Scaling New Energy Technology | Ashok Belani & Bruce Niemeyer | Global Energy Dialogues

Good morning, good afternoon, and good evening to all of the people around the world. I'm your co-host with Sally for today's Stanford Global Energy Dialogue. Today we have two leading experts to join us from the energy industry: Ashok Balani and Bruce Niemeyer. Ashok Balani is the Executive Vice President of Schlumberger New Energy, a position he assumed in February 2020. Ashok is responsible for the deployment of differentiated technologies and practices to decarbonize exploration and production operations and the development of new avenues of growth and emerging markets with carbon-neutral technologies. Ashok started electrical engineering in India and holds a graduate degree in petroleum engineering from Stanford University. Bruce Niemeyer is Corporate Vice President of Strategy and Sustainability for Chevron Corporation, a role he assumed in 2018. Bruce is responsible for guiding development of Chevron's key strategies, including capital allocation and sustainability efforts. Well-focused efforts include investments in low-carbon technology to enable commercial solutions and large-scale carbon capture and storage operations. He has a bachelor's degree in petroleum engineering from the Colorado School of Mines and is a registered petroleum engineer in the state of California. With this introduction to Ashok and Bruce, let me transition this to Sally.

Okay, thank you very much. Like usual, we'll start out with a quiz. The question is: how many commercial-scale carbon capture and storage projects exist today? None, 6, 26, or 121? Okay, so let's see how you did. Wow, okay, so it's pretty evenly split between 0, 6, 26, and 121. The single largest number was 6. So actually, that's not true. Today, according to the Global CCS Institute, there are 26 projects that are in commercial operation today that have the capacity to capture and store 40 million tons of CO2 per year. Now let's move on to the next question. What is the estimated need for CO2 capture and storage utilization in order to be able to limit warming to 1.5 to 2 degrees Celsius by 2050? Do we need 100 million metric tons per year, a billion metric tons per year, 5 billion metric tons per year, or 50 gigatons? And just to be clear, a gigaton is a billion tons. Okay, so go ahead and put in your answers. Oh well, that's pretty good. The single largest answer was 5 billion metric tons per year. So these numbers come from the IPCC Fifth Assessment Report, which began to make the case that we would need to extract carbon dioxide from the atmosphere. More recently, the IPCC report on limiting warming to 1.5 degrees Celsius also concluded and quantified the need: it's somewhere between 5 to 10 billion tons per year by 2050. So you can see right away that given we're at 40 million tons per year today and we need to scale up to 5 to 10 billion tons per year, we're talking about a hundredfold scale-up. Quite a challenge. Okay, so let's start our conversation now. Welcome, Ashok and Bruce, and thank you so much for joining us. In March of this year, it came to our attention that you'd announced an exciting new carbon capture and storage project in California. We'd like to begin today's discussion by learning more about this. So Bruce, why don't we start with you? Specifically, Chevron, Schlumberger, and Microsoft, together with a company called Clean Energy Systems, announced that you would be investing in a first-of-a-kind carbon capture and storage project in California in a small town called Mendota. The project will actually take carbon dioxide out of the atmosphere, produce electricity at the same time, creating so-called negative emissions. Could you explain this project to us?

Okay, great. Thank you. So Ashok, why was this project attractive to Schlumberger, and how do you see this fitting into your long-term plans?

Okay, good morning, Sally. Thank you for inviting us to this talk. Always good to be with Stanford, even if it's virtual. Hopefully we'll do this face-to-face in a short period of time. So this project, we actually started working with Clean Energy Systems about two years ago. At the same time, the world was reviving a lot of interest in carbon capture and sequestration after a hiatus of a few years. There was a lot of interest in the 2004-2012 time frame when lots of experimental projects were done, but from a business or economic standpoint, the world could not get their arms around getting carbon sequestration going. With the new impetus of net zero, climate change issues, and all the countries passing laws to go to net zero, and understanding that net zero by 2050 or 2060 would not be possible even with all the advent of renewables and hydrogen and lithium economies, it was clearly understood that one way or another, carbon capture and sequestration would have to come into a business configuration that can scale. So we started trying to see how we could have business configurations where this could be economically feasible. It so happens that California with its LCFS fuel standards and with 45Q from the federal government, there is a good chance of making something like this economically feasible. While we worked with governments or companies to do projects purely on contract, we wanted to have an innovative business configuration where we could make something quite adventurous as a hugely negative carbon project to be economically viable given the regulations that already exist. So the fact that these three very large companies and a small company which is technically quite innovative come together in this configuration is an attempt at making these kinds of business models pursue these interests, which will make projects like this scalable in the future. So we are very interested because it is a game-changing approach to making something from a business standpoint viable for the future.

Okay, well terrific. Thank you, Ashok. Schlumberger has been very involved in a lot of the technical aspects of current capture and storage really from the very beginning. So Bruce, what was it about this project and about this time that made you decide to invest in this? Why is this important to Chevron?

Okay, terrific. Well, thank you. So it's really good to learn about Chevron, Schlumberger, and Microsoft teaming up to do this project in California. I want to ask a question to you, Ashok. Schlumberger is known as a company that brings the most advanced technologies to very challenging problems. So what are some of the technological challenges for CO2 capture and storage, and how can Schlumberger's technology help?

It's a technically interesting question. When all those series of experimental projects were done 15 or so years ago, something that did come out of all that effort was a lot of advance in technologies related to the subsurface. Where we use things pertinent to Stanford in particular, where we use reservoir simulation for understanding how oil and gas and water move in porous media, we came up with simulators that would analyze how CO2 would move in a saline aquifer. The understanding of CO2 in an oil reservoir was there before, but CO2 in a saline aquifer all came about because of all those projects. Today we have the right kind of simulators or models by which you can understand if you pump CO2 into a saline aquifer, where does it go and how does it behave, which gives you assurance that it will stay in the right place for a very long period of time. Similarly, the well engineering technologies, the technologies for assuring that you have the right kind of integrity for the system to do this kind of storage, all came about 10, 15, 20 years ago and went into the classification schemes that the DOE and EPA worked on. Today the idea of a Class 6 permit exists, which is all part of the technical regulatory framework that can make these technologies feasible in a practical world. So from a sequestration standpoint, the world's knowledge of what happens when you put CO2 in the subsurface is fairly advanced. Of course, as we do more practice commercially, we will learn a whole lot more. On the capture side, which is a bigger challenge, I would divide the issue into three categories. There is the category of concentrated emissions where the emissions are easy to catch or relatively low cost to capture. Then there are dilute streams which are harder to capture, like in a cement or steel process, or direct air capture from the atmosphere. Today we are really trying to kick-start from the 40 megatons you mentioned to the vision of 5 to 10 gigatons. At least we want to look at the concentrated streams and come up with the right commercial models, the right business models, to actually make that happen so that we kick-start the whole business of carbon capture and sequestration. For that, by and large, the technologies exist to capture these concentrated streams and put them in the ground. So the urgency of the moment is to get the business going, and that's what Chevron and Schlumberger are trying to do here, coupled with the power of a company like Microsoft and the technical innovative capability of Clean Energy Systems. All of these put together are going to make use of currently available technologies to make business with carbon capture and sequestration happen. Meanwhile, there are companies looking at capturing diluted streams to bring the cost down to the $30-40 per ton range, and there are also companies looking at direct air capture where the costs are much higher. Over time, as these technologies get proven in the lab and at smaller scale, they will scale to practical implementations. So there is a roadmap of currently available technologies that need to go into new business systems or practices that make CO2 sequestration a business, and then they will follow on from there towards the ambition of 5 to 10 gigatons.

Yeah, well, it's very exciting to think about how we do this scale-up. By this California approach, at 40 million tons, we need 200 of those to become a gigaton scale. At Stanford and the Precourt Institute, I put my director hat on, and actually Sally is doing this planning together with Alan and a few others on this carbon removal workshop. I think there's a lot of technology innovation we will be needing. So now let me turn to Bruce. Chevron has been involved with other carbon capture and storage projects around the world, certainly most notably the Gorgon project in Australia. What have you learned from this and other carbon capture and storage projects that would help make the new project a success? What are the key lessons learned?

Okay, so the framing for this conversation is scaling new technologies. Over the past several decades, we've seen solar and wind and now batteries and EVs starting to scale. But if we think about carbon capture and storage, what do you see as the critical challenges to achieve this 100-fold scale-up over the next three decades? It involves things like what kind of policies are needed, what is the investor appetite for these projects, what is public opinion, how challenging is it to invest in infrastructure or to build infrastructure? Looking at this roadmap you laid out, what do you see as the critical challenges, and how might governments or organizations help?

In a sort of multi-choice question with lots of answers, there's always this one thing at the bottom which says 'all of the above,' and the answer in this case is probably all of the above. As Bruce and I have both been saying, we found this project to be a good starter project where we could create a very innovative group of companies. Chevron and Schlumberger work together every single day, all over the world, but the fact that Microsoft is involved and that there's an innovative company as a partner in the whole scheme—this is new. What we are working on here is to try to put together stakeholders who all have something to bring to this very important exercise to kick-start something. The whole business is not just this project by itself; this is only the beginning. We've spent almost a year now working in 10 different streams. We have talked to the regulators, to the farmers in the Central Valley, and understood whether the waste biomass is a problem and whether it's advantageous for them. We've talked to the existing mothballed plant that was producing power 20 years ago but is now going to be reutilized, creating jobs in the Central Valley. We've talked to the technical people and done experimentation to understand if we can gasify and capture 100% of the CO2 produced to have a perfectly clean waste biomass disposal scheme. We've talked to the California Air Resources Board to understand whether it will qualify for the LCFS incentives. All of that work has been done just to understand that this kind of project can be feasible. Now we're going to go into a front-end engineering design process to risk-mitigate this process in the next year or so. This is the process that companies such as this follow to risk-mitigate these processes and make them commercially viable. We do that for a living in oil and gas, and we're going to do that here as well, with the use of a lot of innovative pieces of technology and practice. That said, this is only the first. We are separately working with other people in the steel industry, the cement industry, the biofuels industry, forming similar configurations to see whether we can bring the practice of carbon capture and sequestration to all those industries where there are hard-to-abate problems. But there is low-hanging fruit in those concentrated streams of CO2. This is going to need help from everybody: from the regulators, from the public for public acceptance, from academia for research to move things forward. I'm only talking about the United States right now. Europe has a slightly different way of approaching the issue, with hubs being formed in the North Sea by a consortium of companies working together with the Norwegian, UK, or Dutch governments. These hubs will then spawn capture activity from various industries, and there will be some kind of business practices established to capture carbon and put it in the ground. All of this effort requires a lot of people to come together, new kinds of partnerships to form, and new business models for the future. An interesting aspect of carbon capture and sequestration is that there is no product being produced that you can sell to someone and make commercial money out of it. You are taking a waste gas and putting it into the ground, so no one is actually buying a product. It is a business that is difficult to establish from a business model standpoint, and that's where a lot of the near-term challenge lies. When there are a hundred projects like this working all over the world and the stakeholders realize that this is feasible commercially, then it will have a life of its own and scale very quickly. Technology will follow for capture and sequestration.

Okay, terrific. Thank you for that really thoughtful answer. So Bruce, looking beyond California, in some ways California has created a very unique opportunity. The low-carbon fuel standard credits are worth on the order of $200 a ton of CO2, and the 45Q tax credit is about $50 a ton, so it's easy to see how that might be attractive. Also, there's biomass in the Central Valley, and it turns out that Mendota overlays a very good saline aquifer for storage. So there were lots of things that make it very encouraging for it to be a success. If we think beyond California, in the United States and more broadly around the world, we need carbon capture and storage not only here but in China, India, and Europe. What do you see as the challenges, and how do you see that rolling out over the next couple of decades to get to scale everywhere?

Yeah, thank you, Sally. So the discussion clearly shows technology innovations are very important. Ashok, I want to ask you: Schlumberger is involved in developing other technologies beyond CO2 capture and storage. Recently, you are involved in lithium-ion batteries, such as lithium extraction. What are the challenges there for scale-up? How much does the industry need to grow, and what role does Schlumberger play in growing this industry? Looking at the scale, in 2020, the production of lithium-ion batteries was probably around 400 gigawatt-hours. What we really need is for production to go up by 10 to 100 fold in the next couple of decades. I want to pick your thoughts on those questions.

I think you are right. We are working on different avenues of growth towards decarbonization or low-carbon or no-carbon technologies. In each one of those sectors, there needs to be a very large increase, in the tens or hundredfold increase, in the coming decade if we are going to go towards the good goals or the sustainable scenarios in the future. We're working in the domain of hydrogen and also in the domain of lithium. Particularly in lithium, over the coming decade there needs to be a massive increase because it is now pretty well understood that electric vehicles will become the order of the day on the road. With this huge increase in electric vehicle deployment, there is going to be a surge in requirement for lithium. Without going into too much detail, a number like 50 kilotons for lithium hydroxide monohydrate, an important compound for the batteries used in cars with the right energy density, the increase has to be from 50 to like a million tons of lithium hydroxide in the next seven, eight, ten years. That's a large investment and a pretty big challenge. We've been working on how to extract lithium from brine found in the subsurface. We obviously understand how to extract lithium-loaded brine from the subsurface, then extract the lithium in a very efficient process, and end up with a very clean brine without the lithium which we can pump back into the ground so that environmentally the whole process is sustainable. Today, some of the processes used are not sustainable from this standpoint because they utilize a lot of water and don't return the water into the ground. Our new innovation that hopefully will come and scale in the near future will be a sustainable process that manages the water in the correct manner. These kinds of competencies, not particularly in the lithium sector but in a general framework, we understand from our businesses in the past. We can apply some of that knowledge to have a continuous chemical process which can return very safe water back into the ground and yet extract enough lithium to make it commercially viable. Today the world knows how to extract lithium from brines with something like a thousand ppm, and we will be able to move to brines which are like 100 ppm, so we'll expand the target addressable market for lithium brines that can yield good lithium for the battery-making industry. This will allow all the giga factories being planned in the United States, Asia, and Europe to scale better. Otherwise, there will be a surge of lithium demand which the world would find difficult to meet in the next few years. So I'll take that as one sector that is very interesting. Everybody relates to the fact that EVs are coming, but behind that, a lot has to happen to enable the ramp-up of electric vehicles in the world, and this is just one of those issues where we are trying to create a new business.

Yeah, so this is very exciting. The whole world has about 1.4 billion cars running on the road, about 1 billion passenger cars and 400 million trucks and big buses. If that 1 billion passenger cars all become electric, assuming a 50 kilowatt-hour battery pack, that requires 50 terawatt-hours of lithium-ion batteries. With 400 gigawatt-hours of production right now, it takes a hundred years to produce that much. So we need to shorten that to a 20-30 year time frame. Lithium extraction production will likely increase by about fivefold in the next decade, which is also very exciting. Now, for those 400 million trucks and buses, that's heavy stuff. Lithium-ion batteries might not be able to supply the power, so there's a lot of discussion about hydrogen. You touched upon that earlier. Schlumberger New Energy and CEA and partners announced the formation of Genvia for clean hydrogen production. Tell us about this joint venture and its importance.

Before I go to hydrogen, coming back to the batteries, whatever the fold increase, there are two very important aspects. While there is the aspect of growing lithium batteries very quickly, there is the aspect of making them more efficient. I'm going to return the question to people like yourself at the Institute of Energy Efficiency. The work you do in coming up with new materials that make batteries more efficient in terms of energy density is very important. If those batteries don't go up that roadmap, then the scaling cannot happen. So there is the aspect you cover and the aspect extraction covers that have to go together to make some of these things happen. It is a challenge, but also a very exciting area because it is very interesting innovation for the future. It's good that we work together on these subjects. Similarly, we did something on hydrogen. We created a company called Genvia in France. That company is a public-private partnership. The configuration is important. The public-private partnership is between the Atomic Energy Agency in France, called the CEA, which has a technology arm called CEA Tech, and they have some technology they have been working on for the last 20 years on solid oxide high-temperature electrolyzers. We, in that case, are the industrialization or commercialization arm along with a few other stakeholders. There are three shareholders in Genvia: a very innovative cement company which is a hard-to-abate sector for emissions, a very innovative construction company which runs all the autoroutes in France and owns all the stops, and a region of France as well which wants to completely decarbonize and move to a hydrogen economy. Between the CEA and Schlumberger, we bring the expertise of trying to industrialize this technology of solid oxide high-temperature electrolysis, which is the most efficient way of turning renewable energy into hydrogen. There are parallel projects that are going to be launched by all these companies working together with us to create the hydrogen systems that will be utilized in the cementing process, in charging stations, or in local buses, to create a movement on the whole value chain to create a new hydrogen economy for the future. The company has been put together by all of these stakeholders. It will work with many other people all over the world as well, but at least it starts off with the right stakeholders that are going to come together and emphasize the whole value chain build-up for green hydrogen in the future. That is our effort on hydrogen, the company called Genvia, which we just launched in January.

So hydrogen is so important. Actually, at the Precourt Institute, we are planning to launch a major initiative on clean hydrogen, so I'll keep you updated. Bruce, now let's turn to you. We touched upon direct air capture. This is a very important but very challenging problem requiring technology innovation. Earlier, we hosted a Bill Gates event right here in the Global Energy Dialogue, and he mentioned direct air capture. You have seen in the news that Tesla co-founder Elon Musk is giving a $100 million prize for direct air capture. Chevron has also invested in DAC technology. Can you explain this technology to us and why Chevron is interested in it?

Thank you, Bruce. Back to you, Sally.

Okay. Thank you. So let's get back to the principal topic of today's conversation, that is scaling CO2 capture and storage. And just to provide a little context, this is a technology that actually got its start in the 1970s, where we began pumping carbon dioxide back underground to enhance oil recovery. So the basic technology of drilling and CO2 injection was established then. And then in the 1990s, Statoil, as a consequence of responding to government policy that penalized atmospheric emissions of CO2, they began to do CO2 capture and storage with the specific purpose of mitigating climate change. And if we look since then, the technology has grown at a rate of about nine percent a year. And if we have any hope of getting to 5 to 10 billion metric tons per year, we need to at least double that rate of growth. And so I think we're at a very special moment where policymakers and the public and leading thought organizations are making the case that this is an important technology. And I'll just point to the IEA on Monday came out with its report on how we could hope to achieve a net zero by 2050, and they really highlighted the critical role that carbon capture and storage plays. So now imagine in our audience we've got influential policymakers. Make the case for what are the three most critical things that we need to be able to sustain the momentum that you and others have begun today. And Bruce, why don't we start with you?

Well, I think Bruce covered the subject quite well, and it's very difficult to say at this high level these are the three most important things, but there is devil in the detail a little bit. For instance, I'll pick up just one or two detailed points related to that. A certain thing needs to happen, but then there is, for instance, one issue for sealed carbon capture and sequestration is that the process for Class VI permitting, which allows you to pump carbon dioxide into the ground, it exists, but that process takes a long time. And for me, thinking about it from a technical regulatory point of view, it is way too long to be able to enable all this scale up to happen. So somewhere there has to be a dialogue with the policymakers, as Ruth was saying, where we are able to go back and say, hey, these things need to change, or else we won't be able to progress in a fast enough fashion. And we're not talking about trying to circumvent or go past certain things or ignore them. Certainly, if you're talking about just the process, it needs to be sped up, but it's technically and from an assurance standpoint quite robust, and it can happen much faster. Similarly, on the other side, for instance, we're going to work very hard on decarbonizing a cement plant or something. Well, the cement that is going to come out of that plant is going to be a low carbon footprint cement. Well, there is not a market mechanism or regulatory mechanism today to make that cement different from all the other high carbon footprint cement. Now, there may be advanced companies like Chevron or Microsoft or someone who will say that the cement I acquire will be from certain places, but you don't want to leave it to some kind of goodwill from a company to be able to do something like that. There has to be some kind of a system by which this thing gets formalized to give it a lot more impetus. So again, you need to then raise it to the level that Bruce was talking about where the policy has to be able to follow some of these practices such that it takes away the roadblocks or the difficulties of making these things commercially viable. If these things are not commercially viable, then it's just not going to scale up. And technology, which is what most people come to as soon as you talk about it like direct air capture, that's not the issue today. Today the issue is scale up from where we are. And for the scale up, there is low hanging fruit. If that doesn't happen, direct air capture is never going to happen. So let's do the stuff that we can today with our means today and take the roadblocks out of the way for that, such that carbon capture and sequestration becomes a viable business for the future. I think that's it for me. If I could pass that message saying the policymakers need to be tuned in along with organizations such as yourself from the Precourt Institute or other parts of Stanford, and there are so many people who are lending to the thought leadership in this space, and you guys do an amazing job to move this thing forward, we have to pass this message through our room or through whoever it might be, but this needs to reach the right people so that we all work together to make this thing move forward.

Okay, thanks very much. Back to you.

Yeah, the conversation so far has been very exciting. Now let's come to the fun part. Let's get some questions from the audience. Well, let's start by having our students questions. Joining us today are two Stanford students, Google Wen and Karim. Karim is a Stanford PhD student in Energy Resources Engineering. She is currently working with Sally on the topic of simulations for CO2 geological storage with machine learning approaches. Karim is a Stanford student with a Master's in Earth. With both of them joining us, I think we're presenting a pretty broad background. Let me bring Karim to the stage. Which one do you want to go first?

Thank you. I think I will go first. And thank you again to Bruce and Ashok for joining us today. So for the first question for both Bruce and Ashok, in your opinion, what's the biggest technological challenge that you expect given the Mendota project will be a first of its kind operation?

Well, technically, I think we haven't spoken too much about this here, but the gasifier that takes in this waste biomass from the farms, the input waste biomass has to be at the right configuration to be able to go into this gasifier, and how this gasifier manages to yield the gas that goes into the turbine is an important challenge. And these turbines have not been used in the past to do this kind of work which captures 100% of the carbon dioxide. So to actually make it work at scale for 300 kilotons is also a technical challenge. Now from there on, the carbon capture and the sequestration itself is, I would say, less challenging, although after we've sequestered for some period of time, to make sure that the sequestration is progressing correctly, maybe using some of the work you are doing in carbon capture and sequestration surveillance and assurance with simulation in the future using machine learning, maybe those will be interesting things to come in the future. But in the immediate execution, I think there are execution of project management issues, but besides that, technically these two, the gasification and the electrification from the gas, are technical challenges that we have to contend with. There's a lot of people working on it, so I don't think it's insurmountable, and from a fundamental standpoint it works, but we still have to engineer it to execute what we have planned.

Thank you, Bruce and Ashok. My question is around the valley of death, commercializing the first of a kind. One can say that corporations have more patient capital than venture capital or private equity. I want to ask you to what extent do you think that is true, and if so, I'd appreciate if you can elaborate on to what extent are you willing to take a higher risk on early commercialization to achieve a longer term strategic position or sustainable returns?

So I think what Bruce said in the end is very important. I think the way the four companies came together, they cover enough characteristics in terms of tax equity or in terms of LCFS, and there is enough knowledge and capability that we would be able to handle most of the situations. But moving the question from simply Mendota to carbon capture and sequestration, in the United States alone today there are probably 100 projects which are being worked on, and we are involved in quite a few of those with different sectors of industry. And it's not limited only to corporate capital. There is plenty of private equity capital which is being considered for investment into these projects. Places like in the Midwest where there is biofuels with carbon capture possible, where the emission streams are quite concentrated, it's going to happen with private capital. There are places in Louisiana where there are hubs that will be created, they may happen with corporate capital with the big oil companies, but they could happen also with private capital. So is one or the other more suitable? Well, I think in innovative configurations like Mendota, you need different types of thinking process. The tax equity and the LCFS monetization and so on, for that you need expertise. So companies like this can maybe do it better. Sometimes private equity is quite tuned to doing these kind of things. So I hope that a lot of capital gets leveraged into the carbon capture and sequestration process, private and corporate.

Okay, we're going to move now to the first audience question. The question is for both of you really. Can you talk about how digital technology helped you scale from the idea phase to eventual commercialization? And maybe I'll sort of shift the question a little bit because I think one of the things that a lot of people don't realize is that the oil and gas industry was actually a huge consumer of digital technology and continues to innovate in that area. Thinking like a reservoir simulator creates a digital twin of the subsurface. So anyway, over to you. What is the role of digital technology and innovation in the space for you?

I'm going to say one thing here which is an interesting little twist in which there is something to do with digital that is meaningful for Mendota. Interestingly, Chevron, Schlumberger, and Microsoft actually are today working on and started working on a digital collaboration for the oil and gas business about three years ago, or 2019 I think we announced it, but we started working on it a lot earlier. So the partners have already understood how to work on something which is quite groundbreaking in the oil and gas business as well, where Chevron's moving all its data to cloud and Schlumberger is doing the same, and moving all our applications that we work on together to cloud and leverage it for more efficient workflows and processes in the oil and gas business. The same three constituencies actually came together because we have partners to do something quite daring and different in the carbon capture and sequestration process. So it's not like Mendota is going digital overnight, but the fact is that that digital collaboration helped this collaboration to proceed further. Now, in the world of new energy, it's a very interesting place for digital because the legacy is very, very small. So for all our hydrogen work that we are doing on solid oxide electrolysis or some of the work we will do in Mendota and other projects like BECCS projects, they are going to use digital configurations which are very modern and they will be built on Azure right from the beginning, and so they will be future compatible right from the beginning. Native digital, if I may say. We're working on a building heating and cooling system where we start off by a digital system working on cloud. So the opportunity that we do even project management in a digital way, the project map, the execution files pass to operation files in a seamless manner because it's built on cloud, and with collaboration happening on cloud, the fact that we can innovate on an ongoing basis, all this will be natural components of working in a digital way in the future in new energy because the legacy doesn't exist that you have to transform. And wherever we are putting something in place, we are going to make sure that it is cloud compatible and uses all the platform attributes that one uses in digital today.

Okay, terrific. Okay, we'll go back to you.

Thank you. So for the next question, I want to dive deeper on the Mendota project. So the goal is to remove 300,000 tons or 0.3 million tons of CO2 per year. So I'm curious, what are the factors and reasonings of choosing this target? Let's start with Bruce.

Well, I think when we started working on this, we had five different plants that exist already. Because one of the interesting things here is that these plants exist already, and we're going to reshape them into bioenergy with CCS. They used to be bioenergy plants in the past. So we had the choice of a few, and as Bruce said, we looked at which ones were the most valid for the quickest, most viable project. And this one, which used to be a 20 megawatt plant, if you back calculate from that how much input biomass we could use and hence how much carbon dioxide would come with the air separation, this was the configuration in this plant which works the best. It might change by a little bit in the end, but it's a function of selecting that plant. And once we select that plant, then these numbers were in place. But eventually there's a roadmap of doing many others like this in California, and that will go to much higher numbers hopefully. So this is just a starting project.

Thank you. Now to Karim. Thanks. I wanted to talk to you about carbon prices. Carbon prices have been picking up with Low Carbon Fuel Standards sitting at around $200 a ton and the EU Emission Trade Scheme almost tripling in the past year to around $70 a ton, and many others that are coming online. My question is, how do you navigate the immense and growing transition in the policy space? And maybe more specifically, how do you deal with carbon pricing risk and volatility in your investment decisions either in new energy or in the fossil space? Maybe we can start with Ashok.

Well, I think Bruce is more of an expert on this because working as an oil company, an oil company always navigates these kind of issues. And certainly the knowledge of LCFS at Chevron is much better than what we have in Schlumberger, and that's why we have the complementarity. But in general, the idea is that we've taken what is our reasonable numbers from the past history and what is possible with the current regulation, and we are going to design the project and engineer it to be viable within the current known numbers in the market. Now, the important point that we made in the beginning is that we are going to the lowest hanging fruit. So we are taking a place where current regulations apply and make it commercially viable and economically feasible with the technologies that we have now. I think the question you're asking is valid for when this is going to scale to tens and then hundreds of megatons. Then how will people navigate those uncertainties of market mechanisms or regulatory mechanisms? LCFS being a market mechanism and 45Q being a regulatory mechanism. Here is where then what we said earlier, policy has to follow. Policy has to be tuned in, and policy has to follow, otherwise these risks are not going to work. Or maybe the banks have to come up, the financial system has to come up with the right solutions, or the insurance systems have to come up with the right solutions. And these are not something that I govern and have knowledge of, or Chevron does. I think the system needs to progress in this direction.

Yeah, Bruce and Ashok, this conversation is great. Indeed, in the audience there are a couple of questions asking about how economically business-wise for CO2 capture storage. The question how does that work? I think Karim's question, he asked you to expand that broadly also answer the audience questions. I will not repeat. Now let me get to a different question from the audience. Can you be more specific about the technology already working so well today for carbon capture storage in this category and what's in the pipeline? We have earlier discussion on this already. I think the discussion probably spread and it's a good chance to be concise and tell the audience so what's available today, what's coming next. Who wants to take this, Bruce or Ashok?

Ashok, turn it to you. Yeah, I think if I were to kind of generally make a statement without going into too much detail, this is a broad subject so it's hard to narrow it down. Broadly, as we said, there are different streams, and in all those streams there is work going on and technology companies that are working on innovating various aspects of it. Today we are aware of what's happening in the biofuel industry, and there there is a lot of possibilities, I think tens of megatons to be captured and sequestered with known technologies. There is the blue hydrogen industry which is going to start, where in an SMR process which is producing hydrogen from gas, you are able to capture a very large portion of the carbon dioxide and you'll be able to sequester to make the hydrogen clean. In a cement process, you are not able to capture a very large amount, but you are able to capture enough to be able to sequester to almost half the carbon footprint of the cement. And similarly, there are numbers in steel and so on. So in all of these sectors which are large CO2 emission sectors, there is work going on to be able to capture and sequester the carbon dioxide. And there's plenty of runway right now to start these projects and these businesses. And as we work on these projects that can start already, there are very innovative companies which are working of course on direct air capture which is much further down the road, but on dilute streams through again the physics of either the pressure swing or the electrochemical swing or the chemical swing of adsorption, absorption, all the physics exists. But from the physics to actually engineer a solution that you can apply to an existing stream, it takes a little bit of work. And there are engineering companies that are working on dilute stream carbon capture which will be in numbers that are good enough to be able to make a project economically viable. So if I may leave a message, there is plenty of roadmap which is viable today. We need to just embark on the business on the heavy streams where it is obviously viable and then keep on growing the more dilute streams as technology and innovation develops. And there's lots of room for small innovative companies that will come up and do this innovation, and then companies such as ourselves and Chevron will scale these technologies to make these projects viable.

Okay. So we've talked a lot about pumping CO2 back underground, and the question from the audience is, well, what about CO2 utilization? Can we make products with it? Yeah, love to hear your thoughts on that.

No, I think Bruce said it all. But in a very concise message, I think if the world is going to decarbonize by using carbon management in terms of carbon capture and sequestration or carbon usage, then the most urgent thing to do is to get the business of carbon capture and sequestration going. That is the most urgent question.

Hi, Bruce and Ashok, thank you so much for the great conversation. I'd like to thank all the audience around the world, also thanking our student participants. We started the Global Energy Dialogue last June soon after the COVID lockdown. This has been a great event at Stanford. We hope this has been serving the purpose for the whole world, bringing the energy experts together to really discuss how do we decarbonize. We started with the conversation with Secretary Ernie Moniz, Steve Chu, and then with Chad Holiday, so many great events. Bill Gates came. And last month we have our own Precourt Advisory Council member Mike Morgan and Doug Kimmerman, and Bruce and Ashok. Thank you so much for sharing with us your perspective. This Global Energy Dialogue now lasting for a year, many of us all got fascinated. We decided and say next several months is our summer time, we will take a break. So we'll go to the beach and think hard about how do we do energy for the next step. Well, we zoom out to the Stanford start a new quarter in the fall. Thank you so much. Bye now.