SPEAKER_00 0:03

Today's guest is Jan Pulitz, the founder and CEO of Ardor Energy, a company helping the Canadian industry transform power from a static operating cost into a strategic competitive advantage. Before launching Ardor, Jan spent nearly two decades in global LNG and energy leadership roles at companies such as PetroChina, Canada, and Shell, working across Europe, Russia, and Canada on some of the world's most complex energy projects. He brings a rare combination of commercial strategy, industrial engineering, finance, and real-world operational excellence to the conversation around electrification, industrial resilience, and the future of power markets. Welcome to the show, Jan.

SPEAKER_02 0:55

Thank you, Maxime. Excited to be here.

SPEAKER_00 1:00

We're excited to have you. I've been looking forward to the conversation for some time. And it's very, very pertinent because a lot of the conversations that we've been having probably in the last uh four to eight weeks have been around energy and data centers. We work with a Caribbean nation. So it's very pertinent there. Like for them, it's uh they have two priorities food, energy, and waste. Um in Canada, energy is very pertinent as well. So it's it's the um topic that you're uh in terms of energy. So give us a bit of the background story in terms of who is Jan and how do you end up from Europe into Canada and and and then about Ardor? How do you start Ardor Energy?

SPEAKER_02 1:49

Yeah, Maxime, thanks. And indeed um I'll uh try to shed a bit of light on that because it's uh it's been an interesting journey. Um, as my accent probably uh makes clear, I'm originally from Germany. Um grown up there, studied industrial engineering, uh went actually to study in Texas as well, did a finance degree over there, and I thought, well, coming from a small town over in Germany, I want to start working somewhere abroad and see the world before returning back to Germany. That was the base plan. This great opportunity with Shell. I had actually applied with them to become a trader. I wanted to go into trading or as a quant into trading, but they said, Hey, we've got a job for you as a risk engineer. And I had no idea what a risk engineer was. They said, Well, you've got an engineering background and a finance background, it's a small group that supports our insurance program. But they said, Well, you've got a it has just one big disadvantage, you will have to travel a lot, and a lot of it is to like very remote places, and they may need to travel often less comfortably to places like offshore platforms. And I thought, yeah, whoa, someone will pay me to travel most of my time. I was young, single. It's like I'm gonna get paid to go to offshore platforms. I thought this is brilliant. I'll do that for a few years, and uh before return back to Germany to do something more normal. So started with the with Shell in the UK in that role, then Netherlands, and indeed my my first international trip was to Nigeria to the Cawthorn Channel gas plant in the swamp. So huge experience. Um, yeah, I would say got really hooked on the energy industry early on. Now that's over two decades ago, but it was the days of the mega projects. Um, the oil price was running up 05 to 07. So saw a lot, lots happening in energy, and I just couldn't believe the sheer scale and complexity of things. And yeah, after that assignment, Shell said, Well, you're this in this weird role, you're this engineer, but part of finance. Next role for you is an accounting role. I said, Well, I'm not gonna do an accounting role, so started applying for jobs back in Germany. I really wanted a frontline role, they first turned me down for a few jobs, but then finally one came through in Far East Russia um on the Sakhalin project, and I thought, well, this is getting even better. Now I can work on the front lines. Um, Sakhalin at the time was the world's second largest integrated energy project, an island north of Japan between Kamchatka and Vladivostok. So I moved there, worked there for three years. I was in my late 20s, and before you knew it, managing helicopter and icebreaker contracts in in Far East Russia and incredibly exciting time. Um how is your Russian? My Russian is very basic now. I forgot unfortunately most of it. Yeah, it was easy on small talk level, yeah. And uh yeah, enjoyed the time over there a lot, and then I was looking well, where do I move uh next? Met my now wife over there. She was a uh project engineer with Exxon. They moved her to Canada, so I thought, well, I'll try and find it all here. Half a year later, found a job with Shell in in Canada, did MA support, some deal support work here, but I really wanted to get back into the project world. Like mega projects were just so exciting. And that was the time when LNG Canada just uh took off here in Canada, so that was my mission. Okay, I supported them on two of the deals they needed to do, that was early in 2013-14. Yeah, and that worked really well. So they offered me a job on the project. So I got seconded in, became the deal lead for the pipeline on that project. On that project, I met my now co-founder, uh Sarah McNiven. Um, she was a deal lawyer there. Her background was investment banking and law, so we worked a lot together on that pipeline deal, the coastal gas link pipeline. Yeah. And with Shell, I was still a UK employee. So I was this German with a UK-based country living in Canada. And so I thought, well, I want to have a more permanent base here, and decided then to look around. And um, yeah, I ended up joining China uh at Final Investment Decision, one of the main holders in LNG Canada, and there I became accountable, commercially accountable for that uh LNG value chain. Overall, I was looking after um commercial, marketing, uh supply chain, and IT for them for five years. Super exciting role as we built all this up, was still very heavily involved on LNG Canada as well, and then at one point thought, well, it's time to do something different. And I thought, well, if I don't, I always wanted to found a company, set up a company, yeah, had the idea, and that idea came up though during that time. And I thought, if I don't try it now, I never will. Opportunity on the power side. I thought, well, this is the time to to try this. Set up Ardor in uh late 2023. Then Sarah joined the project about a year later when uh she left Chell's well. Okay, yeah, we've been going ever since. That's the the long story, the medium short.

SPEAKER_00 7:15

Yeah, so Ian, um uh thank you so much for kind of walking us through the the the journey. So in 2023, you you set up Arder. What was the problem that you saw in the market, and how are you going about solving it?

SPEAKER_02 7:31

Yeah, in short, it's power for industrial customers. And what do I do I mean? I still remember when one of our deal leads came in and said, Jan, you're struggling with our core here, like some things don't make sense, and I'd never looked much at power before, it was always non-core, always very important, but kind of non-core for business, was all about gas and oil value chains, W and so on. And I just couldn't believe how complex it was. So if you have a transmission contract or distribution contract for gas, it's very simple. Basically, the bigger the pipe is, the higher your bill is. It's it what they call the take-or-pay contract, you pay a fixed fee, you get access to more gas, you pay more for that, and then you just pay for the energy that you pull. Electricity is remarkably complex, and especially on the transmission side, a certain 15-minute window during one month may drive up to half of your total transmission though. So it just became so complex. And I didn't fully understand it, and I tried to come up with a good commercial strategy. We didn't have experts in the house at the time, and I looked around and talked to some of my peers in the industry, and everyone was in the same boat. But the general answer was, well, yeah, it's important, but you know what? It's just power, it's a flow through cost, it's non-core. Yeah, and yeah, you you just manage it accordingly. And what I found is everyone had the same kind of set and forget strategies. Yeah, but the more I looked into it, the more it is thought there are actually a lot of levers you can do. Yeah, not just a flow through cost element, this is really strategic for competitiveness. I was also looking after supply chain at the time, and then I figured out we spent more time optimizing the cost of our photocopier contracts than the cost of the power contracts. And I thought this can't be. So, how's that possible? And when we look to consultants as well, there were quite a few power consultants out there, but they were usually very specialized. Many come from the regulatory background, they're specialized on your contract sizing or your hedging strategy, but getting an overview of all the different levers you have, and which ones should you actually prioritize? So, setting up what I'd seen to be so key on all other energy projects, these early phases, picking the right levers and then only zooming in, yeah, yeah, you couldn't find it. And I thought, well, that seems to be a gap in the market. So um, yeah, that's what we do now at Arder. We help industrial clients figure out these power strategies, and because with that we get really good insights into what works and doesn't work, we also provide advice to investors in helping them figure out their own strategies on how to think about that market.

SPEAKER_00 10:27

And so um, if I was to put it in my own terms, Ian, it does this mean that you're looking at the the power supply and figuring out how to obtain the the highest amount of power at the lowest price per kilowatt.

SPEAKER_02 10:42

Yeah, in short, what we look at is if you if you look at power very broadly, how do you set it up competitively and uh in a resilient manner? So, for any of the engineers that may listen here, if we recall back to the good old days setting up optimization strategies, you can never pick more than one goal function, all the rest becomes constraints or your algorithm crashes. Like you said, there that's pick cost, that's usually the number one priority. All the rest then becomes a constraint. That's usually how we work. Um, then we look at the client's data, so it's demand data and their cost data, their profiles, and then we screen across levers. So there are contractual levers, operational levers, and investment-based levers. And in the first step, going really top down, screening out what screens green, so what are things they should definitely look at? What are elements that are amber may work, may not work, so borderline, and what is red, so what can you quite safely forget about, which is just as important as identifying what's green, um, and with that step, creating a clear prioritization and then seeking out specialists in that area. Um, one thing we found is there are specialists in almost every area, but you need to find the right area first and then define the scope. So um background is on the commercial deal side. So the way we work is as advisors early on to the client, but then also as their deal team. So delivering on their behalf as client representatives those deals because usually clients don't want to see yet another consulting report, and then it becomes their problem. So we help them identify the priorities, but then also deliver them so that the client can run around and say, I agree with this assessment. Here's a mandate, please go out on our behalf, help us structure this, or in some cases, they want to retain control fully themselves, and then we work in the background, but setting them up for success.

SPEAKER_00 12:51

Love it. I mean, I think that that's the kind of the evolution of consulting is moving away from like um do it, uh uh I'll do it myself to like do it for me to like a combination of do it with you, like having the client alongside with you doing the work and driving the value of creation based on whatever is identified as the highest priority.

SPEAKER_02 13:16

Yeah, indeed. And one thing we've done quite consciously, anytime we do work, we we spend a lot of effort on encoding the knowledge so that we have our own proprietary analytics, our own tools that help us accelerate and become a lot more efficient next time, so that it can ultimately lead more towards a platform approach where the data can lead clients there. But the important part is to get started and solve real problems. That's what we found so far. Yeah, um, a lot of the analytics are huge synergies after a while, figuring that part out. Yeah, but what is optimal for a client is just for every case we looked at so far, it's just so vastly different.

SPEAKER_00 13:58

Yeah, you know, I couldn't agree more. Um I mean ultimately if you if you're a company consuming electricity, you you to your point, you want to build the redundancy, you want to build a resilience, um, and you want to you know buy energy when the energy price is low and and uh or store energy when the energy stuff price is is is high, right? Um you want to optimize this. Um I was recently reading the study around kind of the data centers, because obviously data centers are very much invoke at the moment kind of how we're going to supply uh the data centers, and uh the consensus uh it appears is that we actually have 10% oversupply of energy. The problem is that everything needs to be built to peak capacity. And so if the data centers agree to work in a coordinate fashion where it you know you bring them down when the the the the when it's peak demand and kind of redirect the traffic to where there's supply of electricity, you actually have over supply of electricity of 10%. So it's a 10 plus 10 minus 10 percent delta, but it requires a coordinated uh orchestration.

SPEAKER_02 15:17

100%. If we just look at Alberta's power market, I mean it's it's a phenomenon we see globally. But here, for example, last week between Sunday, midnight going into Sunday and Monday morning 10 a.m., we had 34 hours in a row where the power price set at zero dollars per megawatt hour. That's the floor in the market, it can't go lower. We had 34 non-stop hours where power price was zero, the longest streak we've had in the history of the market. What cost is you? Um, what we have is um we have it's inflexible supply, is the short answer, and we're quite islanded. So we have a very large, unique feature in Alberta is a large base of gas-fired cogen that comes from the oil sense, um, and that is delivering around call it around four, four and a half power, 24-7. And the power is almost a high product of steam production for the oil sense. So they will keep running even if the power price is at zero because they need the steam. Power is a by product. Now, on top of that, we have now inflexible um uh wind and solar. So if it's really windy, we have currently about six gigawatt of wind capacity in the property, it's about two gigawatt of solar. If we add that together, we're around 10 or even north of 10 gigawatt. Our average demand is 10 gigawatt. You have just one megawatt too much if you can't export, power price sits at zero, and then we have some what's called slow ramping assets, gas fired, steam, others that sit in there. Our interties are very limited uh still into BC, Montana, and Saskatchewan. So large we're largely an island, and it's flexible um generation. But then the the flip side of that is whenever then the wind falls off quickly or solar falls off, and we need what's called the quick ramp comes in, evening ramp in particular, prices can shoot up straight to the price cap, which currently is $199.99, so just under a thousand dollars per metal hour. So you get almost the bar distribution out there, yeah. Yeah.

SPEAKER_00 17:32

And and what what's um, I mean, um like uh Alan Grant and our team is somebody that used to dive resource planning for BC Hydro. What's driving um this island isolation? Because like my understanding of the Opera market is one of the most democratized, liberalized markets in in the country. So, why would we not build more transmission lines so we have egress pointing to I don't know, Montana or other other uh jurisdictions?

SPEAKER_02 18:02

Good question. Um, our market design and and I'll just call it politics certainly have part to play with that, and of course, also concerns, and I think some quite rightful concerns from power developers who also said, Well, we're opening ourselves up to certain competition from outside players who may not need to compete on the same basis. How does that work? How do you have a fair playing field? You can of course the technical complexities as well. Right now we have a limitation where even the intertie into BC, which could run at up to one gigawatt, is limited in size because of what's called the uh most severe single contingency, the MSSC, where if an intertie was to trip and fall off, if it's too large, it may actually trigger a blackout on the entire grid. So if you think to that Spain-Portugal infamous blackout we had a good year ago, um, we don't want those incidents either. So currently the system operator is procuring what's called fast frequency response services. They go into that later this year to get a large amount of batteries uh in here that should start operating by 2029 to increase those capabilities, and then I think beyond that it becomes another CapEx problem. Okay, do we build more enterprise? Where do we build them? What are the market access rules? Um, but a lot of that is is it's coming now. Alberta used to be a powered importer, we've become an exporter now, and everyone is now short power, it's no longer that yeah, power just wants to find its way in. Yeah, everyone wants more power, and I think it's gonna create a great business opportunity for the province.

SPEAKER_00 19:47

For sure. Um, I mean the one thing that I love about Alberta is that in some ways it's it's like China. If something is needed, we'll figure out a way to make it. Yeah. Yeah. Amazing. Um, so just just to finish the story around ARDER, is ARDA primarily on the commercial side, or do you guys get involved with some of the lobbying, some consultation, task forces, um, some of the kind of engineering, or just more so on the commercial side, the strategy side?

SPEAKER_02 20:17

Um, our focus, our big focus is on the commercial side, really helping the clients and being being a client rep, um, figuring out how to play in that market. And now, in order to do that, we need to be at the forefront of understanding what's happening. Last week I was in four days, uh, in a four-day workshop with the electric system operator, with other stakeholders on future transmission tariffs, was called the internal demand rates. Um, we're registered stakeholders for this FFR plus procurement. So we have to be on that front line. We're not a lobbying group, we're not an advocacy group. Um, others do that very well. Our real focus is help industry, help investors, find what works to a large degree world as it is, but then figure out how to best uh operate within it.

SPEAKER_00 21:07

From a KPI perspective, Jan, are you comfortable sharing kind of some of where some of the wins come for industrial customers and uh quantum like magnitude? Yeah.

SPEAKER_02 21:21

Um given that they work with an upstream uh company here, central Alberta, quite spread out distribution, uh connected assets. Um if we look at just purely the non-CapEx items, so things they can do operationally or contractually, uh five to ten percent cost upside without negative impact to um uh to operations. Um, and once you talk about investment based levers, then it's more um well the the kind of hurdle rates that you approach. But we looked at one again, an upstream operator that was a battery that could be employed, and in their Actually, a 20% internal rate of return that that battery could deploy based on their specific attributes. The nice thing is what we really like about industry is it's not as commoditized. So if you look at the large umd scale project, people fight over this, it's essentially the same business model. Whereas on the industrial side, something that works really well for one client doesn't work for the other. So that's it's more work identified, more work required to identify the right um levers. Once you have them, you can find um really attractive metrics. We had another one, for example, where power factors turned out to be the main um, so that's power quality metric. I won't go deep into the engineering part of it, but there are well-known uh opportunities. That operator had several hundred sites, so very spread out operations, and most of the work was on just integrating the building data from the utilities because then also huge Excel files. You just try to integrate several hundred sites and then create a time series, it's really hard to find the signal within the noise. So we spend about two weeks just fine-tuning the analytics model for it. We could feed it through and then quickly identify 20 sites where relatively inexpensive power factor corrections would help them um reduce costs by hundreds of thousands of dollars per year. Wow. So that's what you can do. There are also opportunities where we looked at a midstream operator, and for them they were so well optimized already. There was not much they could going towards bigger investments. For example, um, they could deploy solar behind the fence at their site, which looks quite attractive. But these other opportunities just weren't there because they were quite good already, but they were very happy with that because it gave them confidence as well, and they could report to their board that they're actually quite well set up.

SPEAKER_00 24:03

That's amazing. That's amazing. Um, what's the commercial uh arrangement typically? Uh, is it time and materials? Is it like percentage of savings? Uh kind of like how does it work?

SPEAKER_02 24:18

Um good question. And that was one of the main, I would say, still learnings and still in in progress as a company as well, where ideally we want to have a compensation structure that's aligned with the client's success. Yeah, as a client in my past role, I never liked pure time and materials because the alignment you're just so structurally misaligned, and I ideally we work percentage of savings is a nice concept, sometimes hard to implement. So, what we usually start with is more a cost recovery model in the beginning. Uh, we need to recover our costs as a small company, but uh but beyond that, we just want to get started and identify the um most promising levers, and once we implement them, either work on certain fixed fees with certain incentives or, of course, savings as well, if they can be uh calculated and if the comp uh client is comfortable with that. So that's indeed the goal for us is get started quickly. Don't spend six months on analysis, but really in a matter of weeks, identify what's the lowest hanging fruit and then start delivering and with shared upside.

SPEAKER_00 25:27

How quickly can you identify those wins? Is it like if you have all the historian data, like like is it a matter of like take two weeks, analyze the data, come up with a report, and say this is the power strategy, and then let's go after it in terms of capturing the the values?

SPEAKER_02 25:44

Ideally, yes, it really depends on the complexity on on what basis you start from. Um, like I said there's one midstream company there, we looked at the data, it was very straightforward. Within 10 days, we we had a good idea of what's going on or where opportunities might lie. Um, with another company which had the hundreds of different sites. Yeah, you get just you almost feel for the client as well that the data they get from the user is not really easy to read, and accordingly on our site, neither. So that took a little bit longer, um, and then a lot of work trying to figure out also what works operationally because it's coming from industry background, I say it's often that things look nice on a spreadsheet, but in reality they may look a bit harder. So, in that case, yeah, that requires a lot more conversation.

SPEAKER_00 26:38

Yeah, I know I I hear you. I mean, when we were working on digital things, like, yeah, the AI can produce something, and they're like, Well, but from our operational perspective, you can't do this because of A, B, and C. Um, so like on paper, because if I have all these things, but the like what we're hearing from you is that like you have uh uh you have the ability to quickly get in within like 160, 200 hours, get the initial assessment, and then start capturing the the value creation. So, which is pretty attractive in terms of like the the downside risk for an industrial power customer is pretty low in terms of like what they're paying in terms of the capture that could be realized.

SPEAKER_02 27:20

Indeed, and that's the whole goal get started quickly and and ideally uh come up with a self-financing program where the projects start paying for themselves. So we we want to be in a situation where the client is out of pocket as little as possible until they can start realizing savings, and then the savings from the first project should also help finance the next ones, and then you have a structural improvement because the other thing is perfect is the enemy of the good, really often, and so our whole focus is on higher cadence. So I would rather go with a higher cadence, smaller wins, smaller projects, but ones that are all a creative by themselves, and that then lead to the next thing rather than trying to figure out the perfect strategy. Where strategy often sounds a bit intimidating because people expect a 200-page report and then trying to figure out after multiple stakeholder engagements what to do. Whereas our focus is on well, if we identify, usually the screening shows pretty quickly. Yeah, what's feasible, what's not. Let's start with what's really feasible, what what screens on top, and then go to the next thing.

SPEAKER_00 28:31

Yeah. Understood. Um, are there specific industries that they're more exposed? Um if um if if they fail to modernize their energy strategy, like kind of like who should we pay attention to geo messaging?

SPEAKER_02 28:49

Our background's oil and gas. Oil and gas, of course, the biggest industry here as well in Alberta. So that's our big focus is. Um, I would say this the second one, of course, is uh mining. Uh, mining, of course, also very big and and quite closely related. Um pepper chemical, I would count in as well. So we're looking at these uh these bigger uh customers out there. Um our focus is on these large companies, and I would say it's just more on that on that characteristics. Um, we started looking at the municipality uh space as well. Um, and we're currently looking how we can translate it because some municipalities are from a power consumption profile more similar to an industrial player than to, for example, a residential one. If someone has large uh wastewater treatment plants, for example, or um transport infrastructure. Um so that's a field that we're quite excited about, but have not started on yet.

SPEAKER_00 29:54

And and and and in this case, is identifying those industrial assets within the municipality that uh that would benefit with this this kind of like is the initial phase of discovery and optimization.

SPEAKER_02 30:07

Correct, yeah. So that's uh but for now our big focus is on is on oil and gas, and from my own experiences a lot of opportunity within that. And the other thing to highlight is uh, and we hinted at it, the market is changing so much. We talked about the zero dollar hours a bit, but on top of that, we have here in Alberta the biggest power market restructuring in over two decades, the restructured energy market coming. Price caps will triple over time, we'll have a negative price floor of minus a hundred dollars a megawatt hour by 2032. Instead of one price, we'll have a few thousand pricing nodes all throughout the province, and on top of that, all our tariffs will change. So those who are more proactive who get ahead of it, they will have a real advantage. Whereas otherwise, you may be okay or maybe not. You won't really so being proactive starts to pay, and like you said, their flexibility gets more and more value, uh, whether driven by the data centers or otherwise. That's yeah, the amount of change that's coming is just it's quite incredible.

SPEAKER_00 31:13

Yeah, I mean, uh with certain customers' power, um, is a significant uh cost on their um um income statement. So it's uh it's important to be able to look at it like, well, how do we turn this cost or it into an advantage vis-a-vis other competitors? Because like if it will optimize our pricing strategy by 20%, that means that our margin is going up, hopefully by e corresponding percentage. So higher margin means higher cash flow, it means high opportunities for growth.

SPEAKER_02 31:46

Yeah, and and the one 100%. And if we look at overall growth in the market, we know that we're I think two, three years ago, um, we had very high power prices, and people really woke up to it. And right now, prices are very low again, they're unsustainably low. Right now, not a single technology recovers its full cycle cost, neither gas powered, uh, nor hydro, nor wind, nor solar. No one makes it money back in Alberta. So we know it's unsustainable, and just with the first phase of data center allocations, that's 1.2 gigawatt that are coming within the next two, three years. Contracts already signed with the ASO. That's equivalent to six years of normal load growth on top of that normal load growth. So things are gonna change very rapidly here in the next few years.

SPEAKER_00 32:39

Yeah, I I hear, I mean, we're working on data center project, uh, two uh two assets, um 530 and 470 megawatts, uh lead investor from Salt Lake City. And so this is just one project. I mean, this is just one firm. Like I I can only imagine there's a ton of other companies working on something similar, which would require significant load growth and kind of like appropriate resource plan in terms of like how we're gonna produce and consume power in a way that's sustainable.

SPEAKER_02 33:16

100%, and that is just on top of what's coming in industry as well, where I think electrification, the the upsides are so big. You look at we talked to um um an oil and gas company that electrified a gas plant in British Columbia over the last years, driven there by regulation at first. But what they told us before, they now realized the upsides were so significant on the operational side, the maintenance side, reliability, maintenance cost, uptime, that now they're looking at electrifying the Alberta gas plant, and it's driven by those aspects, it's not driven by ESG goals, um, but it's driven by reliability metrics, by resilience of the asset, and by uptime production.

SPEAKER_00 34:01

And that'll it's gonna be big. And it makes sense. I mean, most companies look at at assets from a total cost of ownership, as well as like what does it cost me to run? Like, it's not just uh the initial, but it's also like the overall um uh branding of the asset. So this kind of dovetails nicely into decarbonization. I I know you have uh spoken publicly about industrial heat is one of the hardest sectors to decarbonize. Why is it such a difficult problem?

SPEAKER_02 34:34

Heat heat is hard because it's the way of doing things right now, especially here in North America, if it's unabated, it's really cheap. Our natural gas price is really really low here in Alberta in particular. We have really cheap net gas. So if you just fire a net gas boiler, unabated, if there's no price on the emissions, it's really cheap heat and steam. Um you have a heat rate of four call it four and a half gigajoules per megawatt hour of steam. So if your natural gas costs you right now two Canadian dollars per gigajoule, 250 delivered, you get you get steam for 12 to 15 Canadian dollars per megawatt hour thermal. That is really cheap. So if you wanted to electrify that, really hard to do. And if you want to look at carbon capture and storage, well, that's the economics are extremely challenging to say the least. So we're one thing we did early on, and you mentioned those earlier talks, when we started the company as well, there was still a lot of discussion how do we decarbonize the oil sands, and also from my past role, I've looked into that a lot. And carbon capture is it's technically very doable. Uh, it's been done shell here with Quest, but the cost is really high. And for new greenfield CCS plus carbon capture pipelines, you're often talking 200 to 300 dollars per ton per of emissions because the other thing is the process itself through the reboil of the amine uh solvents, etc., has a lot of parasitic emissions as well. So once you calculate those out, the net cost is really high. So we looked at how can you decarbonize it in different ways that's more cost efficient and also simpler to do? Because and one thing it came up was thermal energy storage, uh, which partnered up with a company out of the US called Rondo Energy. They do build these really large, it's basically toasters covered in bricks. Um bricks for heat storage, and it's really that simple. The industry it comes, they had a great approach because they said we want to innovate as little as possible. Yeah, you're just generating heat as a resistance heating, so it is literally a giant heater, came from the steel industry. You generate up to 1500 degrees centigrade heat, you store it in these keramics, also come from the steel industry, used for for over a century already. Yeah, and then you just need a blower, you blow air through, you generate the same blended temperature that a gas burner would generate, and you can generate high pressure, high temperature steam, same quality what oil sands needs um right now, and without any scope one emissions. So, as long as your power that goes in is is clean, you have clean steam, and so it's more expensive steam generation, but no messy CCS at the end or other processes. Yeah, um, and like Rondo delivered it um for an enhanced oil recovery project already in California. Um, so there it's already operating. They put solar behind the fence right next to the oil asset near Bakersfield, and they generate high pressure, high temperature steam to uh for oil field applications. You could do the same thing here. We ran the numbers, it looks very favorable compared to uh carbon capture. Yeah, the big challenge is still it's still a big project. Um, carbon capture gets very large um subsidies, investment tax credits that you don't get for this technology. So even though the net impact may be the same, it's not on the same playing field. And of course, right now, with all the uncertainty on carbon pricing and some of the pressure taking off on emissions reductions as well, it makes it harder.

SPEAKER_00 38:44

Yeah, sorry. I was gonna ask Jan, are we then making bets on the wrong technology? We're working with a circular company out of Christchurch, New Zealand. Um, and and the need uh the the the nithinum bottom, they're they're in the in the waste management space. So essentially they process waste, turn it into uh or organics and fertilizer, the the the the gases are used to to fire up the plants, uh they sell the green credits. And it's it's uh the asset generates money by itself. Um, so with if we have better solutions in technology, are we placing the bet on the wrong technology? And is the desire driven not because obviously from an economics perspective, it doesn't make sense. Is is is the desire purely driven by how much carbon we can sequester?

SPEAKER_02 39:31

Yeah, it's a good good question. I think in general, whenever you have to pick winners or whenever policy or some of these pick technologies rather than outcomes, it's problematic. I in a way I understand as well uh the difficulty for the regulators and for politicians as well to pick something because like a carbon price is so unpopular, whereas if you say we support a certain technology, it may be easier to do, and of course, they need to avoid as well unintended consequences that they want to pick something that's then well vetted, and it's it's really hard to stay on top of the technologies there, of course. The more we can reward outcomes, the better, of course. I mean, I give you another example, like to start with simple like electrode boilers, it's like it's a really nice way to partially decarbonize really low if you have intermittently cheap power, like let's pick our zero dollar hours right now, and we have a lot of curtailment right now of wind and solar power. If you have a nearby industry that can access this power cheaply or at zero dollars, yeah, these are boilers that you can put onto the same steam header, and they're oversimplified. Now, apologies to any steam engineers, but it's basically lightning in a bottle. Basically, you have a you apply very high voltage between two plates inside a pressure containment, and it flashes water into steam that gets sprayed inside from a nozzle, and you have steam less power, but you you can ramp them up within a matter of seconds, and you can switch them off in a matter of seconds and switch back and forth if needed to gas fired generation. But when you have a few hours of otherwise curtailed clean energy, you switch over and you run it electrically, and once prices spike, you turn it off and go back to gas fired. It's not 100% decarbonized, but you know what? It can be very profitable. This is really simple technology. It's TRL 9, it's fully de-risked, it's fully deployed. What level? Uh this is uh this is TRL9, so fully established. Oh okay. This exists, you just need really cheap power to put in. These boilers are even cheaper than gas-fired boilers. There's hardly any maintenance, very robust. You wouldn't want to run them 24-7 because prices will still average out high, but they're so cheap. You need only a 10-15% capacity factor. So running it only 10-15% of the time if you get power at zero, um, to break even. So you can you can do a lot of things um yeah with the right concepts, but yeah, you need the right uh right commercial um circumstances for you need the right transmission tariffs, distribution. People need to understand that. So it's a few more hurdles to run through. Whereas yeah, when you start with it, often there are other lower hanging fruits at times, so that's why heat is so hard, even though the opportunity is as big.

SPEAKER_00 42:40

Got it, got it. Um, Canada talks a lot about becoming an energy superpower from your perspective, yeah. I'm kind of like, what we're actually need to happen for that to become a reality.

SPEAKER_02 42:53

My view, we already are. And even if we look at LNG, we're um LNG Canada. If we move forward with phase two as well, just LNG Canada, phase one and two makes us a global top five LNG exporter. Okay, so we're it's already pretty big. Phase one alone is about is over 10% of our total gas production over here. We're already big. We're not as big as the US, and I don't think we'll we'll ever be there. But with if I just look LNG again, LNG Canada, phase one and phase two will be ahead of uh Malaysia, ahead of Nigeria, we're top five exporters, so we're we're fairly big. Um on the oil side, it's already fairly big with the new projects that were recently announced, the South Bow projects. I don't think we'll see any pipeline constraints soon. And on the renewable side, we have a lot of potential here. I think there's on the power side, we have world class windows resources, we have world class uh solar resources we could use here in the provinces. We already have one class hydro in a bunch of provinces. If we now build out the grid to connect all of this, also east-west and not stand in our own way, I think we can have all of the I I think the opportunity is huge, and then having affordable, reliable, and clean power will attract a lot of industries. Well, like you mentioned, data centers, but also other producing industries that need a lot of power. Yeah.

SPEAKER_00 44:25

What if from your perspective? I mean, what does the industrial energy landscape look like in 2035?

SPEAKER_02 44:37

I think we have a huge potential that will just yeah, we have an all of the above approach and we can expand massively. And I think the role model I'm looking at is taxes. When we think about, I'll pick clean energy now. People always quote China or California. I run the numbers on a per capita basis, just looking how and just normalize the size. Texas lists both of them in terms of deployment of renewables and deployment of energy storage, and that is market-led. Um, Texas, I think few people would accuse the Texans of being uh too much on the green side. So Texas has created sets of market conditions that enable those technologies that move out of the way. Texas still has record growth, oil production growth, and LNG production, but at the same time, they're the world leaders per capita and renewables and energy storage as well. And it attracts industry. You look at all these manufacturing industries that move into Texas, and you can do all of this, and I think we can do the same here as well.

SPEAKER_00 45:50

Do you uh I mean there's the um the the the like where do you line around nuclear? Like there's the conversation around three-mile island is going to be resuscitated in order to power a data center and the the the off-take agreement that the PPA is purely with just one customer. Kind of like, um where does nuclear play a role in our energy landscape?

SPEAKER_02 46:17

I I'm actually one of the few Germans probably who actually like nuclear power. So I'll I'll say that up front.

SPEAKER_00 46:24

So I I think I think from the risk Germany's regretting shutting down the nuclear plants after Russia cut it off, and now they're looking to probably resuscitate that.

SPEAKER_02 46:34

Yeah, there were the German decisions are are hard to rationalize. That's let's put it politely out there. I think that the the main the main challenge I just see with nuclear is mainly on the cost and complexity side. The the small modular reactors, at least the designs I've seen are neither small nor modular, and it's just really hard to see how we can get to attractive costs. I think and see it strategically playing a big role. Yeah, I struggle having seen mega projects and how hard it is to get projects over the line and all the hurdles that are there for nuclear as well. I just can't see it helping us materially within the next 10 years address the power needs we have. And and we have we have a lot of potent lot of growth potential, but also some real challenges just to address what we need over the next 10 years. So I think we need to make sure it doesn't become a red herring that detracts from what do we need to do for the next 10 years. We should never close our eyes to long-term options, but to me it's that's a long-term conversation for the next 10 years. Okay, storage is first and foremost the biggest thing we need to do: flexibility. Like you said, it's it's not about the average consumption, but it's also about peaks.

SPEAKER_01 47:50

So I think storage is huge, renewables are the low-cost intermittent ones, and and gas will will play a material role as well for the for for the foreseeable future.

SPEAKER_00 48:02

Amazing. Um, and and we can I I mean, policy is absolutely an important lever to pull on. It just as long as we don't skew the policy in one direction or another, because I think that we need to have a multi-prong, multi-faceted approach in terms of how we develop it. 100% couldn't agree more. Yeah, and I know that we're coming on to time. Um I I I I I like to end the conversation with a couple couple of questions, and you can you can pick um between the two, or you can answer both. Um the first question is what's the best advice you have ever received? And the second question is like, what's the kindest thing somebody has ever done for you?

SPEAKER_02 48:51

Okay, both are very deep questions. I'll the best advice, actually. My my dad always used to say um if if you try, you may lose, if you don't try, you have already lost. Yeah, especially finding a founding a company, it's uh nothing's straightforward, nothing's as easy from the outset as it looks like, and it's a roller coaster at times, and I think just thinking about it's like, well, you know what, nothing's easy, we but we have a go at it, and trying something only generates upside you. It's it's very usually you can manage that risk, and uh well, you talk to founders all the time, and uh yeah, I think not not going up, just keep going at things where where the conviction is there, and we think it's yeah, it's a lot to figure out, it's rarely a straight line, but it's worthwhile and and the upside's there, sure.

SPEAKER_00 49:58

And and and in many cases when you're building a company, um it's kind of like if you're building um uh like a project or a house, there's a lot of work that goes into building the foundation, and nothing shows, nothing shows, nothing shows. Once you start putting together like you know, the the stuff above service, like, oh well that goes quickly, but like that foundational piece, people out there estimate how much effort it goes into it.

SPEAKER_02 50:24

100%. Yeah, and for for kind of thing kind of thing, uh they would almost require too much time to think back, but I think in general, what I I find most useful, both personally and and in and in business is actually constructive criticism, I would say. When people come with the in with the intention of helping, but saying what one should do differently, and what people telling me, hey, look, you're really wrong here, you should do something wrong, or your approach is wrong, or but but being because I think that is really hard for people to do. Compliments are easy, criticism is not, but I think that that's what's needed for ultimately for growth and to improve. None of us are perfect, we make mistakes all the time, and I really I I've greatly benefited from people who've who've helped me by criticizing and in a constructive manner and pointing out look, you should really think about what you're doing here. This is how it comes across, or or this is where you may be going wrong. To me, that is actually a really kind thing to tell people what not to do or or what to reconsider.

SPEAKER_00 51:34

A hundred percent. One of my favorite books of all times is uh is a book called Radical Candor by Kim Scott. And so it the the the the key premise of the book is exactly what you described. The feedback is a gift, and and in um if you want to do something nice for somebody, it's to provide them with that valuable feedback um around like what it could do better, or like whatever it might be. Now, you're German, or at least by origin, you're German, and so German and Dutch people are known for being very direct. Have you had to adjust your style here in Canada?

SPEAKER_02 52:10

Yes, but here my one of my biggest learnings when I started with Shell was in in London, and I still remember my boss's boss came in. Well, it must have been like four or five weeks into the job, and he came in and said, Jan, if you have time, uh you may want to consider um looking at this presentation and what we can do about it. So he came back the next day and asked me, It's like, oh, um, did you have a chance to look at this? And I said, like, uh no. And he looked at me totally shocked. To me, as a German, it was like highly highly optional. It's like, if you have time, you may want to consider like it's like four optional elements, whereas in English it was you better go on it right away. So um, and similarly, I think my own communication style needed some uh needed some tweaks at times, yes.

SPEAKER_00 53:08

Jan um I enjoy the conversation tremendously. Um, you were extremely valuable, guests, highly knowledgeable. Um, thank you so much for your generosity of time and and the graciousness with the insights that you shared.

SPEAKER_02 53:24

Yeah, thanks a lot, Maxim. Great pleasure uh talking with you and love energy. And uh yeah, if also if anyone listening here is ever interested, just to talk energy, energy markets, opportunities, love the topic. Please, please reach out for sure.

SPEAKER_00 53:38

And in the show notes, we'll include links to Arthur, uh links to your LinkedIn profile so people can follow your work and the work that the company's doing.

SPEAKER_02 53:47

Perfect, thanks so much.

SPEAKER_00 53:48

Amazing.