Can you describe your role at ChampionX and explain the company’s primary activities and focus areas?
My name is Shankar Annamalai and I’ve had the privilege of being part of ChampionX for nearly seven years. I currently lead our global emissions business and oversee our operations in the Permian geomarket. The Permian Basin holds a special place in the energy landscape, not only due to its rich history and significant production capacity but also because of its pivotal role in shaping the future of energy. This region is a microcosm of the broader energy challenges and opportunities we face globally, making it a fitting focus for today’s discussions.
ChampionX is a company with deep roots and a rich history that spans over a century. Our evolution mirrors the transformations within the energy sector itself. We began with a strong focus on production chemistry, providing essential solutions to enhance oil recovery and production. Over time, we’ve expanded our expertise into reservoir chemistry, offering a broad range of chemical solutions that optimize production and extend the life of reservoirs. But our journey didn’t stop there. Recognizing the growing need for integrated solutions, we ventured into the realm of artificial lift and digital technologies. Our Production and Automation Technologies group exemplifies this integration, providing end-to-end solutions that cover the entire production lifecycle of a well.
This group offers a diverse portfolio, including artificial lift systems, which are essential for maintaining production levels in aging wells. In addition, we have developed a suite of digital solutions that leverage advanced analytics and automation to enhance operational efficiency and safety. Recently, we expanded this portfolio through strategic acquisitions, such as RMS tools. These additions have strengthened our capabilities in performance optimization, allowing us to offer even more tailored solutions to our customers.
Our most recent and significant expansion has been into emissions technologies. This new business segment aligns perfectly with our overarching mission to support our customers in not only maximizing production efficiency but also in minimizing the environmental impact of their operations. We are committed to helping them reduce the greenhouse gas intensity of the hydrocarbons they produce, a goal that is increasingly critical in today’s world.
At the Permian Energy Dialogues, you will be discussing emissions, particularly OOOOb emissions, WEC, and the IRA’s impact on methane emissions. Can you share some of your initial thoughts and considerations on these topics with our readers?
As we explore the topic of emissions regulation and the implications of the Inflation Reduction Act (IRA), it’s crucial to acknowledge the intricate and multifaceted nature of this landscape. The regulatory environment is in a state of constant evolution, influenced by a complex interplay of political, economic, and environmental factors. This evolving landscape creates both challenges and opportunities for companies like ours and for the broader industry.
The inclusion of representatives from the Environmental Protection Agency (EPA) in our panel discussions is invaluable. Their presence provides a direct link between the regulators crafting these policies and the industry players who must navigate them. This dialogue is essential for ensuring that regulations are practical, enforceable, and conducive to innovation.
At the heart of our discussions is the imperative to reduce greenhouse gas emissions. The oil and gas industry has made significant strides in this area, driven by both regulatory mandates and a genuine commitment to environmental stewardship. Recent data from organizations like the Environmental Defense Fund (EDF) underscores the progress being made. However, the journey towards a more sustainable future is far from over. The challenge lies in striking a balance between regulatory rigor and economic viability. We must create a framework that encourages innovation and adoption of new technologies while also ensuring that companies can operate profitably.
During our panel discussions, we will delve into the diverse array of technologies available today that can help reduce emissions, especially in regions like the Permian. ChampionX is at the forefront of providing these technologies, offering solutions ranging from advanced optical gas imaging cameras to continuous methane monitors and aerial detection systems. Each of these technologies plays a critical role in helping operators identify, quantify and mitigate emissions.
What impact has the IRA had on your business and the industry at large? Could you elaborate on this?
The Inflation Reduction Act has had a profound impact on our industry, shaping not only regulatory compliance but also investment strategies and operational practices. The IRA introduces a combination of penalties and incentives designed to accelerate the transition to a lower-carbon future. On one hand, there are penalties for non-compliance with emissions standards, which can be significant. On the other hand, the act provides incentives for companies that take proactive measures to reduce their emissions. These incentives include tax credits, grants and other financial mechanisms that make it more economically feasible to invest in emissions-reducing technologies.
However, it’s essential to recognize that many operators were already moving in this direction, driven by a combination of market forces and a growing recognition of their environmental responsibilities. The cultural shift within the industry towards greater environmental consciousness has been palpable, particularly in the Permian. This shift mirrors the industry’s earlier transformation in the realm of safety. There was a time when safety gear like hard hats and safety glasses were not universally adopted. Today, they are standard practice, and the same is increasingly true for emissions reduction technologies. Companies are integrating these technologies into their operations not just as a regulatory requirement but as a core component of their corporate responsibility and sustainability strategies.
How would you evaluate the investments being made by operators across the oil and gas value chain in emissions monitoring? Do you believe these investments are sufficient, and if not, what incentives could encourage them to increase their efforts?
From an investment perspective, the IRA has catalyzed a reevaluation of capital allocation. Companies are increasingly factoring in the long-term benefits of reducing emissions, not just in terms of regulatory compliance but also in terms of operational efficiency and brand reputation. At ChampionX, we’ve seen this shift firsthand. Our customers are seeking out solutions that provide a clear return on investment, both financially and environmentally. Continuous monitoring of methane emissions, for example, offers dual benefits: it helps companies comply with regulations and provides critical data that can optimize production and reduce operational costs. This data-driven approach is becoming a cornerstone of modern energy operations, enabling more precise and informed decision-making.
Despite the positive trends, there remains a degree of uncertainty, particularly regarding the implementation of new regulations. This uncertainty can sometimes lead to hesitation in decision-making, as companies weigh the risks and benefits of investing in new technologies. At ChampionX, we believe that the key to overcoming this uncertainty lies in offering flexible, scalable solutions that can adapt to changing regulations and market conditions. Our focus is on providing technologies that are not only effective in reducing emissions but also economically viable and easy to integrate into existing operations.
Is the current regulatory environment conducive to methane detection initiatives? Do your clients find it easy to navigate these regulations, or are there improvements regulators could make to enhance understanding?
One of the most significant challenges we face is bridging the gap between regulatory goals and the practical realities of implementing new technologies in the field. This gap can sometimes lead to confusion and hesitancy, as companies struggle to navigate a complex and rapidly changing landscape. However, it’s crucial to approach this challenge with a mindset of continuous improvement. At ChampionX, we are guided by the principle of “going to the Gemba,” a concept rooted in lean manufacturing. This Japanese term means going to the real place where work happens. By engaging directly with field operations, we gain a deeper understanding of the practical challenges and opportunities associated with new technologies. This hands-on approach is invaluable in refining our solutions and ensuring that they meet the real-world needs of our customers.
We’ve also found that fostering close collaboration with regulators is essential. By inviting EPA representatives and other regulatory bodies to our facilities, we’ve been able to provide them with firsthand insights into the complexities of oil and gas production. These interactions are crucial for fostering a mutual understanding of the industry’s realities and the potential impacts of regulatory decisions. Our goal is to ensure that regulations do not become an impediment to innovation but rather a catalyst for it. We advocate for a pragmatic approach that recognizes the value of incremental improvements. This philosophy is captured in our belief that “not letting perfect get in the way of better.” In other words, we should not allow the pursuit of perfect solutions to hinder the implementation of good ones that can make a tangible difference in the short term.
The rapid pace of technological advancement presents both challenges and opportunities. Technologies that were considered cutting-edge just a few years ago may now be outdated. This rapid evolution underscores the importance of flexibility and adaptability in both technology deployment and regulatory frameworks. At ChampionX, we are committed to staying at the forefront of innovation, continually refining our solutions to meet the evolving needs of our customers and the industry.
Can you provide examples of successful partnerships with operators that have yielded positive results?
Our commitment to innovation and customer-centricity has yielded numerous success stories, demonstrating the tangible benefits of our technologies. It’s important to note that different companies may choose different methods, depending on their specific needs and strategies. Some may opt for aerial surveillance, others for continuous monitoring, and some for optical gas imaging.
For instance, with our optical gas imaging camera, we’ve incorporated feedback from our customers, such as the need for a tablet interface. This feature is particularly useful when an operator needs to move around a facility while monitoring. In one recent case, an operator was stationed on the opposite side of a facility when they heard an unusual noise. Thanks to the camera’s WIFI-connected tablet, they were able to view the live feed remotely and identify a leak that had been elusive. It was akin to trying to capture a rare animal on video – challenging yet ultimately successful due to the right technology. This innovation was a direct response to customer feedback, allowing for the efficient identification and capture of the leak.
On the continuous monitoring front, the technology generates a wealth of data, enabling quick responses. For example, we had a case where a customer kept receiving alerts for a tiny leak on a surface pipe before separation. Despite multiple inspections, the leak remained undetected by sight or sound. However, using an optical gas imaging camera confirmed the presence of the leak, validating the continuous monitor’s alerts. Although it was a small leak, not a “super emitter,” these minor leaks can accumulate over time, significantly impacting overall emissions. Studies, even from our competitors, demonstrate that addressing not only large but also small, persistent leaks is crucial. The continuous nature of monitoring helps manage both the duration and intensity of these emissions, underscoring the importance of addressing all types of leaks, regardless of their size.
How do you evaluate the impact of AI on your business and in the adoption of new technologies?
The integration of artificial intelligence (AI) into our systems has been a game-changer, revolutionizing the way we analyze and interpret data. We’re leveraging an enormous amount of data, and this influx has enabled us to implement a variety of abatement solutions, whether through continuous monitoring or aerial surveys. One of the exciting developments we’re seeing is how artificial intelligence (AI) is simplifying the data navigation process. For select customers, we’re currently rolling out a new AI tool. While “AI” has become a buzzword, meaning different things to different people, we’re specifically using large language models (LLMs) to enhance our capabilities.
One key advantage we’re discovering is the ease with which operators can interact with data. For example, instead of manually navigating through dashboards or exporting data into Excel spreadsheets, operators can simply ask the AI to display specific data over a selected time period. This makes it much more efficient to extract valuable insights, which can then inform subsequent actions. While we’re not yet at the stage where AI can physically fix a leak or drive out to a facility, it can provide a quick and comprehensive overview of potential issues from the office. This efficiency in data processing allows operators to have more time and focus on addressing the actual problems. We’ve seen some impressive use cases where our AI tools have enabled operators to swiftly analyze data and take faster action in resolving issues.
What are your expectations for the Permian Energy Dialogues in terms of discussions, networking opportunities, and the overall learning experience?
I truly value the Permian Energy Dialogues as it provides a platform for meaningful and, at times, challenging discussions. In terms of expectations, I’d like to revisit the concept of “going to the Gemba,” which means going to the actual place where value is created. While we won’t be at a specific oil and gas production site, gas processing facility, or compression facility, we will be together, and that’s crucial.
I believe it’s important for us to engage in difficult conversations, especially about our differing views on how to approach these issues. However, it’s equally vital to find common ground, focusing on our shared goal of reducing greenhouse gas intensity in regions like the Permian. My hope is that we can have honest discussions, acknowledge our differences, and still identify ways to improve our practices for a better future.
Often, when diverse groups come together, there’s a risk of stagnation due to conflicting opinions, making it hard to reach a common solution. However, from our position, we observe a genuine desire from our customers to do more, along with clear signals from the scientific community and regulators about what is needed. There is definitely some overlap in these perspectives, and it’s critical that we identify and act on these commonalities.
The urgency is real – every day of confusion or delay in implementing solutions is a day we continue to release more emissions into the environment. Therefore, if we can make swift decisions and implement agreed-upon actions, we can start making an immediate impact on reducing methane emissions in areas like the Permian. It’s a race against time, and every step towards a consensus and action plan counts significantly.
