James Stenhouse, Managing Director at H2Oil Group, highlights the role of O & G companies in accelerating and securing the energy transition, as we move towards a more sustainable future.
H2Oil Group specializes in two core areas: H2Oil Upstream business, focusing on petroleum exploration and development in Europe through establishing a portfolio of upstream revenue generating assets.
And H2Oil Well Services, offering well testing, frac flowback, and completions services. With experience in over 50 countries, H2Oil Well Services provides innovative solutions, obtaining advanced data quality and environmentally friendly well completion methods that reduce GHG emissions and increase gas sales revenue.
H2Oil also offers extensive independent consultancy expertise in management, engineering, and supervisory services across the complete asset lifecycle, from initial phases of field conceptual design to end of life abandonment operations.
Mr. Stenhouse, in a few words, what does H2Oil offering for the energy industry include?
James Stenhouse: At H2Oil Group we are focussed across two main divisions within Oil and Gas sector. Our upstream business segment via H2Oil Ltd (UK) is a petroleum exploration and development company based in the United Kingdom.
For some background, in 2020 October we signed an SPA with PXOG Massey for the Gas Producing – EIV-1 License area (Suceava, Romania) which is currently awaiting the National Agency for Mineral Resources (NAMR)/Governmental approval, which we hope should be completed in the coming months. We are aiming on building a portfolio of conventional, production-led, gas and geothermal assets within Europe – targeting specifically Eastern Europe with Romania in particular.
Our other main business Segment is via H2Oil Well Services which offers services within the realm of well testing, frac flowback and completions.
We have had experience in over 50 countries, currently with operations reaching far afield as Australia. We strive to provide an advanced service for well testing focussing on niche well scopes that allow us to be nimble in our custom engineering offering. A recent example of this was for a client in Romania, who wished to clean-up a well without flaring, thus a benefit to GHG emissions and also a gain in gas sales revenue due to a direct clean-up via the production plant. We provided a solution which allowed variable clean-up post completion, mitigating sand and fluid risks, whilst acquiring required reservoir data for well test analysis. The well was successfully tested and all objectives of the clean-up and diversion in production occurred.
What are your current responsibilities as a Managing Director within the company and your main objectives to pursue business development?
James Stenhouse: As the Managing Director of H2Oil Group, my primary responsibilities include overseeing the company’s overall strategic direction and ensuring the successful implementation of our business operations. This involves close collaboration with various clients, focusing on natural growth and identifying new market opportunities. My main objectives for business development include expanding our footprint in Eastern Europe, diversifying our portfolio, and strengthening our well services division. We aim to implement technology and enhanced data gathering techniques to standard upstream activities bringing improved development to both our clients and in-house.
While H2Oil Group operates across the world, H2Oil Well Services covers well testing and well services in the European region. When and why did you choose to start operations in Romania?
James Stenhouse: H2Oil Group’s decision to kick off operations in Romania back in 2017 was fueled by the country’s abundant natural resources and prime position within European energy markets.
On a personal note, back in 2013 my initial fascination with Romania stemmed from my wife, a proud Romanian herself. It’s said that love conquers all, and in this case, it led me to uncover the hidden gem that is Romania’s mature oil and gas market. By venturing into the Romanian market, we aim to establish H2Oil as a key player in the regional energy sector, all the while making a tangible difference to the local economy.
Romania, with the right fiscal and governmental regimes, has the potential to grow into a top tier oil and gas producing country, like it once was. With recent discoveries and production in the Black Sea, operators with sufficient financial backing, the correct fiscal regimes and sharing of data, these may be the major catalyst for growth in the region similar to what has been achieved in Turkey.
How do you see the Romanian and regional O & G markets? What are the opportunities and challenges for H2Oil in the local market economy?
James Stenhouse: The Romanian and regional oil and gas markets have been evolving in recent years, with a noticeable shift towards sustainable energy sources, increased investments in infrastructure, and an emphasis on energy security. A significant development in the local economic landscape is the implementation of the windfall tax on gas, which has potential implications for the region’s development and the netback gas price. Another notable achievement is the completion of the BRUA pipeline, which enhances regional interconnectivity and strengthens energy security.
Recent events, such as the conflict in Ukraine, have further underscored the importance of energy security in the region. H2Oil acknowledges that the windfall tax, the changing geopolitical landscape, and the impact on netback gas prices create both opportunities and challenges for the company growth both in the upstream and services sector.
While the windfall tax generates increased revenue for the government, which can be used for further development of the energy sector, it may also hinder the region’s development by discouraging investments in the gas industry and directly affecting the netback gas price. This situation creates challenges for operators and block interest holders, we must navigate these complexities to remain viable and continue contributing positively to the local economy.
In addition to the traditional oil and gas market, H2Oil recognizes the potential for applying existing oil and gas technology to tap into the geothermal energy sector. Geothermal energy, derived from the Earth’s natural heat, is a sustainable and reliable energy source that can provide clean power with a minimal environmental footprint. By leveraging our expertise in drilling, well completion, and reservoir management, H2Oil can contribute to the development and expansion of geothermal energy projects.
Despite these challenges, H2Oil remains committed to supporting the energy transition and enhancing energy security in the region.
Talking to several C-suite leaders, one of the most important goals for 2023 is to make sure that their businesses become more ‘future-proof’, and they can easily achieve this objective by integrating sustainability into their core operations. What are H2Oil major goals for this year and the main pillars of your strategy to reach these goals?
James Stenhouse: H2Oil recognizes the growing emphasis on sustainability and the need to future-proof businesses. In 2023, our primary goals revolve around integrating sustainable practices into our core operations and expanding our portfolio to include clean energy initiatives, thus ‘future-proofing’ and adapting to the energy transition.
To achieve these goals, we have identified four main pillars for our strategy:
1.Technology Adaptation: H2Oil will invest in innovative technologies and explore their applications in the renewable energy sector. For instance, we will leverage our expertise in oil and gas drilling, well completion, and reservoir management to develop geothermal energy projects, such as enhanced geothermal systems (EGS). This will apply to both our own upstream assets and also via our well services division offering the same to clients.
2.Emissions Reduction: H2Oil is committed to addressing the issue of flare emissions and greenhouse gas (GHG) reduction in our operations. We have invested in specialized tank and production systems designed to capture and utilize associated gas, thereby minimizing flaring and reducing GHG emissions. This approach not only mitigates the environmental impact of our activities but also contributes to energy efficiency and resource optimization. We also recently started offering for carbon neutral well testing – offering carbon credits to offset flare gas during the testing period.
3.Collaboration and Partnerships: Recognizing the importance of collective efforts in addressing global sustainability challenges, H2Oil will seek strategic partnerships with industry leaders, research institutions, and governmental bodies. These collaborations will facilitate the sharing of knowledge, resources, and best practices, enabling us to identify new opportunities and accelerate our progress towards sustainable energy goals.
4.Environmental Stewardship: H2Oil is committed to reducing its environmental footprint by implementing responsible practices across all our operations. This includes minimizing waste, improving energy efficiency, and reducing greenhouse gas emissions. We will also actively participate in industry-wide initiatives aimed at promoting environmental stewardship and sustainable development.
By focusing on these strategic pillars, H2Oil aims to become a leader in the energy transition, paving the way for a more sustainable and resilient future for our business, stakeholders, and the communities we serve.
Supportive policies, in combination with higher O & G cash flows in 2022, have enabled companies to increase investment in clean energy. How do you see the role of O & G companies in accelerating and securing the energy transition?
James Stenhouse: The role of oil and gas companies in accelerating and securing the energy transition is both crucial and multifaceted. As major players in the energy sector, O & G companies possess the expertise, resources, and infrastructure required to drive the shift towards cleaner energy sources. Here are some key areas where O & G companies can contribute significantly to the energy transition:
1.Technology and Innovation: Oil and gas companies can leverage their extensive experience in research and development to create and implement innovative clean energy technologies. This includes harnessing renewable energy sources like solar, wind, and geothermal, as well as investing in energy storage solutions, carbon capture, and hydrogen technologies.
2.Infrastructure Development: O & G companies can use their vast infrastructure and engineering capabilities to build and modernize the energy grid, ensuring it is flexible, resilient, and capable of accommodating a diverse mix of energy sources.
3.Investment and Financing: With potentially strong financial positions, oil and gas companies can invest in and support the growth of clean energy projects, helping to scale up renewable energy production and accelerate the energy transition.
4.Workforce and Skill Transfer: O & G companies can play a vital role in workforce development for the renewable energy sector, providing training and employment opportunities for their skilled personnel to transition into clean energy roles.
5.Collaboration and Partnerships: By forging strategic partnerships with governments, regulatory bodies, technology providers, and other stakeholders, oil and gas companies can facilitate the sharing of knowledge and resources to advance the energy transition on a global scale.
In summary, O & G companies are uniquely positioned to contribute to the energy transition in a variety of ways. By embracing the shift towards clean energy and actively participating in the transition process, they can help ensure a more sustainable and secure energy future for all.
On the other hand, the energy experts warn the new oil and gas sector overtaxation project in Romania poses considerable challenges for oil and gas operators. What are your thoughts on this issue?
James Stenhouse: The new oil and gas sector overtaxation project in Romania certainly poses challenges for oil and gas operators. While it may generate additional revenue for the government, it can also have unintended consequences for the industry as a whole.
One of the most significant concerns is the potential reduction in investment budgets. As operators face higher tax burdens, they may become more hesitant to invest in new projects, research and development, or infrastructure improvements. This could slow down the growth of the industry, hamper innovation, and ultimately, limit Romania’s ability to capitalize on its rich natural resources.
Moreover, the overtaxation project could impact the competitiveness of the Romanian oil and gas market on a regional and global level. If operators recognise the fiscal regime as critical, they may choose to direct their investments to other regions with more attractive taxation policies. This could result in lost opportunities for job creation, economic growth, and energy security in the region.
In light of these potential disadvantages, it is crucial for the government to carefully assess the long-term implications of the overtaxation project and strike a balance between generating revenue and fostering a conducive environment for the oil and gas sector. This may involve revisiting the taxation policy, engaging in dialogue with industry stakeholders, and considering alternative fiscal measures that support the sustainable development of Romania’s oil and gas industry.
What do you consider to be the major stimulators in the oilfield services market? What about the impediments hampering growth?
James Stenhouse: Major stimulators in the oilfield services market include increased global energy demand, technological advancements, and the need for efficient and sustainable operations. Conversely, factors such as volatile oil prices, geopolitical uncertainties, and the energy transition can hamper growth.
To navigate these challenges, H2Oil continuously aims to evolve with the market, offering advanced solutions to clients and stakeholders. Focusing on ESG initiatives to allow for enhanced net gas emission reductions to standard upstream activities.
Have you identified the areas where your company can bring its biggest contribution? What would be the top priorities for H2Oil during the upcoming period?
James Stenhouse: At H2Oil we have identified two key areas where companies can make the most significant contribution:
- Upstream Business: Our priority in the coming period is to expand our asset base by focusing on near-producing gas assets in Eastern Europe, especially in Romania. We believe that by leveraging our technical expertise and local knowledge, we can unlock the potential of these assets to promote energy security and economic growth in the region. We will continue to pursue strategic acquisitions and partnerships to strengthen our product portfolio and continue to strengthen our presence in the regional energy market.
- Well Services Division: H2Oil Well Services has a proven track record in providing innovative and customized solutions for well testing, cuttings flowback and completion. Our top priority is to grow the department by providing excellent service, remaining flexible in our offering, and adapting to the changing needs of our customers. Our goal is to stay at the forefront of industry advancements by implementing advanced technologies and best practices to ensure our services are competitive and add value to our clients’ operations. In addition to these key areas, H2Oil is also committed to supporting the energy transition by exploring clean energy options such as geothermal projects and integrating sustainability into our operations. We will continue to prioritize emissions reductions, environmental stewardship, and collaboration with industry stakeholders to drive a more sustainable and sustainable energy future.
Does H2Oil consider expanding its business in Romania or in the region in the future?
James Stenhouse: H2Oil is considering expanding its business in and around Romania in the future. We are currently evaluating several opportunities that we wish to add to our portfolio. We see great potential in the region and want to further strengthen our presence and contribute to the growth and prosperity of the local energy sector. Our expansion plans will be driven by market demand, strategic partnerships, and the changing energy landscape. Moving forward, we will prioritize sustainable growth and continue to care about environmental stewardship and ensure our business practices are aligned with the global transition to clean energy and a more sustainable future.