. John Arnold has this new technology that I think he invested in, potentially, is like it's supposed to be the most

42:50 accurate satellite technology that we've seen to date. And so there was a kid of threat about it on Twitter that went viral. Well, I hope that it'd be great if it gets there from what we see

43:01 currently is that the satellites are not precise enough to do this properly. The levels that we need to do the proper detecting and actually it's not just coming up with the number, that by itself

43:13 is one thing, but it's also. where are the leaks so that they can be repaired or the valves can be replaced or compressors being replaced and so on. And from what we can see that that needs still a

43:25 lot of flyovers, hands, lasers, and so on, on the ground. So,

43:32 I mean, so I think the satellites are going to be very useful to kind of catch the big emitters. It's what's called super emitters and it's going to be very useful to that, do general surveys. But

43:43 once you go into the details, you need a lot of these other technologies. But who knows, in 10 years, this might be so precise that finding the satellite is good enough. With as fast as

43:53 technology is evolving, I would never say never on anything before. So, I wouldn't predict on that one, I don't know. You know, we need certified. This is random. We need certified sushi.

44:03 We've got certified sushi. We need certified sushi. We need egg-grade sushi. There's like five places in Houston that are I've got my own little scale, and all the way down to it, there's a lot

44:12 of ass. I mean, we can probably develop that as my cue, but - We can probably - As a bit of a side show then. George, this has been awesome. Thanks so much for your time. Later. What's the

44:22 website, mikuecom? mikueorg. mikueorg. Go check it out guys. If you like this episode, go leave us a reading review. Share this with your friends.