L.A. Goes to Court, Products Made from Thin Air, DOE Rejects, and Steady Prices

Good morning, this is the Oil Patch. We chow down on all things oil and gas news, and then spit it out into bite size digestible content. All for you.‌

Gross. We'll try to do better next time.

Here's what the Oilman has for you today:

• DOE rejects SPR oil bids

• Products made out of thin air

• Oil surplus, but steady prices

• Los Angeles taken to Court

Department of Energy Reject SPR Bids

Looks like the U.S. Department of Energy is playing hard to get with a few anonymous oil companies. They've rejected initial bids for resupplying a 3 million barrels to the nation's emergency crude oil stockpile in February. I mean, who doesn't want a little bit of strategic oil in the Strategic Petroleum Reserve during these strange and trying times?

Not the DOE.

"Following review of the initial submission, DOE will not be making any award selections for the February delivery window," the spokesperson said in an emailed statement.

The DOE had announced last month that they would purchase up to 3 million barrels for delivery to the Strategic Petroleum Reserve in February. It would've been the first buy since last year's record 180-million-barrel release to tame U.S. pump prices. But, as it turns out, that's not happening.

"DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers," the spokesperson said.

It's nice to know one federal agency is watching out for the good of the taxpayers. Not strategically watching out for us in case of global catastrophe or war, but just watching out for us fiscally. Right?

Details about the crude oil bids were not available.

Surprise, surprise.

Made from Air...Right...

Marketing is always better than IRL.

‌The chemical makeup of air is roughly 80% nitrogen and 20% oxygen with trace gases (carbon dioxide is less than 0.5%). Given that, this marketing is just dumb. But I guess that is what $57MM in VC money will get you.

Twelve, a carbon transformation startup (with really bad marketing), has raised $57 million in Series A funding to create products made from CO2 rather than fossil fuels.

Introducing the latest in cutting-edge technology by Twelve: carbon transformation modules that can supposedly integrate seamlessly into existing manufacturing processes and have the potential to solve the world's emissions problem. That's right, folks, a magic box that'll apparently fix 10% of the global carbon emissions problem.

I know, I know, it sounds too good to be true (because it is).

But the company's partnering with some big names in the automotive, household and apparel industry brands, as well as NASA (yes, NASA! because why not?), to reduce emissions and create "CO2Made products."

I thought the products were made from air?

Anyways, if you're in the market for industrial-scale carbon transformation module things, good news! They're now available for pre-order. The company recently closed a successful Series A funding round, led by the Capricorn Technology Impact Fund and Carbon Direct Capital Management with participation from seed round lead DCVC, Munich Re Ventures, Microsoft Climate Innovation Fund, Breakout Ventures, and Evok Innovations.

Looks like Twelve are well on the way to show us how to turn CO2 into gold.

Surprising Oil Surplus, But Rising Demand in China

It looks like the oil market is starting 2023 off with a bang... or rather, a build. According to the US Energy Information Administration, crude oil inventories saw a 19 million barrel build in the first week of the year. That's right, we're starting off strong with a surplus of crude. And in case you were wondering, the American Petroleum Institute estimated a slightly smaller build of 14.87 million barrels in the same period. Talk about a surprise party!

‌But wait, there's more! Gasoline stocks also had a 4.1 million barrel build in the first week of 2023, while middle distillates declined by 1.1 million barrels. So, if you're keeping score at home:

• Crude 📈

• Gasoline 📈

• Middle distillates 📉

As for what this means for prices, well, it's anyone's guess. Prices were climbing on expectations of a fast Chinese recovery, but were pushed lower by the surprise build in US inventories. And let's not forget the wild cards: questions about China's post-lockdown recovery and the effectiveness of Western sanctions on Russian oil. It's like trying to predict the weather, but with more variables and less accurate forecasts.

In other words, the oil market is a rollercoaster, and you never know when you're going to get a stomach-churning drop or a dizzying climb. But one thing's for sure, it's never boring.

L.A. Gets Sued

Homeless camps and open drug use on city streets and property. Sure.

‌Reliable energy sourced from your own back yard? Nah.‌

‌Los Angeles is too good for that.

Ah, Los Angeles, the land of sunshine and smog. Did you know that this fair city of California is home to 26 oil and gas fields? Apparently there's more than 5,000 active and idle oil and gas wells scattered throughout LA, in all the fun places like Wilmington, Harbor Gateway, downtown, West LA, South LA, and the northwest San Fernando Valley.

But who's keeping track, amirite?

The Oilman doesn't have the stats on how many oil and gas operators there are in LA, but don't worry, because we do know one of them: Warren Resources.

And they're not too happy with the city right now. That's why Warren Resources is suing them.

Warren Resources are not happy campers.

Yup, you heard that right. Warren Resources, an oil company with operations in the Wilmington neighborhood of LA, is suing the city to try and stop an ordinance that bans new oil and gas exploration and extraction, as well as shutting down existing operations within 20 years.

The company claims that the city failed to conduct an adequate environmental review and that the ordinance violates the California Environmental Quality Act, the city's General Plan, and state and federal constitutions. They also claim that the law would force the shutdown of their operations, which are located solely within the LA area.

Their attorneys stated that “the City has failed to ask the necessary questions and obtain the required evidence at every turn, has rushed every legally required process along the way, and as a result has based its approval and adoption of the Ordinance on a woefully deficient environmental document.”

As if one lawsuit wasn't bad enough, several other entities, including E&B Natural Resources Management Corp and Hillcrest Beverly Oil Corp., also filed separate lawsuits against the city over the ordinance.

Looks like LA's in for quite the legal battle.

Pipelines Optimized & Automated

Well, well, well, it looks like control room operators for oil pipelines are finally getting the recognition they deserve. Meet Vicki Knott, CEO of CruxOCM and chemical engineer extraordinaire from Newfoundland. After working as a control room operator for the Keystone Pipeline, she realized that the process could be a whole lot more efficient with some fancy software. So, in 2017 she teamed up with Roger Shirt, CruxOCM's CTO and oil and gas sector consultant, to co-found this O&G tech startup in Calgary.

Fast forward to 2022, and the company just raised $7.6 million CAD ($6 million USD) to fuel its product development and expansion efforts. CruxOCM is all about delivering operations control management software to energy companies to help reduce the complexity and inefficiency of standard operations control rooms. And let me tell you, their robotic industrial process automation (RIPA)-enabled software is a game changer (you didn't know the Oilman did some work on pipelines back in the day?). It maximizes and optimizes flow rates and streamlines startup and shut-down procedures. Sweet.

CruxOCM plans to use the fresh capital to bolster the user experience of its software and take its tech to new verticals. The $6MM all-equity round closed in August 2022 and was led by new Menlo Park-based investor Bullpen Capital, which invests in startups between their seed and Series A rounds. It saw participation from new investors Industry Ventures and Cendana Capital, as well as previous investors Angular Ventures, Root Ventures, and Golden Ventures. With this additional capital, CruxOCM’s total funding to date comes to $11.4 million CAD ($9 million USD).

So, the next time you're filling up your gas tank, think about the control room operators who made it all possible with the help of massive pipeline infrastructure (and maybe CruxOCM's software). Who knows, maybe one day all of us will have our own little autopilot software, just like the pilots and planes and control room operators.

Not that kind of autopilot software...

But let's not get ahead of ourselves.‌

Meme of the Day

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