Cemvita Factory CEO on Whether Oil and Gas Industry Is Moving Swiftly Enough To Capitalize on Future of CCUS
This latest fundraising was led by Energy Capital Ventures and 8090 Partners but also included the venture arms of Mitsubishi Heavy Industries and Occidental Petroleum (Oxy), the latter of which made its first equity investment in Cemvita Factory in 2019.
The company’s CEO and cofounder, Moji Karimi, holds degrees in drilling and petroleum engineering and previously worked with Weatherford International and for reservoir diagnostics firm Biota Technology. He has been an advocate for revamping the oil and gas industry’s approach to innovation. In this Q&A, Karimi discusses the promising and not-so-promising developments he sees shaping the industry’s future in the CCUS sector.
What keeps you up at night as a former oil and gas professional who is now leading a CCUS startup?
I’m very happy that I’m doing something that I love, so what’s keeping me up at night is now mostly how to speed up our growth.
It wasn’t always like this though. When we started, it felt like I was the guy in that video where he is dancing by himself, and it takes a bit for people to join one by one but finally everyone is dancing. Right now, almost everyone is on the CCUS dance floor, which is exciting.
According to the International Energy Agency, to hold back global warming the world needs to reach a CCUS capacity of more than 7,600 megatons of CO2 per year compared to today’s total of a mere 40 megatons per year. So when we consider what realizing it ultimately requires, is there a risk that the vision of megascale CCUS is in a hype cycle?
I think there is a spectrum.
The different letters of CCUS are at different stages of market hype and technology development.
On one hand, you have CO2 sequestration and EOR which are fully de-risked, and on the other side you have direct air capture and CO2 utilization which are still being developed.
On that note, I also believe that CO2 storage is just a transitional solution until we figure out how to utilize and convert the CO2 into other valuable products. For that reason, at Cemvita we use the term “CCU$” instead. CO2 storage is a cost, but utilization is a new revenue source.
What’s the biggest factor holding back a more rapid approach to CCUS in the upstream oil and gas industry?
I think the main reason is that oil and gas executives have been reactive, and at best, not aggressive enough. In general, it seems the industry is still doing R&D with a business-as-usual mindset or as if energy transition is similar to a downturn, whereas in reality the industry is going through a massive transformation in the next decade or two.
Incremental improvements that we have relied on in the past won’t work for energy transition. We need radical solutions, and radical solutions call for radical leadership.
Some of the technologies that enable a sustainable energy mix in 2050 may not even be invented yet!
The upstream oil and gas industry has long taken a cautious approach to adopting new technologies due to the risks and capital at stake. Are there other heavy industries with similar challenges that you see as providing a template to move faster on R&D?
Tesla was founded in July of 2003 and SpaceX started in May of 2002. These two companies are less than 20 years old yet have transformed two massive industries with many established players.
That’s the type of innovation and execution that upstream oil and gas needs or we’ll be like the former Nokia CEO who said after being acquired by Microsoft, “We didn’t do anything wrong, but somehow, we lost.”
A tangible example is how the industry looks at the subsurface reservoir. Taking SpaceX as a model, the fundamental problem they solved was by making rockets reusable.
Can we make reservoirs reusable? The industry is pretty much doing no R&D on that.
Do you think the concept of lower-carbon oil and gas products—thanks to the offsetting effects of CCUS—will be warmly embraced by consumers and therefore encourage producers to go further despite the added cost CCUS brings?
No, the oil and gas industry had the opportunity to educate the public about the role that oil and gas play in the progress and prosperity that we all have enjoyed and unfortunately, we missed that window. So that led to the notion for keeping fossil fuels in the ground no matter the carbon footprint.
If you ask the average person on the street about methane, they think it’s a greenhouse gas worse than carbon dioxide and not as natural gas for power generation. The public doesn’t know about the interplay of molecules and electrons.
That said, the reality is that the world will continue to need fossil fuels and feedstocks for a long time and molecules with a lower carbon footprint will have an advantage. So, I’d say oil and gas companies don’t have much of a choice at this point not to invest in CCUS.
Whomever can figure out ways to produce the lowest- carbon hydrocarbons to be used either as fuels or feedstock will win.
If the upstream sector does not retain its role as the leader in CCUS, what other industry could take over?
CCUS is an industry sector in and of itself, but it does present an opportunity to the oil and gas industry for taking a leadership role.
That just makes logical sense, leveraging the existing talent and infrastructure in the oil and gas industry and having access to the CO2 sources. I’ve been saying that since 2018. Only a few companies have taken that leadership role with Oxy being in the forefront.
What about hydrogen production? Is this another potential business line, one some argue is verging on the hype cycle, and something that the upstream sector should not be chasing?
There is a lot of hype about hydrogen but again I think it’s all about the economical pathway that’s being considered for the interplay of molecules and electrons.
The downstream sector is already making hydrogen from methane and that can be coupled with CCUS to make blue hydrogen. Upstream sector plays a role for the storage of the CO2 captured from steam-methane reforming plants, but I don’t see it as a long-term value-add role in the hydrogen economy.
At our own company we are working on other pathways that enable the upstream sector to directly produce hydrogen.
Outside of your own developments, what specific energy transition or clean tech are you most excited about?
There are a few, I really like solutions that leverage the existing infrastructure in oil and gas but repurpose them in a sustainable way.
Geothermal, for example, you’ll still need geologists, drilling engineers, etc. Through our work at Cemvita, I also now think and cover a broader spectrum of energy transition technologies; for example I’m very interested in innovations in the mining sector to sustainably increase the recovery of key metals and minerals needed, then, of course, CCUS and downstream of CCUS for sustainable production of chemicals and polymers.
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