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00:00:00 Speaker 1
This episode of the Energy Pipeline is sponsored by Caterpillar Oil & Gas. Since the 1930s, Caterpillar has manufactured engines for drilling, production, well service and gas compression. With more than 2100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions.
00:00:28 Speaker 2
Welcome to the Energy Pipeline Podcast with your host KC Yost. Tune in each week to learn more about industry issues, tools, and resources to streamline and modernize the future of the industry. Whether you work in oil and gas or bring a unique perspective, this podcast is your Knowledge transfer hub. Welcome to the Energy Pipeline.
00:00:52 KC Yost
Hello everyone, and welcome to this episode of the Energy Pipeline Podcast. Today we'll be discussing the nature of the gas compression industry and what is driving innovation in that sector. Our guest is Kyle Jantzen, Director of Business Development at Archrock, a market leader for natural gas compression, aftermarket services, and methane monitoring. So welcome to the Energy Pipeline Podcast, Kyle.
00:01:16 Kyle Jantzen
Hey KC, thanks for having me.
00:01:19 KC Yost
Glad you're here. Glad you're here. So before we get started talking about gas compression, could you take a few minutes to share your background with our listeners?
00:01:27 Kyle Jantzen
Sure thing. I've been with Archrock and the predecessor companies for about the past 15 years. Actually started my career working for the Oklahoma Department of Environmental Quality focused on leak detection and air emissions. Which is kind of funny because over my history at Archrock, I've done a little bit of everything ranging from regulatory requirements to sales to our aftermarket services group. And now here I am full circle looking at the impact of leak detection, methane emissions, and all of that to our industry.
00:02:00 KC Yost
Great, great, great. So you've got a very well-rounded background and you know what the regulators are looking for because you were one, right?
00:02:11 Kyle Jantzen
That's exactly right. It was definitely a fun job, but being from Oklahoma when you're looking to move outside of the civil service area, there's a lot of oil and gas, and that's how I wound up in oil and gas.
00:02:23 KC Yost
Excellent. Excellent. Well, glad to have you here. Thanks for taking the time to visit with us. So let's get right into the discussion. Right now in the US, what's the top of your customer's mind in the gas compression industry?
00:02:40 Kyle Jantzen
Sure. I'd probably say over the last couple of years, we're really starting to notice that every meeting we go to, every conference we go to, everyone wants to talk about methane or call it greenhouse gases. And when you start hearing about methane, there's a couple of things that start rising to the top. I mean, number one, we're seeing regulations come out as part of the Inflation Reduction Act and also EPA's new source performance standards that's focused on methane. And what's different about that is in the past, methane has always been not considered a pollutant. And now as an industry, we're having to look at this and we're having to come up with strategies and compliance avenues to figure out how we're going to attack this. And then on top of the methane regulations, something else that's really impacting not just compression but the oil and gas industry, is this concept of methane charges. Because with the Inflation Reduction Act, we've introduced this mechanism to where we're going to look at our industry and we're going to impose, call it a charge, call it a tax, call it a fee, whatever you want to call it. It's actually going to start impacting us from a dollars and cents perspective for our methane emissions.
00:03:57 KC Yost
That's amazing. I started in the industry in the mid '70s. And when we'd have to replay a pipeline segment, we'd blow it down. We wouldn't think anything of it, let the gas out. Our biggest concern was to make sure that we didn't hit the explosive limit with the natural gas, the 5 to 15%, all that kind of thing.
00:04:20 Kyle Jantzen
That's exactly right. Even when I was at the Oklahoma DEQ, I remember that we would be looking at our emissions like your VOCs, and if something around methane popped up, we said, well, we don't care about methane. That's not a criteria pollutant. And we'd go on, you're right. Our focus around methane was number one, retain the product because we could actually make money around it. And number two, keep us a safe environment, right?
00:04:41 KC Yost
That's right. That's exactly right. We would do an analysis to see whether it was cheaper to go ahead and blow the gas off or try and capture the gas to push it into the next line segment or whatever the case may be. Yeah. So that's the way you'd approach it. So now with all of this coming on and regulations that are being imposed, what are the challenges that the gas compression industry is facing today?
00:05:09 Kyle Jantzen
Sure. So I mentioned previously that we as an industry haven't really looked at methane regulation, and I would tell you that now the challenge is we've seen a couple of regs come out and it's the Wild West on how we're going to come about complying with these. So we're trying to figure out how we do this. So number one, let me start with, I referenced news source performance standards. There's an actual regulation that came out called Quad Ob, and it's actually become enough of a buzzword that even your C-suite, when you say Quad Ob, they know what you're talking about. So if I take a step back and look at this from a compression standpoint, what Quad Ob is doing for our side of the industry is that it's making us look at our rod packing emissions to where you're actually going to have standards. You're going to have standards that are based upon flow rates, which is also something new. In the past when you talk about methane leaks, you're looking at a parts per million. But now, us as an industry, you're going to be held accountable to flow rates looking at standard cubic feet a minute. So when you look at requirements like that, you've got to figure out, Hey, am I going to go about changing my compressor rod packing once a year? Am I going to measure my volume or am I going to put some form of a control device or a closed vent system on there? And the other challenge that we're seeing as an industry is you keep hearing about sustainability, right? You keep hearing about companies quests for net-zero. And it's no secret that a lot of the compression in our industry, we burn natural gas, right? We burn a fossil fuel. So part of what we have to work towards is how do we keep moving forward with becoming more efficient with what our overall emissions are? How do we decarbonize? And we can do that through several ways. We're able to look at our partners such as Caterpillar, who are able to make a more efficient burning process where we're able to get the same amount of power for less fuel. We're able to look at technologies that are coming out that allow for us to capture the CO₂ that's coming from these emissions. So when you talk about challenges that we're facing as an industry, there's a lot of them right now, but it is exciting to work in an industry like the oil and gas industry because you've got some bright minds that are out there, right? And when you put a problem in front of us, I can guarantee you that this industry is going to figure out how to take care of that and how to move forward.
00:07:33 KC Yost
So just as a sidebar example of that, if you don't mind me sharing, I remember in 1976 when I graduated from college. My father was heavily involved in strategic planning for his gas company, and he thought I was crazy because in the mid '70s, all of the gas companies felt that we had about 8 to 10 years worth of natural gas left in the industry. And that in that length of time I would be out looking for a job doing something else because there would be no natural gas left in the United States. I'd be working overseas or whatever the case may be. Of course, with invention and development of directional drilling and all of that kind of thing, fracking and all of that of course, now we've got this huge surplus of natural gas. So I guess my point is that we've seen the industry run into hurdles over the years, and we always seem to come up with some really cool innovations to keep things going and make the environment, in this case, make the environment better, right?
00:08:43 Kyle Jantzen
Okay. So you're dead on. And I can tell you that as I go to trade shows and conferences, it's an exciting time to see the technology that's coming out because I've always been a believer that regulation drives technology. We have these regulations that are out there, and like I mentioned, you've got some bright minds that are out there, whether it's through the vendor network, whether it's through the oil and gas operators themselves. We're going to tackle this head-on and we're going to figure out how to make this work. And I'm excited to see products that are going to be coming out over the next few years.
00:09:13 KC Yost
Excellent. Excellent. That's great. So why is there a demand for gas compression solutions?
00:09:21 Kyle Jantzen
Sure. When we talk about just compression as a whole, a lot of our customers, they have a couple decisions. Number one, do they want to own their compression? Or number two, do they want for us to provide a service to them? So it can be based upon how long they think they're going to be on location. It can be based upon their just overall strategy. Do they want to deploy their capital to compression and operate it themselves or do they think it's better fit to hire a service provider such as ourselves to come out and do it? I'll also tell you that there's a supply and demand issue going on right now. There's a lot of demand for compression, and there's only so much in the market. So customers may not be able to easily go and order a package and get it deployed on site. That's why they would come to somebody like ourselves to provide available equipment. But also as you go out into the Delaware Basin, the Midland Basin, right? There is a shortage of labor out there, and that's where you're going to need a service provider because maybe a customer may want to go out and own their own compression and compress their own gas, but they may not have access to that equipment or those people. So that's where we fit in and we provide a service of providing that gas compression. And look, it's our core business. It's what we do. We're focused on making sure that that customer has the maximum uptime possible and that we're providing them a service to where it allows them to focus on what their core business is.
00:10:44 KC Yost
And speaking of that, you guys work all over the US, don't you?
00:10:47 Kyle Jantzen
We do. We've got a focus of just about every major basin that's out there, whether it's the Northeast, whether it's the Haynesville, whether it's South Texas, Midland, MidCon, the Rockies, you name it, we're there.
00:11:00 KC Yost
So with each of these locations and then you pile on the federal regulations and the industry standards that are coming on and the new company commitments. You've got regulations and rules and all of this impacting you in different parts of the country. And then overall overarching ways of looking at things. I mean, for example, Colorado hasn't allowed anyone to flare gas in years, right? So everything's a little bit... So how are all of those regulations and rules and company commitments and state regulations impacting the regions you operate in?
00:11:44 Kyle Jantzen
Sure. So it's interesting. When I first started out of college, I don't want to date myself, but let's just say 25 years ago when I was working for the state, it was interesting because environmental groups were almost like the groups you would keep in the basement to just say, Hey, fill these papers out, right? And we're going to go do this over here, over there. But it's really become in recent history and recent time to where they're at the forefront. Now, operations has to go through the environmental groups to understand what can I do? When can I do it? How do I do it? You're seeing regulations that are driving the number of units that you can have on location. They're driving what kind of control devices, what can you operate in certain instances? And it's really become state by state and also at the federal level to where this is something that we've got to understand, at what point do we trigger those emission levels? So how many units can we have on a location? And what control devices do we have to use? It's amazing the changes that we've seen over the past 20 years for how the emission standards are impacting this industry. It's even driving technology. You've seen a lot of focus for when we talk about engines that are driving these compressors with these NOx standards that are out there. You're seeing the development of the Lean burn technology, the ultra lean-burn technology that's allowing us to get to these NOx levels that are required by the state agencies that are out there. So it's really amazing just to see how far it's come and the requirements that we see come from the environmental side of the world.
00:13:23 KC Yost
So put you on the spot here.
00:13:26 Kyle Jantzen
Sure.
00:13:28 KC Yost
Which area of the country is the easiest area for you guys to work in, and which area is the toughest for you guys to work in?
00:13:36 Kyle Jantzen
Sure. I don't know that I would say easiest because you have your federal regulations that are driving a lot of these requirements, and those apply to all states. But you do see states that have more stringent requirements. And we've always known California, right? You've got California, which has your areas with the ultra, ultra low NOx requirements. But you're also seeing other states that are what I call probably more progressive from a regulatory standpoint, Colorado, Wyoming, New Mexico, you're seeing. And then you have states like Texas and Oklahoma, which we still see that they have their state requirements, but they lean a little more on the federal requirement side instead of going above and beyond what the federal requirements have. But you kind of see it all across the board. And it is a challenge that we face as an industry is that every state out there has their state requirements. It's going to be different operating in Pennsylvania than you would see operating in Oklahoma versus New Mexico.
00:14:40 KC Yost
You think it'll get to a point where you try to come up... Catalytic converter, for example, on cars. California required it. And it got to a point where, I don't know, 1979, 1980, where someone just decided, or the Japanese decided they'd send cars over all of them with catalytic converters on them so that they could sell the cars anywhere and they would... California had the toughest requirements. Are you thinking that you may get to that point where you look at the toughest requirements and just design everything to send it to... Doesn't matter, West Virginia, PA, Colorado, California?
00:15:19 Kyle Jantzen
Sure. I'm confident that our industry will figure out how to address these issues, right? And look, we are good stewards, not just Archrock, but the industry as a whole. And if the technology exists that's out there that allows us to cost-effectively manage and control our emissions, we're going to do it. And when I see that whether it's the low NOx standards, whether it's methane standards, whether it's VOC standards, if we figure out a way to cost-effectively do this, we're going to deploy these to every area that we send our assets.
00:15:53 KC Yost
Perfect. Perfect. Perfect. So you talked about this. So what are some of the solutions that your team's working on?
00:16:00 Kyle Jantzen
Sure. So I should have mentioned in the beginning that I'm part of our new ventures group at Archrock. And when we say new ventures, what that means to us is we're always looking at ways that we can continue to provide additional value and service to our customers. I think in business school, we always use the example of Kodak, right? You don't want to be the next Kodak. That doesn't seem the future evolving. So for us, what's the most proximate thing to us? It's natural gas compression. It's compression using electric motors. It's compression using gas-driven CAT engines. It's the actual compression itself. So we know that there's a focus on methane. We know that there's a focus on CO2, and when we look at the new products that we can deliver, we want to make sure that we're bringing products to the market that bring value to our customers. So there's a couple that I would talk about today. The first one, if you remember earlier, I was talking about regulations focused on rod packing. That's something that we've never really looked at as an industry. And sure, you can do the same tried and true method of saying, well, I'll just use a vapor recovery unit, or I'm just going to monitor. But we actually have brought a product to market that we designed and developed ourselves called the Carbon Hawk. What this Carbon Hawk does is it is an attachment to your rod packing from your compressors, and it also has a way that it can capture your blow-downs as well. So we said, look, we want to retain this product. I mean, at the end of the day, this is what we're selling as an industry, right? That's how we see value as we sell the gas. So we want to capture what normally would've been vented to the atmosphere, and not just for the sake of capturing our product, but for also the sake of showing compliance and then just being a steward and preventing those emissions from going into the atmosphere. So with this Carbon Hawk, it allows for you to install one of these skids on one of your locations. You can hook it up to, call it five compressors itself. So it's a small skid, six foot by eight foot, and we believe that our customers have a need for capturing their rod packing gas, also capturing those blow downs. We think that just where rod packing alone on a single call it cap 3,600 engine can be over 30 tons a year itself. So when you look at a methane charge of anywhere between 900 to $1,500 a ton, that starts adding up pretty quick. And also, look, like I told you before, I believe that our industry are good stewards to the environment. If there's technology out there that allows us to cost effectively control our emissions, we're going to do it. Something else that I would add is that we've recently invested in a company called ECOTEC. They are a company that's been around 30 years. They started in California doing biogas. And this is a prime example of in the biogas industry and waste management, they've focused on methane. That's something that happens and you want to be able to measure. So we've taken that technology because they use laser technology that allows them to detect methane. We said, there's no reason why we can't use this type of technology in the oil and gas industry. So what's exciting there is that by bringing this technology to our industry, not only are we finding great ways to detect methane, but we can also use devices like they have one called the inaudible. Which you think of it as when a cop's checking your speed or you're seeing how fast you can throw a fastball at baseball, it looks like that to where it's an open path laser that all you do is turn the thing on and you're basically checking. And we think that there's the use for a device like that to where you can make it a safer work environment too. Fire departments use this whenever they go into a burning building. They want to make sure that there's no methane, that they're not walking into an explosive environment. Same thing with us. If we can use technology that's out there to clean up the environment and make it a safer workplace for our employees, that truly is a win-win scenario right there. Also, with the rod packing that I talked about previously, we developed another product with ECOTEC called the EcoFlow. That is a device that has, looking at that rod packing emissions. Because if you remember, we talked about that there were flow rate requirements. Well, up until now, there's not really a lot of devices that you can go out there and say, well, I'm leaking at three standard cubic feet a minute. So we developed a device that's a lightweight, that's cost-effective, that you hook up to that rod packing. You look down at your device and it says you are leaking X standard cubic feet a minute. So that's what we're trying to do, is we want to bring tools for our customers to use to help them show compliance and help them retain their products, and to make sure that we're making it as easy as possible, as safe as possible for us to compress natural gas.
00:20:58 KC Yost
Man, you guys have got everything covered on the methane front, don't you?
00:21:03 Kyle Jantzen
Yeah, we're trying, and that's not even covering CO₂, which we're pretty excited of what we're doing from the CO₂ front as well.
00:21:13 KC Yost
Well, speaking of that, so what are you thinking about solutions for your customers?
00:21:18 Kyle Jantzen
So on the carbon dioxide front, this is a tough one for us, right? As an industry, because when you burn a fossil fuel in a perfect world, you're emitting CO₂ for perfect combustion. And just like methane, CO₂ has never really been considered a pollutant up until this point. So CO₂ has always had a tried and true method of being captured through using amines. Now, the problem with amines and gas compression is it just doesn't scale down. Look, if you're at a power plant, you're at a refinery, you're at a big processing facility, you probably have some pretty good methods of capturing CO₂. So what we've looked at is we've recently invested in a company called Ionada, and they are developing what we call small-scale carbon capture. And when I say small-scale, think of it as something that you put on one of these CAT 3, 600 engines. So what we want to do is we want to cost-effectively, capture that CO₂ and then sequester it. And when I say cost-effectively, one of the things the Inflation Reduction Act has done out there, there are these 45Q credits, which gives you $85 per ton of CO₂ that you capture. So from us, from a business side, we've got to figure out, okay, if that's our bar, how do we capture, transport and sequester that CO₂ for $85 a ton or less, or get as close as we can to it? And with, again, regulations driving technology, that's how we are going to decarbonize this industry is we're going to continue to work on this technology. We're going to get it more cost-effective and more cost-effective as the years go by. And then we're going to build out the infrastructure to figure out what we do, and we actually capture this CO₂ and how we get it into the ground and sequester it.
00:23:09 KC Yost
So with all of these pieces working together and worrying about the Carbon Hawk and ECOTEC and all of these moving parts and CO₂ and methane, so how are you guys using technology and data to make all of this product work together?
00:23:30 Kyle Jantzen
Sure. And KC, one of the things I would tell you that is a great advantage for us at Archrock is we have got fantastic relationships with our customers. We work with a lot of the major producers and gatherers and mainstream companies that are out there. So it's truly a partnership. We are going to meet with our customers. We're going to understand what their needs are, what is their demand, and then we're going to leverage our expertise in the gas compression industry to bring the solutions that they need to the table. So call it rod packing measurement, right? That's something that our customers needed, call it carbon capture on the engines. We're working on that. We're going to figure out how to do it, but collectively, we've got to work together and we've got to figure out what are the problems? How are we going to solve them, and what are we going to bring to market for our customers? That's how we do it.
00:24:19 KC Yost
So it's basically a collaboration, is that what I'm hearing to be? It has to be. Sure, sure, sure. Are you members of a number of industry organizations that help facilitate that collaboration, or do you guys do it on your own?
00:24:36 Kyle Jantzen
Oh, definitely. Yeah, it's definitely both. I'm a big believer in the industry's trade associations, Gas Processors Association, the GPA. Then there's also a subset of that, the GPSA, that allows service companies to participate. There's also the Gas Compression Association that we're a member of. But these trade associations are fantastic because what it does is it brings all of these operators together, all of these companies together and allows us to talk about what are the problems we're facing as an industry? What are the solutions? Who's found a solution? How can we take that technology and pass it along, right? So we 100% believe in being a part of those trade associations.
00:25:21 KC Yost
Good. Good. Good. So with all of this going on, what excites you about the future of gas compression?
00:25:27 Kyle Jantzen
Well, earlier when I mentioned that when you go to some of these trade shows, I was just at one that was focused on methane mitigation. It's pretty exciting to see the new tech that's coming out. I mean, look at your phone that's in your pocket right now. Look at all the things that thing can do. So when we take technology that has that capability, what can we do as an oil and gas industry? So whether it's taking a device the size of your phone and being able to look at all of your methane emissions that are out there, or whether it's putting exhaust control on, that's going to take out 98% of your CO2 and reduce your emissions as well. That's what truly excites me about this industry. And looking at the gas compression industry and also just natural gas as the cleanest burning fossil fuel that's out there, that's truly exciting. When you look at over the next 50 years, what can we do with the amount of natural gas that we have available within this country? And then how is we at Archrock that we move forward? And one of the things we do is we use the tagline, We Power a Cleaner America. We stand by that. We believe in it. And as part of what our daily objectives are, is how do we continue to move forward to more responsibly compress this natural gas for our customers? And as time goes on, as we find new technologies, we bring new services to the market, we're going to keep getting that lower and lower. And you mentioned earlier in one of your questions, does this eventually happen everywhere? Sure. We believe that in time with the right work from this industry and the right technologies, that's how we get there.
00:27:01 KC Yost
Excellent. So with all of this advancement and the technology, what do they say that our typical cell phone has 10 times the computing capability that all of NASA had on the moon landings or some such thing like that?
00:27:18 Kyle Jantzen
That's right.
00:27:18 KC Yost
10 times may not be enough, but nevertheless, with all of this, what are some of the products that you're looking forward to in the next near future, let's say near future, and then long term?
00:27:32 Kyle Jantzen
Sure. And not speaking just specifically to our tribe, but when you look at the industry as a whole, I'll tell you something else that's exciting is data and the access to data, right? Being able to not just leverage sites that have access to cellular connectivity, but satellite connectivity. We're at a point to where you can communicate almost anywhere on the planet. And I think about the access to data that we have. How can we leverage AI? How can we leverage information systems that allow us to get better and better? To where in a perfect world, you're never going to have a downtime event because you're going to be able to leverage all of that data to figure out where you will have the problems before you have the problems. The other thing that excites me is when you talk about what can we look forward to here at Archrock? It's figuring out how we tackle this small scale carbon capture. I think that's truly exciting that not just here in the States, but globally, we can lead this technology development and really show the world how we can move forward with capturing carbon from units such as like these CAT 36 000s.
00:28:40 KC Yost
Great. Super. Super deal. Super deal. So we're coming close to the end of our time together. Anything else you want to add to the conversation? Something I might've missed asking about?
00:28:55 Kyle Jantzen
What I would add, KC, is that as we talk about how do we continue to reduce our emissions, how do we continue to provide that valued service of compressing gas here in the domestic US? I look at it as this is not the responsibility of just one individual company, right? This is something we truly will have to tackle as a team, as an industry, as a vendor. I look at the work that Archrock has done and the CAT has done as well, being able to leverage CAT's dealers. They're corporate groups that we're able to work with to provide what we consider the industry-leading engines and service that's out there. But it's leveraging experience like that. It's taking the brainpower that we have as an industry and truly tackling these issues head on as they come out. And KC, I'm excited to see not just where we are 10 years from now, but where we are one year from now. From being able to provide a truly industry-leading compliance service and tackling these methane issues, tackling these CO₂ issues, and truly powering a cleaner America.
00:30:08 KC Yost
And it comes back to the collaboration again. You've got to have the industry leaders that are out there, but it is a collaboration, isn't it?
00:30:18 Kyle Jantzen
That's exactly right.
00:30:19 KC Yost
Very important. Very important. Okay. Well great. Well, thanks for taking the time to visit with us today. I really appreciate it, Kyle.
00:30:25 Kyle Jantzen
Well, KC, thanks for having me.
00:30:26 KC Yost
Absolutely. So if anyone would like to learn more about Archrock and the great work that they're doing, and you've heard quite a bit of it here from Kyle, you can find them on the web at archrock.com. That's A-R-C-H-R-O-C-K. com, archrock.com. So thanks to all of you for tuning into this episode of the Energy Pipeline Podcast sponsored by Caterpillar Oil & Gas. If you have any questions, comments, or ideas for podcast topics, feel free to email me at kc.yost@oggn.com. I also want to thank my producer, Anastasia Willison-Duff and everyone at the Oil & Gas Global Network for making this podcast possible. Find out more about other OGGN podcasts at oggn.com. This is KC Yost saying goodbye for now. Have a great week and keep that energy flowing through the pipeline.
00:31:21 Speaker 5
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