Kathairos has emerged as the leading North American solution for methane elimination from pneumatics, with more than 1,000 systems in operation across North America and over 40 major oil and gas producer partners.
In this post
Our Chief Climate Officer, Jacqueline Peterson sits down with Energy Intelligence to highlight our simple, reliable and affordable methane elimination solution.
The replacement of high-bleed gas-powered pneumatics with zero-emissions equipment, which has become a cornerstone of some US oil and gas producers’ climate programs, has taken on new urgency with the US Environmental Protection Agency’s recently finalized methane rule. But converting to instrument air systems that mostly rely on electricity can be costly and difficult, especially at remote well sites. That’s where start-up Kathairos comes in: The Calgary-based firm provides liquid nitrogen to actuate existing pneumatics, eliminating the need for new equipment. Energy Intelligence recently spoke with Chief Climate Officer Jaqueline Peterson about the company’s novel technology. The interview has been edited for length and clarity.
Solution
The pneumatics issue has been around for a while, but you estimate that around half a million well sites will need to be zero-vent in the next six years. Where are we now in that narrative?
I would say we’re still in the very early stages, but a lot of people are waking up and recognizing that in order to meet these requirements, they’re going to need to start acting now. And so we are seeing a lot of movement. It still very much pales to the size of the challenge at hand, but we’ve moved from our six original trial sites two years ago — those were our first commercial sites in the field — to now over 1,500 we have in operation or on order. And we’re looking this year to add several thousand more; next year, in the tens of thou- sands. We have the ability through Chart Industries to scale to meet this demand. But it’s really about making the industry also recognize what options are available out there. And that the longer they delay implementation is just that much more that will have to be done in subsequent years. So I think the industry really varies in terms of the companies that are on top of this and are moving quickly. And then there are, of course, thousands of others that probably haven’t really thought too much about this at all. So our biggest goal right now is just raising awareness to the industry that there is a simple economic solution available, even for those smaller, lower-venting well sites, along with sites that can be very remote and not close to any sort of power grid.
Where do you see the greatest need right now?
I think the greatest need right now is figuring out a solution for those remote and low-venting sites. Whether this is in New Mexico or Oklahoma, it really varies. Basically, there are these sites everywhere, especially the basins that have really been built out over decades, that do have, still, lots of devices operating that are not new, and that would be very costly to retrofit, for instance. That’s really what we’re going to need to solve. I think that there’s still a lot of work to do with the really low-hanging fruit — those that are close to electric grids and larger sites where the economics are more favorable ... where they generate more revenue in a given year.
What is the primary advantage of liquid nitrogen?
Because nitrogen is inert, you can, for whatever reason, switch back to using fuel gas if you were to need to, so you never need to worry about any lost production. When you’re operating an air system, you can introduce air into the fuel line. Of course, it’s combustive. So, as a result, if a grid goes down, or a part needs to get fixed, your entire site is shut in.So we’re actually operating as a backup on some sites with instrument air systems that are already installed. Because invariably, the grid goes down a few times a year, and just losing that production for those two or three days can cost our customers millions of dollars, essentially, if they’re not able to meet their nominations. So we’ll have a tank sitting there that’s just ready to kick in.
Well Sites
Why target the super-low-emitting sites? Why are they important?
Because there’s so many of them. I think that the vast majority of the facilities that are operating are these very small sites. If we, if we estimate around, say, 400,000 locations in the US, and I think that’s pretty conservative, I would estimate three quarters of those are those really low-venting sites. Why is this such a big deal? When you multiply it out to that aggregate, it really does start to make a real climate impact.
Cost
Can you estimate how much it would cost to install one of your systems versus electrifying or a different type of device?
It’s essentially a fundamentally different model in that we’re a rental-based model similar to a propane system. So you rent the tank and then you pay for the amount of nitrogen that actually gets used, and this is nice because the cost of the system is pretty much directly reflective of the amount of methane that otherwise would have been vented. So if you have a really small site that doesn’t vent too much, you’re going to have a small tank and not use much nitrogen. So then you’re looking at a few thousand dollars a year, for instance… We’re also looking at developing solutions that are even cheaper and designed for those super-low-emitting sites. But then, of course, as you scale up to bigger sites, they are we’re going to have bigger units that do cost a bit more. But the abatement cost, on that per-ton basis, is still very reasonable. And especially when you’re comparing to an instrument air, they’re very similar in terms of those really big sites where you have good electrical access.
Regulations
What have you heard from your customers on the methane fee proposed by the EPA?
There is big concern. If you’re a small producer and you only have a handful of sites, this isn’t likely going to apply to you. But many producers have thousands of sites that are venting methane, and they’re facing taxes or fees or charges, whatever the term is, of millions of dollars a year to become compliant. So this is very much front and center for them and is definitely causing them to accelerate their deployments and try to move fast. The sooner that they’re able to convert wells, the less tax they’ll have to pay. So this is a very, very meaningful incentive and it comes up in basically all of our conversations.
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