Low-Carbon Tech Dominates Recent Spate of Upstream Venture Investments
It has been a busy month so far for the oil and gas industry’s venture capital groups. Find out which operators are making moves and which technology developers are turning heads in this latest roundup.
The first 2 weeks of April have brought several reminders that the low-carbon technology train is continuing to move deeper into the investment portfolios of oil and gas producers. Below is a list of some of the biggest new investments and partnerships that have taken place during this span.
Chevron’s First Bet on Offshore Wind
Chevron is making its first foray into the burgeoning wind energy sector after its venture capital division shared yesterday plans to invest in a startup called Ocergy. The Nevada-based engineering company has developed a modular-design approach to floating foundations for wind turbines.
This latest investment round included Norwegian industrial manufacturer Moreled which will tap its offshore wind business to help build the foundations that are aiming to be low-cost and therefore scalable. The companies expect the first commercial installations will happen sometime in 2025.
Chevron did not release the amount of its investment, but said it is part of a $300-million annual fund it set up to invest in firms it considers to be enablers of the energy transition. Analysts noted that the deal marks the first investment by a large US-based oil and gas company into offshore wind energy.
Chevron has made a few other recent investments in the low-carbon tech space, including one earlier this month in a Denver-based startup called Starfire Energy which is developing “carbon-free” ammonia and hydrogen production technology.
The supermajor has noted that its strategy is not to invest directly into renewable energy projects, as other large operators have done, but rather to invest in the potential upside of emerging technologies that will be used in the renewable market.
A Platform To Verify Emissions
Project Canary announced on 6 April that it raised $10 million in a Series A funding round that was led by a group of energy-focused investors that includes Quantum Energy Partners. The Denver-based startup bills itself as an “international environmental standards company” that provides companies with a platform to track and manage their emissions data in real time.
The value proposition for oil and gas companies boils down to the need to prove that they are meeting stated emissions targets and able to gain a competitive advantage when marketing low-carbon intensity products.
Following the investment round, Chesapeake Energy announced this week that it was tapping Project Canary for a pilot project at some of its well sites in the Marcellus Shale and Haynesville Shale. Chesapeake said the ultimate goal is to prove that it can produce and find a market for “responsibly sourced natural gas.”
Project Canary says that its emissions monitoring and verification system has been used on more than 5,000 wells in the US, accounting for 85% of transactions involving responsibly sourced gas.
Oxy's Low-Carbon Efforts To Include Bioethylene Plant
Occidental Petroleum (Oxy) and Cemvita Factory said on 6 April that they are planning to build a bioethylene pilot plant that will use jointly developed technology to convert CO2 into the chemical feedstock. The plant is expected to start up next year and comes after Oxy’s low-carbon venture arm made its initial investment in Cemvita in 2019.
The Houston-based companies said in their announcement that their process of making bioethylene can be done at a lower cost and with a smaller emissions footprint than existing methods which rely on refining sugar cane. The pilot will rely on a microorganism that Cemvita has genetically engineered with a banana gene to require only CO2, water, and light to produce the ethylene that can be used in Oxy’s industrial chemical business.
Climate Fund Taps Advanced Tank and Site Monitoring Firm
Andium, a field monitoring and communications specialist, raised $15 million in a Series A investment round that was led by the venture arm of the Oil and Gas Climate Initiative (OGCI), a consortium formed by a dozen of the world's largest oil companies.
New York City-based Andium has developed a line of video-based services that use thermal imaging and object detection software to monitor flaring conditions. Operators in the US are also using the company’s technology to monitor tank levels, for site security, and to watch for safety hazards that include unattended fires.
Making Chemicals With Light, Not Heat
Syzygy Plasmonics closed a $23-million Series B funding round with energy investors that included Norway’s Equinor. The Houston-based startup is developing photocatalytic technology that uses LED lights instead of heat to generate the chemical reactions needed to make plastics, semiconductors, LED lights, and metals.
Syzygy is born from university research and says its approach will lead to reduced costs and emissions by removing fuel combustion from the chemical manufacturing process. However, it said the first commercial product is to be a hydrogen production system that will be half the cost of electrolysis.
The funding was led by Hong Kong-based venture capital firm Horizon Ventures and included several of the Houston-based startup’s original seed investors. Syzygy previously received about $12 million in grants from the US Department of Energy and US National Science Foundation.
Building a Hydrogen Business
Baker Hughes joined two other companies this month in forming a €260 million fund (equal to about $311,540) that will be used to build large-scale green hydrogen production infrastructure.
Baker Hughes is committing about a fifth of the initial funding while fuel cell developer Plug Power will provide €160 million. Cryogenic equipment maker Chart Industries is providing the remainder. The new fund, called the FiveT Hydrogen Fund, will focus on technology developers that produce, store, and transport green hydrogen.
Data Analytics Firm Gets Big Boost
While this current venture investment cycle is dominated by low-carbon prospects, the industry’s digital revolution continues. Seattle-based Seeq Corp. said on Tuesday that it secured $50 million in new funding which it will use to scale up its market presence.
The Series C round was led by technology investor group Insight Partners but also included some of Seeq’s initial oil and gas investors: Altira Group, and the venture arms of Chevron and Saudi Aramco. To date, the company has raised about $115 million in total equity funding.
Seeq’s software is aimed at helping large industrial companies leverage their machine and sensor data that have traditionally been difficult to analyze quickly or easily. Outside of the oil and gas sector, Seeq’s customers also include pharmaceutical, chemical, utility, and renewable energy companies.