If the latest International Energy Agency (IEA) report is any indicator, oil, and gas is an industry in decline. With trillions developed into global energy and clean tech, investment in renewables is beginning to outpace fossil fuels.
However, with that transition, more and more oil and gas wells will be abandoned and expensive to clean up.
In California, for example, many oil majors with deep pockets have more than enough money to clean up the sites, but giants like Shell and ExxonMobil began selling their Golden State sites in 2022, despite selling at a time of high oil prices, to avoid the looming liability of environmental cleanups.
In fact, at the time oil profits were so high that Governor Newsom called for a windfall tax on their profits, according to ProPublica. In spite of record profits at a time of intensifying climate change, California’s oil and gas-producing resources have been in overall decline for nearly four decades — the industry turned a corner downward with the price collapse of 2015.
Now, a first-of-its-kind study, published last month, shows cleaning up California's oil sites could cost $21.5 billion, and as oil and gas declines in favor of planet-saving lower-carbon options, the industry isn’t projected to make enough to pay for it.
However, some new technology companies might have clean and profitable solutions for old wells to give them a second, greener life. And as idle wells constantly seep methane — 11 megatons of carbon dioxide equivalent a year — the clock is ticking.
As California and Texas-based startup, Renewell, puts in its 2021 white paper, there are 2.6 million idle oil and gas wells in North America alone, “from the urban landscape of Los Angeles to the rolling plains of West Texas.” Cleaning up them all
Oil wells typically have a lifetime of about 20 to 30 years and as new facilities make less and less sense, that number is only expected to rise.
But if these wells were converted into energy storage?
Already, energy storage is necessary for renewable energy sources like solar and wind, to power our world, as these sources are inherently intermittent. When the sun isn’t shining and the wind isn’t blowing, energy storage can not only stabilize the electricity grid but can contribute to meeting demand during peak times, such as blistering hot summer days in Texas when air conditioners are turned to ten or during the looming California droughts and heatwaves that take a toll of electricity.
However, according to Renewell, energy storage at present, is expensive and carbon-intensive, but its Gravity Well system can combat both of these hurdles. According to the startup, cleaning up the over two million wells will require $187 billion, likely take more than a century, and leak more than 664 million tons of CO2 equivalent of methane.
That’s the equivalent of over 4,000 gas plants firing for a year or nearly 2 billion pounds of coal burned.
But with Gravity Well, not only would the costs fall and the methane emissions drastically reduce, but energy could be stored from renewables.
Renewell is currently partnering with oil and gas companies and if the company converts over 1.8 million idle wells, it would create 132 gigawatts of storage. That would equate to ~5% of the market share in 2050.
And they aren’t the only ones finding new uses for abandoned wells and innovative ways to clean them up.
Last year, Plug and Play Alberta, a startup accelerator, launched the second cohort of its sustainability program.
One of the startups included was Crbon Labs, a startup decommissioning wells, restoring the land to its original state, tracing emissions data with blockchain, and selling carbon credits for emissions reduced, available to both cooperations and individuals.
The plan could both reduce oil companies' exposure to costly cleanup efforts down the road and make economic sense -- even at a time of high gas prices -- with the carbon credits that these plans could unlock.
Meanwhile, Cemvita Factory, a biotech company based out of Texas (deep in the heart of oil country) announced multiple developments for its Gold Hydrogen business.
The company recently completed what it called a successful pilot program produced from depleted oil reservoirs in the Permian Basin that are ready to be plugged and abandoned.
According to the Houston-based startup, at the rate it's producing, the hydrogen only costs $1 per kilogram in the lab, which is a key milestone toward commercialization.
Cemvita's plan to convert oil and methane gas reserves into hydrogen within a well has two benefits.
Currently most of the hydrogen in the world is made by converting methane gas (which, as Foot.Notes readers know, has eight times the warming potential of carbon dioxide) using costly, and energy intensive, practices.
By using microbes, Cemvita could reduce methane emissions and cut the cost of hydrogen production -- a win-win for an industry that desperately needs to find some use for its (one-day) stranded assets.
Oil companies are going to face a long and costly transition as the global energy demand shifts to renewable sources -- these startups are making sure that the public isn't left to foot the bill.