Executive Q&A: Shale Solutions Go Natural

As the oil and gas industry seeks ways to lessen its impact on the environment while meeting the needs of energy users and wants of investors, some companies are turning to chemicals made from renewable sources to green up their operations.

Use of biosurfactants produced by microorganisms have been emerging within the industry in recent years as a sustainable biotechnology to replace synthetic petroleum-based surfactants. The surge takes place as operators aim to squeeze more resources from declining reservoirs, counting on these biochemicals to improve the mobility of hydrocarbons in EOR operations, strengthen fracture networks or achieve other goals that may involve lowering surface or interfacial tension in flow assurance.

The biosurfactants market size surpassed $1.5 billion in 2019 and could grow over 5.5% CAGR between 2020 and 2026, according to a Global Market Insights report. Higher demand for biosurfactants, which are used mainly to manufacture detergents and cosmetics, is driven by rising consumer preference toward use of bio-based products mainly in North America and Europe due to their environmental-friendly properties.

Cresson, Texas-based Integrity BioChem (IBC) is among the manufacturers of biopolymer-based products for the oil and gas industry. IBC CEO Jimmy Jett said taking the sustainable route when choosing which products to use in the oil field does not mean having to sacrifice price or performance.

“You can actually make the transition and you don’t have to go to your shareholder and say, ‘Hey, we’re green now, but all the profits gone,’” Jett told Hart Energy. “That’s a tough pill for anybody to swallow. Our goal is to be able to help people transition to a sustainable chemical platform and then go high-five their shareholders because they’re actually driving value for the company. We are not here to help our customers lose money and then check a sustainability box.”

He shared thoughts on the market and how IBC is navigating today’s headwinds and what could come in the future.

Hart Energy: How is the biopolymer market faring these days compared to when the company started in 2017?

Jett: We’ve been helped by a very interesting supply chain crisis. As the supply chain, especially on synthetic surfactants has gotten tighter, we’ve benefited because people are starting to migrate to other options. Thank goodness our bio-based surfactants are vegetative sourced and sourced in the U.S. So, we’ve actually benefited from some of the supply chain disruptions. What’s nice about that is we’ve been able to transition some of these chemistries because our products perform as good as some of the synthetics. It’s been a good transition for us.

Hart Energy: Is the company experiencing any inflationary pricing pressure?

Jett: Everybody is experiencing that to some degree. We are very fortunate in the United States because most of the major crops in the U.S. are so subsidized by the United States government that there’s a little bit more stability than some of the traditional chemistries out there. So, we are experiencing a little bit of pricing pressure on some of our vegetative additives but not like not like the synthetic market.

Hart Energy: Are there factors happening in the oil industry or the market in general that’s causing IBC to rethink anything as a company as far as products, strategy or operations?

Jett: Absolutely. The energy space in general has typically been on the on the tail end of change when it comes to sustainability, but there is national and global pressure to reduce carbon output and just have good practices in the space. A lot of the industry leaders like Liberty [Oilfield Services], Halliburton and some of the big companies on the forefront of change have really made it a part of their policy to enact good practices. Whether that’s reducing the number of trucks on the road by moving toward more concentrated products or utilizing products like ours—sustainable chemistry—I think that mix is being implemented across a wide variety of customers and service companies in the space. So, we’ve seen a significant change over the last two years.

Hart Energy: Why would some companies be hesitant of replacing synthetic chemicals with bio-based surfactants, and what are you saying to convince them?

Jett: There’s been a lot of sustainable products on the market over the last 10-15 years, and it’s always come down to performance and price. What’s typically been tough for companies to swallow is that you’re telling somebody, ‘You need to use this; it’s more sustainable’ and they’re saying, ‘I have shareholders I report to and I don’t necessarily want to pay for that.’ The energy space is highly technical and everything gets put through an array of tests to prove that there’s no compatibility issues and the performance meets existing standards. A lot of times, the sustainable products just didn’t meet those standards.

Now, what you’re seeing is you have some great companies out there that are offering solutions that actually improve performance and sometimes can reduce cost. It’s been a lot of fun to be a part of this new wave of technology that’s kind of checking all the boxes that a supply chain manager or an executive at a company would want checked. You’re providing a performance value; you’re providing a cost value; and you’re absolutely providing a sustainability value. There’s a fourth element to the whole equation: what are you going to do for my supply chain situation. A lot of companies like IBC are sourced and produced locally, which is huge in a volatile market like this.

Hart Energy: Which companies are you working with, and what are some of the products they are using?

Jett: We work with a wide array of companies in the energy space. We work with everybody including formulators, or technology companies, that create their own products with our backbone surfactants and technology. We also create products for some of the larger service companies in the space. So, for instance, companies like Liberty, they used a lot of our products designed off of our sustainable biosurfactant platform. They’re very innovative. They care about sustainability … and they are putting metrics in place to ensure they’re getting the performance they need and not compromising value.

We sell just straight surfactants to these companies. We sell a lot of emulsifiers, high performance flow enhancers, a wide variety of clay controls, and mitigation products. Everything that we provide into the space we produce in Cresson, Texas. We don’t resell chemistry. We actually produce molecules and then use those in formulations for our customers.

Hart Energy: What is IBC’s greatest challenge in the next year or two?

Jett: A lot of these products that we’re introducing into these markets have never been used before. It’s one thing when you can take a product that is like something else, that has a ton of history and data; when you’re introducing that, it’s just really a sell on service performance and price. What we have to do is go in there and work with these technical teams and show them why this molecule is as good or better and then prove to them and show them, through our Renewable Carbon Index and some of the metrics being used right now, why it’s not only sustainable now but sustainable in the coming days. Those metrics are getting more and more stringent.

Our biggest challenge is just introducing a brand-new technology that’s never been used before. We’re very fortunate that when those technical teams take a look at our technology, they get excited about it because they see the performance and the value. They don’t just see the sustainability.

Hart Energy: Is there anything else you want to add or speak on that we haven’t covered already?

Jett: You can tell I’m kind of a geek about all this. I’m just excited about delivering sustainable products without disrupting what people need to be successful. You know what I’m saying? I think it’s wrong to ask the world to make changes and compromise performance. Humans are smart, and it’s cool to see that there are actually alternative methods out there. You don’t have to give up on what you’re trying to do. You can actually transition in a way that adds value to your shareholders, and that’s exciting for our little company.