Energytech Startups

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Unknown
Energy tech doesn't move forward alone, and neither should you. Energy tech cipher brings together the founders, investors, operators and corporates shaping what's next. From innovation trends to data driven insights. This is where the ecosystem connects, collaborates and moves. Find your place in the ecosystem at energy Tech cipher.com. That's cipher as in Sci, pH. E.R. where we bring the community together online and in-person.

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Unknown
Everything is bigger in Texas, including climate change. But luckily, Houston is leading the energy transition here in H-Town, the fourth largest city in the United States. Entrepreneurs from across Texas and around the world gathered to work with titans of industry to build a technology that will reduce emissions and power a low carbon future. We sit down with those changemakers and wildcatters who are solving the toughest energy challenges, with trillions of dollars on the line.

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Unknown
We dig into how Houston will bring technology to market on a massive scale. Join us as we talk with leaders from the energy capital world, as they show us how the energy transition gets done. I am Nada Ahmed and this is the Energy Technology podcast and I'm Jason Ethier. Let's jump in. Thank you all for being here. And welcome back to the Energy Tech Startups podcast.

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Unknown
And today I'm really excited to be here with Matthias Slashed who is the CEO of Coldstream Energy. Welcome to the show. Thank you and pleasure to be here. So tell us a little bit about Coldstream Energy and what, what is it that you guys are working on? Yeah. So Coldstream Energy, we get around since about 2012 and we started in, gas processing with mechanical refrigeration units.

00;01;44;05 - 00;02;10;25
Unknown
They used to separate rich gas into lean gas and heavy hydrocarbons or natural gas liquids. But they're very power hungry and need a lot of energy, have a lot of consumables, like, methanol to keep everything from freezing. So in 2020, we started to develop a new technology. And that is based on precious metals option. It's again about, gas separation.

00;02;10;27 - 00;02;33;00
Unknown
And the key concept is when you are in the middle of an oilfield, you have all this rich gas coming from the oil. That's the associated gas. And a lot of times that is used for fuel. And it means you're wasting a lot of the other components, like the natural gas liquids, which are the essence, propane, sportiness and so on, that available feedstock.

00;02;33;03 - 00;02;59;12
Unknown
Or even then you think about propane butane. If you go camping, that's a fuel you use there. So instead of burning that in engines as fuel, we separate that out so that you get very lean fuel gas, which means the engines run better at higher performance. And the value of the engine is, is captured as it was. So the next processing plant and I always think about it, we have to make the most of the natural resources.

00;02;59;12 - 00;03;18;18
Unknown
It's burning them is not the best use. And methane is in the field gas, it's the cleanest fuel you have is I mean that's just CO2 and water that comes out of that in the end. And so you want to have the cleanest fuel, which is then more environmentally friendly. And to capture the value of what else is in your, your gas stream.

00;03;18;25 - 00;03;35;19
Unknown
Yeah. And just to like dive in a little more I guess like with natural gas. Right. It's, it's a gas. So that's part of why it's not valuable is because it's hard to compress and hard to transport. But when you have all these, like, oil pipelines, right, you can just put that NGL right back in the pipe and it's whatever a thousand times more dense than gas, right?

00;03;35;19 - 00;03;57;28
Unknown
Yeah. So actually the interesting part is, that these gas streams with the heavy hydrocarbons, they are moved to processing plants. So when you think about the rich gas coming from a well, you have so-called gathering stations where all of the gas is further compressed and then moved to to the next processing facility. And that's where you, break it down into all the individual components.

00;03;58;01 - 00;04;21;15
Unknown
So on the way going down, we have to burn more of the methane and putting more of the heavy hydrocarbons back into the gas pipeline that is then being processed at the processing facility. But right now we are working at one use case as well, where the customer is the so called sales pipeline location, from a bank, a tank battery.

00;04;21;15 - 00;04;59;07
Unknown
That's where oil is being stored and everything that's gassing off is being put into a small pipeline in order to that is going back to a processing facility. So therefore the compression is not really the big part here, but it's really about that. We avoid wasting that raw material in when you think about burning gas that has all these different components in there, it means you have more VOC emissions, the volatile organic content, which is an emission that's very tightly regulated state by state, even city by city.

00;04;59;10 - 00;05;21;02
Unknown
And so therefore, it's one part our clients want to avoid. And it's really about the every breathe. Yes, there is stuff that makes your coffee in the end or that gives you some, changes breathing. So therefore it's about cleaner air in that context as well. Good. And, and so you said the company started in 2012 right.

00;05;21;02 - 00;05;50;16
Unknown
Yeah. And I think the shale revolution really picked up around then. Was that like part of the story. It was part of the story is at that time flaring was a big topic. Regulations were tightened up at that time and the original technology was geared towards as well, capturing the heavy hydrocarbons, but in that case, in a liquid form, the cement put into tanks and had to be trucked off, so that if you had to flare, it was mainly lean gas, mainly methane.

00;05;50;16 - 00;06;15;23
Unknown
And based on that, lower emissions. But as you might know, shortly after having tightened the emissions, it was seen there. That was a significant restriction for the oil. And so a lot of these restrictions have been loosened up again. And that was a little bit the challenge at that time with our original technology that, the demand was not there to the same extent.

00;06;15;28 - 00;06;40;24
Unknown
And these mechanical refrigeration units, they're still used widely, but in very specific applications is as soon as you have to put these natural gas liquids into tanks, that means you need to transport them to the road. A lot of times that means you need to find a facility that can take them. They always require a specific quality to even be able to offload.

00;06;40;26 - 00;07;09;00
Unknown
Those NGOs. So there's a lot of logistics challenges with it. A lot of customers didn't like to have to deal with that is there was some uncertainty and value, and you had more infrastructure on location that was not really wanted at the time. So how do you solve that problem? So we solved the problem by, in our technology, we don't produce the engineers in liquid form anymore, so they don't go into a tank.

00;07;09;02 - 00;07;30;08
Unknown
The way we work it right now is we started at compressor stations. The heavy hydrocarbons we capture, they are kept in gases form based on working at higher pressures and higher temperatures. And in the end, we just put them back in gases forming what's called the suction header of the compressor. So it's kind of the inlet.

00;07;30;11 - 00;07;51;07
Unknown
So they're being re compressed and then moved to the next processing facility. So based on that you don't need any tanks to to capture them. And the customer is getting the value directly at the next processing facility. So it's almost an inversion of the way it was before we were trying to split off the liquids for capture. Now you're you're really capturing just, clean methane for use in the engine system.

00;07;51;07 - 00;08;10;27
Unknown
Yes, exactly. So that's really the difference. The. Yeah, originally it was about capturing a the angles as a product so that they can be sold and put into a pipeline. Now the focus is, first of all, providing the clean fuel gas. And as a byproduct, we have the nodes that still have some methane and ethane in there as well.

00;08;10;29 - 00;08;38;15
Unknown
So it's not really a sellable product. We produce on the heavy side and on the fuel side, I mean, it's pipeline quality gas. Yeah, yeah, yeah. So when your clients, they, use your technology, what's the ROI? What are they getting in return for this? So, yeah. Number one, as I mentioned, one of our systems right now is capturing about 1 to $1.2 million in sales per year.

00;08;38;17 - 00;09;03;29
Unknown
So that's the one part that's really easy to, to quantify. But when you can increase the throughput by a compressor station by a couple of percentage points, that means another 1 or 2 million. In addition, in natural gas, that is making it through the pipeline, through the point of sales. So that means more gas is being moved, more revenue is being created.

00;09;04;02 - 00;09;28;04
Unknown
And when you think about the gas infrastructure, it's kind of limited. So these days you always hear there's not enough take off, capacity, which is impacting also oil production. If you don't have the offtake capacity, you either have to flare or you have to shut in your production. So therefore, in the end, I see really three value streams there.

00;09;28;04 - 00;09;51;24
Unknown
That number one is the the new it's number two is the additional gas being moved through the pipeline. And number three additional oil production. But just the engine alone gets us to an area of less than three years. In a typical use case, when you add on top of that to the additional gas that's being moved, you can get easily below a one year return of investment.

00;09;51;27 - 00;10;19;12
Unknown
And right now we, we're just working on one use case. It's it's a gas lift and gas lift. They use the Richfield gas compressors, compress it, put it down, hold again to keep the production going. So that feel gas. There's a lot of these angles in there. So one customer just now ask us, can we, at that station use again our technology, capture the angles.

00;10;19;15 - 00;10;46;17
Unknown
And in this case, all the angles we capture would have had no value before. So that means that's a very of 2 to $3 million a year that we can put back into a pipeline. So therefore there's a really interesting ROI. And what I really like about it is, as I mentioned, the, the VOC emissions, you can do something that's beneficial from an emission perspective, but you can make money visited at the same time.

00;10;46;17 - 00;11;15;28
Unknown
A lot of times it's mutually exclusive. And I always think anything that reduces emissions but improving, profitability at the same time is just a winning proposition. Interesting. I, I'm trying to figure out how big this thing is. Okay, so when we talk about a typical compressor station, I mean, you're talking about between 8 and 20,000 horsepower to start with, which means it's between 3 and 6 big engines on those locations.

00;11;16;01 - 00;11;41;05
Unknown
We can support you as one of ours gets about up to 10,000 horsepower. Okay, so that's it is 40ft long, 11ft wide, weighs about 85,000 pounds. And is producing enough fuel gas for three big engines at this time. Oh, okay. Is this a just cause? I like to play the prices right, without seeing it? Is this like a $5 million kind of installation?

00;11;41;08 - 00;11;58;12
Unknown
No. It's significant, you know, it's more or less is significantly less. It sounds big, but maybe it takes up a lot of space. Okay. I mean, it's it's. I would lose this game, by the way. It takes a lot of space with it being 40 by 11. But in the end, as we same age, we use precious minutes option.

00;11;58;15 - 00;12;20;29
Unknown
So precious thing adoption means you have an absorbent and it's high pressure. The nails adhering to the surface of the of it. Okay. Yeah. So and the lint gas is flowing through. So then in the second step, we reduce the pressure. And at a reduced pressure it's called the desorption step. Or they're required to comes up at least from the surface again.

00;12;21;02 - 00;12;42;06
Unknown
Yeah. So so therefore one time you get to if you get to the next step you get the heavier bits. That is this is a batch process. In the end we have four of these vessels filled with its orbit. So that one is always producing the gas. One is producing the heavy gas and the two other vessels are in steps in between.

00;12;42;09 - 00;13;10;01
Unknown
So each one of these vessels is about, four feet in diameter. And about seven feet high. And they're filled with a nozzle band. So each vessel is about half a ton of absorbent in them. Okay. So just give give or take in. So that's where some of the weight comes from. But then you have kind of this steel frame where everything is sitting on the vessels.

00;13;10;01 - 00;13;30;16
Unknown
On top of that, those are pressure vessels or the piping lot of those. So I mean, that's how the, the weight comes together. But in the end, we have we are significantly less than okay. Do you want to put in a better total installed cost. So that doesn't become part of the repertoire? As I mentioned before, yeah, it depends on this is $1.2 million of value per year.

00;13;30;16 - 00;13;55;07
Unknown
You get less than, three, three years of. Okay, okay. So so currently fully installed is about 2.7 million. So just a factor of two off. That's pretty good to see. Maybe maybe offshore or no. Now we're just I'm sure it's a different. Yeah. So how easy has it been to convince operators to put in the solution?

00;13;55;10 - 00;14;20;15
Unknown
That's a really good question. Is starting with the there's some technologies out there that help customers to get to a reasonable fuel quality. Those systems have a significantly different price point. You talk about maybe 20, 25% of what our system is costing, but those use a lot of consumables like methanol to keep things from freezing.

00;14;20;17 - 00;14;46;19
Unknown
And one customer told us, you know what? You have the only technology that's NPV positive, which seems like an convincing argument in the first case. But you know how conservative the oil field is, and implementing a change always means somebody has to spend time on it, evaluating it, figuring out how to install it. And I for sure is seeing that everybody seems to be really tight on resources.

00;14;46;21 - 00;15;14;09
Unknown
Doing something new requires, the right conviction to it doing so. And honestly, what I've seen is so far the easiest in for us was going through central technology groups and the venture teams because they see the big picture. And so, you know, there's something that can help us with performance, with creating additional value and based on the big picture, those are the big biggest proponents for us to get into the market.

00;15;14;11 - 00;15;39;19
Unknown
So therefore, one step was getting to the right people to, to get it, into the market. The second part is, there's a disconnect in the midstream business between who might pay the bills and who's getting the value. Yep. So in a typical midstream contract, you might have a mid swimmer who is charging a fee for moving the gas.

00;15;39;22 - 00;16;01;19
Unknown
They would have the expense for the installing the equipment, but based on the midstream contract, they might not get a dime or just a very small percentage of the dollar amount that's being captured. So therefore for typically midstream, depending on how they set up, how they're if they're vertically integrated and get the new value, it becomes a slam dunk discussion for them.

00;16;01;21 - 00;16;25;10
Unknown
Then when you have upstream us again, depending on their contract, there might be some cut going through the midstream. A bird that's maybe seen the most traction recently because number one, typically they own the engine value. Number two, they get the real benefit from moving more gas because they get every dollar in gas that can they say that they can sell.

00;16;25;10 - 00;16;49;15
Unknown
In addition that's the present value to them. Yeah. And so therefore it really comes down to what some of the contractual setups are in finding the right people who yeah. The early movers, in the end, the early adopters. And luckily we found a couple of those, working with one major midstream. I think I can name them one.

00;16;49;15 - 00;17;13;13
Unknown
Okay. Yeah. They've been a great supporter for the last couple of years, and now we're working with two additional, upstream us that really see the value, based on the gas production, the engine oil recovery and all of the ones we are working with right now, it's really about let's have some brand history and then deploy it.

00;17;13;13 - 00;17;43;16
Unknown
Scale. Yeah. And for me, those are the ideal customers. Is number one there. The early adopters. Number two, they have a vision of what it can do for them. And based on that is this is a significant expense for everybody trying to sell one offs. It's a lot of effort takes a lot of time. And I think then we can put obviously some of these, brand names on our website and use them officially in marketing.

00;17;43;18 - 00;18;05;00
Unknown
Veeva get to the next level of traction as well. Yeah, it's in the end, everybody's looking at how many customers do you have and how many replacements do you have? Yeah. Then you know, you have your product market fit, right? Yeah. Yeah. But I mean, I guess in this market, if you have like a big midstream company as your customer, there's a lot of skill you can just do with that one customer because you kind of develop that trust doing the pilot.

00;18;05;00 - 00;18;29;01
Unknown
And then there's so much more you can scale just with them. Absolutely. And I mean, for for me, when you think about developing this kind of equipment, you really need a strong partner early on on the deployment side, somebody who works with you, some of the technical challenges, you know, you might experience. And one, okay, was one of these partners.

00;18;29;03 - 00;18;53;18
Unknown
And if you have a second partner who is also one of our investors and, it's our truck is a major. Yeah, yeah. Compression company. Okay. And they really helped us understanding some of the environment we have. Yeah. You know what, understanding that the market got so kind of what size equipment fee we would need. And they are always our distributor which means they provide the customer connections.

00;18;53;18 - 00;19;19;29
Unknown
And I mean I could not have any had any better partners in a major compression company that's related to our first use case and then in midstream, who really helped us working through the initial growth phase is I mean, one big lesson learned, what was the other pilot system defeated Floyd and of I think 2023. And that was with Iron Horse Midstream.

00;19;19;29 - 00;19;44;26
Unknown
They've all it's a very, very collaborative with us and that system. It worked out of the box. We installed it, we saw it off. We provided lean fuel gas from from day one. We started to fuel one of the com compressor engines and that gave us a lot of confidence. But then the next step was going from the pilot to a commercial system.

00;19;44;28 - 00;20;11;17
Unknown
So, we had to implement a lot of changes to make it cost effective. Based on the customer feedback we got. So again, product market fit in that regard. And with that we we also changed a lot of the process parameters. We, yeah, we went through a lot of changes. And we started to realize upscaling comes with some challenges and changing process parameters.

00;20;11;19 - 00;20;45;06
Unknown
What looked good on paper, we had some dynamic challenges in the system, and we also got spoiled with our first deployment is the way we installed it. It was kind of perfect. So our system was completely isolated from the compressor station conditions. And the first commercial installation, we realized that can be significant differences. Yes, from the universe theory and from having a perfect station to one that is in a little bit more challenging environment.

00;20;45;11 - 00;21;10;08
Unknown
And based on the installation, we were not as isolated from all of these conditions. So it's on the one side. It was painful to have to go through the learnings. But I always said, you know what? It's great. We had this challenge with our first commercial on it, instead of number five, you know, and then having to go back to the drawing board and have to adjust some of the, the design elements.

00;21;10;11 - 00;21;36;23
Unknown
And so that was an amazing learning curve for everybody to understand what happened, why it happened, working with our customer to keep them fully engaged. And I think one philosophy that really helped us was full transparency. We kept our customer fully informed. It was a what? This is something we didn't realize before. This is what's happening. Be working on it.

00;21;36;26 - 00;22;00;06
Unknown
And for sure was a lot of warranty cost that you had. But in the end, building trusting relationships with customers, with your partners, that's what gets you into the long term business. Yeah. And that's what I want to always my company to stand for that. We are the trusted partners that we share, whether it's good news or bad news.

00;22;00;06 - 00;22;30;21
Unknown
And they people switch and make it right. Yeah. I think, and, what I have learned is yes, yes, you can have a product that costs like what you need, but it has to work in all the conditions and, and everyone appreciates that it's difficult. Yeah. And so that kind of transparency, you know, they'll have your back to in terms of taking that risk with you and deploying and and I've definitely had energy companies when they see the value, you know, come back and say, well, do you need more money to make this work?

00;22;30;23 - 00;22;50;28
Unknown
Right. What do we got to do to solve this? Do we need to do development work and so it's that open communication helps provide, yeah. Even the flow capital resources, what you need to to make sure everyone wins. Yeah, absolutely. And I mean that comes back to our focus all part not yeah for sure. Having the full transparency with the board.

00;22;50;28 - 00;23;16;09
Unknown
And I mean when something is not going right, we I shared immediately I mean I had the experience we we it's an award ceremony in New York. S&P 500 S&P global. We they have a nominee for, for the awards. We didn't win that night. But just before the ceremony started, I got a call from our customer.

00;23;16;11 - 00;23;33;25
Unknown
Something doesn't go right right now. So it was kind of a bummer to get this right before the ceremony. Sorry. You got to put on a face. Honestly, it's like I had my board members with me. A couple of them, and information was false. Passed on in real time. Yeah, and they appreciated it. Yeah. Like it's there's no secrets.

00;23;33;25 - 00;23;57;23
Unknown
And, it also helps everybody to be part of the solution and, and everybody has to, to contribute something part of the journey. So talk to us a little bit about your founder journey. How did you come across this problem. And, you know, given your past experience, really can empathize with the customer in a way that makes it easier for you to then sell it?

00;23;57;25 - 00;24;24;16
Unknown
Yeah. So is I'm not actually the founder. I came on after the initial technology development had started, but, the journey with includes whom started with number one. We had a consultant at that time who worked on adsorption technology and talk with one of my board members and were like, you know, what is something you should should look at, as new technology for for guest processing, guest separation.

00;24;24;19 - 00;24;53;02
Unknown
And, that was kind of the starting point of, working on that. We got a first team member on board, our VP of technology. And so before that, what were you doing with okay. Before that. So, before I came to energy, I was with biotech technology, and budget technology. We worked on, DNA sequencing and on subsurface samples.

00;24;53;02 - 00;25;21;06
Unknown
For those who don't know, this is a, Houston startup from a decade ago. I actually it was a San Diego based startup that they were big here. Yes. I mean, been I, I finally sold the technology office. I was the CEO at the time and wound down the company. But, yeah, having virtual Boulder technology was again bringing biotech and oil and gas together, which was, really nice, nice challenge.

00;25;21;06 - 00;25;39;25
Unknown
And I think we were a little bit of head to head of the time to, to get the right market traction. And before that, I was for 22 years with Baker Hughes and and Baker Hughes. I was always involved in bringing new technology to market from, from day one and starting at the field level. And that was your expertise.

00;25;39;25 - 00;26;01;28
Unknown
Yeah, that so that's where the real expertise came from is in one of my words at Baker Use, I was really tasked with help us to monetize more of the technology that has been developed. So, I went through the whole portfolio, looked at the business cases, what was deployed, and sent all the sales guys. You always want to have the new and sexy stuff to, to sell.

00;26;01;28 - 00;26;27;07
Unknown
And I was like, damn, we have so many things that have been developed that have not been commercialized yet, and that was a big clean up of the portfolio and really putting metrics in place. How do we get this into the market, what was missing? And based on that, really also working on product market fit, info. For me, the biggest element of looking at product market fit was I think it was around 2009.

00;26;27;10 - 00;26;50;17
Unknown
That was when shale drilling started to come up and everybody wanted to go horizontal, tighter curves, and it was done with drilling mortars. Spec that and we had better use. We developed the first rotary stable system for the land business to get to the same built up coast. Build up rates and product market fit was a key element back then.

00;26;50;17 - 00;27;18;20
Unknown
It started with the technical requirements, but also with the financial requirements. Total cost of ownership. What can it cost to buy? What can it cost to operate? Yeah, and that was for me a great learning curve to understand you need to have both the technical side and the cost side. They all need to align. And I had a great technology team back then that we leave post that topic significantly.

00;27;18;20 - 00;27;39;27
Unknown
We also asking what is the if you don't need, what are the minimum requirements. And so when I came into Coldstream and the first pilot was in development, the first part I did to develop a cost model to understand, what are the key cost drivers. And based on that, in the end we had to reduce the cost by about 50%.

00;27;39;29 - 00;28;06;15
Unknown
So I had to understand for the levels we have, and it came down to okay, number one, if we work at higher pressures, we can make everything smaller. So that was step step number one. Step number two of that was, when we can dissolve at a higher pressure compared to kind of going down to a vacuum with our pilot, we can eliminate different pieces of equipment.

00;28;06;17 - 00;28;32;23
Unknown
So it was really this iterative process of understanding what are the cost drivers and what level can be pulled to get the system size down, the cost down. And so this is how I implemented a lot of the learnings that I had toward my career, to how we went about further developing this product. That was, in the end, one of the key reasons why I was brought in, based on having worked on commercialization before.

00;28;32;26 - 00;29;04;04
Unknown
And I mean, I was in the lucky situation that, the venture capital firm EIC that backed me by order. They are also affiliated with the private equity firm. It's called ICP. Same team members in the end, that backed Coldstream. So I got one day call from one of my board members. You should talk with these two guys from ICP.

00;29;04;06 - 00;29;26;17
Unknown
And so we started to talk, and I realized it wasn't an interview. It's just a discussion. And so for me, the funny part was I just two days before a recruiter had reached out to me and I was like, this all sounds too similar. It was the same role. Yeah. So I mean, that's how I just got into Coldstream, based on what I did in my previous company at Bywater and having some of the connections.

00;29;26;17 - 00;29;53;10
Unknown
And for me, it is always like the startup world. It's a big family. Yeah. And everybody talks with everybody. And that's how you find your your partners from the customer perspective, how you find your investors, how you find advisors. And for me, that's that's the fun part about it. To, to just have a great community to, to lean on.

00;29;53;13 - 00;30;15;16
Unknown
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00;30;15;21 - 00;30;38;25
Unknown
That's key. Why you're on ecom now. Thanks. And back to the show. I was thinking of your, cost story. And, I was thinking back to my, startup. We were building gas turbine systems, and we thought. We thought the expensive thing would be the gas turbine. And we were building little ones. And it wasn't until we started to build our first field deployable unit.

00;30;38;27 - 00;31;00;17
Unknown
It turned out like 70% of the cost of our system was balance of plan. And we had no idea and ended up driving made our costs not scalable. Yeah. And I kept thinking myself, man, I wish I had known this four years earlier. We would have built a different system that was a different size because, yeah, it was almost these things that you couldn't value engineer out because of just all this other stuff you needed.

00;31;00;20 - 00;31;29;17
Unknown
Yeah. And, it was it's very funny that those assumptions can be, you know, it's just I thought the hard thing would be the technology. Yeah, yeah. I mean, all this other stuff. So. Yeah. Then we still had the mechanical refrigeration units. We had one installation that ran up to 6 or $700,000 for multiple of those units, and the monthly rental rate was about maybe $100,000.

00;31;29;17 - 00;32;00;28
Unknown
So that means the customers had to spend a lot of money to get this installed. And yeah, balance of plant is a key topic there. But when you think about value engineering or thinking about product development, when I came to to Coldstream installing the so-called muse, everything was an individual project, right. And so everybody was in this project mindset meaning also, okay, you have a scope of work.

00;32;01;01 - 00;32;32;00
Unknown
I get 1 or 2 quotes and whatever the losses I take. So product development is completely different for me in that regard. Is I always think about you, you need to start with your should cost meaning before you go out forward, you should have an idea what the cost range should be. And then you have leverage with your suppliers because you can really start with, you know what.

00;32;32;03 - 00;32;54;12
Unknown
This doesn't seem to be right. There can be cut out cost. And so it's not just about accepting a code but also then figuring out where can you simplify. Where can you change how you manufacture something. How can you simplify your setup. And I just realized that I had to, over time, change out. Some of the team members.

00;32;54;12 - 00;33;21;14
Unknown
And some of this have naturally to get from project thinking to product thing. Is that's really about do I need this group there or can it be a different size to be more standardized. Or is it just a huge difference in your mindset is we want to build the same system over and over again, maybe having a few options, but it's the only project aspect would be the balance of planned but not the system itself.

00;33;21;15 - 00;33;48;14
Unknown
Yeah. Interesting. Yeah, like balancing that when at this early stage you are running projects. Right. But but just having that thinking cap on of this is eventually we want it to be a product. Yes, exactly. Exactly. I mean, the earlier you get that thinking in there, like just a couple of days ago of my heavy of engine caught me and was like, so we discussed this change and I think we need to have all of this.

00;33;48;14 - 00;34;13;04
Unknown
In addition, I was like, okay, the moment we need this, the system is shut down anyway, so we don't need a bypass to keep it running. So you don't need this. So it's kind of I'm thinking at every turn, are these additional costs justified or do you take it out? Yeah. And always making sure that you don't take out too much costs that fight to the end.

00;34;13;06 - 00;34;37;28
Unknown
But that's great. Yeah. I mean, that's kind of that is one of the biggest challenges I think a founder faces, an entrepreneur faces is like managing that that cost base and not and also identifying like what you said earlier, what are the minimum requirements. Yeah. Where do you think you learned that diligence. Was it Baker Hughes that taught you that.

00;34;38;00 - 00;35;08;11
Unknown
And then you like kind of brought it into entrepreneurship. Yeah. So I would say the one example with a curve with an MPC approach, we see with system, a lot of decisions had to be made. What can we afford to stay in our cost range. And so what trade offs had to be made. And it was even down to how simple it needs to be to be handled on location, like the complete system with the drive it had to fit on a flatbed truck.

00;35;08;11 - 00;35;28;05
Unknown
Yeah that was the limitation that would you need 50 right? Yes. Need to be in that that length so that it could be sent to the field. Just picked up, put it into the variable to to do the whole. It was one of the requirements. And that meant we had a length restriction. And that's what I learned in the end.

00;35;28;08 - 00;35;49;05
Unknown
What we look at what is absolutely needed. And with it it comes out when you think about processing equipment, you know you always have to point there like okay we need to step up this pipe a little bit based on being able to accommodate the flow. The next question is do we need to be able to provide that extra or do we have an 80% solution.

00;35;49;05 - 00;36;07;09
Unknown
Then we take this out to reduce the cost. So the 8020 rule is you don't need to be able to capture all the markets with what you do. And so I think that's where one of the thinking really came from. And

00;36;07;11 - 00;36;35;25
Unknown
I would say throughout my career, I, I always thought about what is, what's really fit for purpose for the customer. And with that always looking at return of an investment and that's how I approached every customer discussion a broad rotary steering system. So first auto track big picture the US to the Gulf of Mexico. I in the end looked at what is the current daily drilling progress they made.

00;36;35;27 - 00;36;57;15
Unknown
What is the cost in the drilling cost for that? How much time do I think I can shave off on their time curve? And based on that, I always feel comfortable with going to the customer. If you don't exceed this, you just pay the standard rate. And so based on that, really doing your homework and understanding, at what point do you create value in for us?

00;36;57;15 - 00;37;24;15
Unknown
One key element early on was at Coldstream, we asked customers what kind of our AI do you need for some new equipment in the midstream upstream space? Yeah. Into fairly consistent response was less than three years becomes a fairly easy decision for some. It's less than one year, which is a bit more challenging. But having this goal post knowing this is where you need to be told me immediately.

00;37;24;21 - 00;37;49;27
Unknown
I know how much engineers we get out of it and then what can the system cost be so that was the starting point. And now realizing that the additional benefits for the customer, like the additional gas throughput or additional oil production, the value of your C emission reduction meeting this requirement with one of the value props means everything you can add is just getting better.

00;37;50;04 - 00;38;11;26
Unknown
Yeah, and you just need to have a technical goal. Post what you need to deliver an engineer for a financial goal post. And the sooner you have this in mind, the sooner you can understand. Can I even get there? That was one of the first questions I had to answer to the board in the end. The pilot was not cost effective.

00;38;11;28 - 00;38;43;11
Unknown
But can we get there. And if you don't have an idea if you can get there then you might spend a lot of time getting nowhere. Yeah. Yeah. Interesting. I was thinking I don't know, I was thinking I think it's one of these for me it was a hard lesson of entrepreneurship is yeah, having to give that ROI to the customer and like really hitting like a short time window because in some ways like the cost to do it of changing nothing is very expensive.

00;38;43;13 - 00;38;58;15
Unknown
I think my first company, I really wanted like to get all the value out of the product, and I wanted, like, I was gonna give you a four year payback, and that's so much better than than anything else you're doing. And it was a situation where the customer wanted a one year payback. Yeah. And I, we couldn't get that on cost.

00;38;58;17 - 00;39;23;05
Unknown
Right. And, even today, like, with, some of the software products, you're coming back with, one of the lessons we learned again was like our customer, when they sign on to our app, needed instant or like they needed to see the value instantly. And we didn't we didn't deliver that. And it's just a constant reminder that, you have to share a lot of value to the customer early and often, and it's you got to you got to come from their shoes.

00;39;23;05 - 00;39;47;10
Unknown
Otherwise they can move on. Yeah. Right. Right. And I mean, that's also part where you need to consistently evaluate what are the different elements of value. Yeah. Yeah. So I mean going back in one story from, from Baker use very early on when the first Google Glass came out, we looked at using this for, for maintenance manuals.

00;39;47;10 - 00;40;13;00
Unknown
And it was not just about the Google Glass, but the software behind it. How to have up to date documentation on an iPad in front of all the team members. So I first approach it from a efficiency perspective. So naturally, the first question I got. So how many people do you need in that case? Which is obviously a tough one to to answer, and it's also the uncomfortable one to answer.

00;40;13;02 - 00;40;40;09
Unknown
So in the next step we looked at. So I know these manuals are being printed every time there's a revision in some cases every time somebody is picking it up. So it came down to the printing cost, just justified the investment. And that's why we need to think about what where's the value for a specific customer. And you need to be quick on your feet in the end understanding what is the customer talking about?

00;40;40;09 - 00;41;03;00
Unknown
If you guys have challenges, they have. And based on that, what part of the value prop do you really emphasize? Is like 100 for example, engineer was was everything for them. Second customer, the Indian told us, you know what, our engines have a 20% rate right now. That means you have 10,000 horsepower installed. If I can only use 8000 horsepower.

00;41;03;02 - 00;41;31;20
Unknown
And then that based on the decision with the current equipment they're using in the summertime, they might have up to 3% downtime based on fuel. So for them eliminating the D rate, moving more gas, eliminating the downtime, that's where the value is. They still get the notes, but, got a sudden it was more like it's a must have because it's really performance improvement compared to English.

00;41;31;20 - 00;41;53;04
Unknown
So you could say it's nice if you get this additional revenue, but it's not impacting the car in that moment. And so that's why it's always important to listen to your customers and over time, figure out what is the additional way you can articulate. That might not be as easy to quantify, but that you could at least kind of articulate.

00;41;53;07 - 00;42;18;16
Unknown
Yeah. And that sound easy? You know, it is not it is not. I'm curious. So like obviously, you know, you have a product mindset and you're coming in from this, but at a certain point, you know, you're building a company where other people need to do this. How do you how do you train salespeople to have that kind of I don't wanna say, like flexibility or the ability to recognize that they got to shift the, value prop because in some way, salespeople like it to be one thing.

00;42;18;18 - 00;42;49;20
Unknown
Yeah. So, I mean, I get I guess I got got lucky that my current sales leader, he has a long history with the oil and gas use, and other companies who worked in the product space. So that thinking is there. My VP of engineering, he also has some oil and gas history and, also really prioritizing, power facilities.

00;42;49;22 - 00;43;19;23
Unknown
So therefore I think I started to number one, build, build the team around it, but I very consistently frame discussions around we need to standardize, we need to simplify. So I really tried to highlight this in in every discussion we have, like we realized a lot of the compressor stations, they have liquid drop out at the discharge header and liquids they are not good for.

00;43;19;24 - 00;43;50;15
Unknown
And so with materials in the end it's disintegrating. It's not holding a shape anymore. And the first solution was to ask the customer to install one of a scrubber to take the liquids out. But think about product and ease of installation. We will add a scrubber or separator to our skid forward going so that we continue with having three major connections and reducing the amount of equipment that needs to be installed separately.

00;43;50;17 - 00;44;10;29
Unknown
So it's constantly changing on what is changing the product and what do we put on the customer compared to what we think we need to integrate in our system? And it might add a few dollars, but its ease of use, is in the end, when we want to get the operations team convinced that they should use us, we cannot add work.

00;44;11;02 - 00;44;33;19
Unknown
Yep. To their workload. Yeah, their work needs to become easier. So then we can tell them, yeah, don't have to retool your engines as often. Your engines really don't go down as often. It's like, okay, we want this. Yeah. And at the same time we train them. Everything is remotely operated CSA, hardly any hands on activity. It's like, okay, it's like, set it and forget it.

00;44;33;22 - 00;45;00;11
Unknown
And those are the elements kind of the, the buzzwords I tried to use for the team as well is how to think about it, set it and forget it, make it easy to use, make it easy to install. And therefore I think it's constantly, walking the talk and setting the example how we think about it. And still being very hands on, involved in customer discussions, in technical discussions.

00;45;00;13 - 00;45;25;06
Unknown
Is that what we see? Is he my strength? I'm I'm a mechanical engineer by background. I did my PhD in that as well, but I don't use the specific knowledge that I use what I learned and how to address problems, how to work through problems, and as much as I don't know, most of the times the technical details, I can ask the questions they didn't ask them before.

00;45;25;09 - 00;45;49;28
Unknown
And based on their challenge, the team to think about aspects that might not have thought about it. And then on top of that, having the commercial mindset based on having worked years and years on commercializing products, and with that, being able to challenge the technical side and the commercial side, and I think it's for my role currently, an ideal combination of experiences and skills.

00;45;50;00 - 00;46;12;05
Unknown
Super. So what are you excited about now next for cold stream energy okay. And I think what we're excited about is I mean right now we're still in the early commercial stage. It's really about getting to full commercial stage meaning getting the follow up orders from our customers. And we had some delays in the installations which delayed that as well.

00;46;12;08 - 00;46;38;07
Unknown
So getting the follow up orders and I'm working with some of these partners also on investments, and with that in mind, the two things we really want to do next, number one is developing a second site for smaller compressor stations. And we have a lot of demand from customers who are asking us, can you provide leased equipments as well?

00;46;38;09 - 00;47;02;26
Unknown
So right now we're working to our distributor Ashfaq, which is working extremely well. But we have requests. Can we do directly business with you? And that means we're contemplating six, 12 months out to move into a lease business as well. Which means I need to raise some more money to to find that fleet. But, that's for me, the exciting part that several customers are asking for.

00;47;02;26 - 00;47;28;18
Unknown
Number one, if you want to use your current system, but then we want to help you get a smaller system in the market. And then one other customer saying, yes, we want a smaller system, but we want to enable you to provide your least business as well. And so really going from having the mindset of a distributor business model with a very small team, we have 14 people right now with just three field hands.

00;47;28;21 - 00;47;49;29
Unknown
If we take sale and lease, we need to build out more of a service capability again, which probably I would say until a year ago, I was not ready to do that. Based on that. Now seeing there is a pathway to recurring revenue as well. And with that really going from building a company to building the business, building it.

00;47;50;05 - 00;48;21;10
Unknown
Yeah. And that's really an exciting phase in, in every life of a company, as we had several times, it's easy to build a company. It's not easy to build a business. Yeah, yeah, yeah, yeah, yeah I've learned that a couple times. Yeah. And yeah. And then what do you think about like what's happening on the macro level? You know, I mean, I guess you're operating mostly here in the US, and in Texas when it comes to natural gas, you know, with a lot of data centers coming into the state.

00;48;21;12 - 00;48;48;07
Unknown
Potentially more natural gas power, being put into the grid. And how how do you foresee all of that impacting what you're doing? Yeah. So I would say, first of all, as I mentioned, we can have improving throughput of compressor stations. That means we are part of moving as much gas as possible through the existing infrastructure. So that's for me one part I'll be supporting that in my mind.

00;48;48;10 - 00;49;18;00
Unknown
The second part is not as you think about data centers, but microgrids. Lot of operators are putting microgrids in the field to to run the ESPs or other infrastructure, and they don't always have clean gas available to vendors. And running which gas for a microgrid means reliability goes down. Yeah, yeah. Just said one company telling me that just blew up each oven on their side based on which fuel.

00;49;18;00 - 00;49;40;09
Unknown
Yes. Oh, really? So we can use the same concept we used for compressor stations for, for microgrids is again, it's a rich gas pipeline coming to a site we can lean out, the gas again to provide clean fuel. Gas to here to Michael. Good. One and one better. And then depending on what the local setup is, we could just we compress the angles, put them back in the pipeline.

00;49;40;12 - 00;50;15;27
Unknown
If they have a sales line we can just free flow it in there. So therefore we see that we can really help also with in-field power microgrids to make this more effective and efficient. And outside of that, natural gas is one part. Last we get the price alliance energy take menjadi the the key node was about talked a lot about angles natural gas liquids and that's there's a significant production here and there's a significant demand.

00;50;15;27 - 00;50;40;28
Unknown
And the rest of the bills. Yeah. Is that was mentioned when you think about, more developing areas where the first question was, why don't you just put, electricity and power plants, whatever, in there? But that that takes time and a lot of money. But if you can move that population from burning wood installs to using propane butane, it makes their life easier.

00;50;40;28 - 00;51;10;11
Unknown
It's cleaner. If you were to to use that lot of that is being produced here and use somewhere else. But going back to the natural resource part, when we have not burning these needs, but capturing them and using them as feedstock for different products, I think we can have the overall oil, flow of natural resources and having that affordability and availability as well.

00;51;10;14 - 00;51;30;24
Unknown
So that's how I really think we I mean, short term, you think about immediately if you provide money to, to our customers that way. But listening to some of these stories, what the impact of angles in the use cases are, it's if you're really good about that, we can have a bigger impact. On how natural resources are being used.

00;51;31;00 - 00;51;50;29
Unknown
So if we can take a step a little bit, I don't know, broader. Yeah. One of the things that I'm very curious about is how are energy companies talking about capital deployment today in upstream and midstream? And and just to frame this a little bit, you know, I think a year ago, you know, there was a lot of there was a lot of prediction that oil price was going to be really low.

00;51;51;02 - 00;52;07;15
Unknown
And then six months ago, there was a lot of prediction that, you know, I think it was there was a sense was going to go up. But, a lot of people were holding capital because it was unclear. You know, if you have to go deploy capital into the Middle East, if you need to deploy capital elsewhere because there was so much volatility.

00;52;07;17 - 00;52;24;12
Unknown
And so I'm curious if there's still a sense of like, let's hold on to cash because we don't know where to spend it, or if people have I think we're starting to get into planning season for 2027. So I'm really curious what the mindset is today about what the customers are thinking about.

00;52;24;15 - 00;53;17;23
Unknown
I mean, think about one interesting part I just heard recently was, caterpillar, for example, is a major provider of of natural gas fired and great compressors doing compressors as well. Yeah. They're lead times for engines, measured in years. Yeah. Wow. So, which also means, the people who provide compressor packages and use those engines, they need to plan ahead and, at the same time, the customers right now are thinking still more in months based on the the volatility and I would say it's it's the the must have is is straightforward the decision like if they have more uptake in one area deploying more compressors that Jenny I would

00;53;17;23 - 00;53;52;26
Unknown
say there's a more cautious approach to understand where where the journey is is going. And at the same time, I, I always feel if you have the right value, the decisions are being made. I think it's really about if somebody has the conviction is the right thing to do and talking with the right people, you get the movement and yes, there's the question where capital needs to be deployed, but on the flip side, you have a lot of companies who just work in the US.

00;53;52;28 - 00;54;19;26
Unknown
You have some that work international in for all of them. It's different decisions. In the end, it's more it's whether we have to deploy the capital in the US and what where to go or how you move the capital between the continents. So I think it's a really different story for every company. But I would agree that there's more hesitation in deploying capital, even with the high prices today, just because there's volatility.

00;54;19;27 - 00;54;43;10
Unknown
Yeah, generally. Exactly, exactly. I mean, it doesn't mean you have open checkbooks. Yeah. Is in the end, you ought to be prepared for what happens if the pricing drops. Yeah. You cannot have overcommitted in that time. And I think that what we see over the probably last ten years, capital discipline in general, that the capital spend is not moving the same as the oil price.

00;54;43;15 - 00;55;06;18
Unknown
Yeah. It's not as much moving down anymore as it used to. And it's not moving as much up anymore. It's just like almost a consistent it's it's it's way more consistent I would say is it's not following the latest trend is I mean, you can see with everything going on in the Middle East. Yeah. It didn't mean that everybody stop more in the US and is ramping up production.

00;55;06;20 - 00;55;29;14
Unknown
It just doesn't work this way. So if you guys think about let's wait and see wait and see and see where's the average going. Yeah yeah. And so that's more of what, what I'm seeing I would say yeah a big a big shift from ten years ago. Yeah absolutely huge. But yeah I think it helps to to take the volatility with the oil and gas business, as we all see in the eye and fire mentality during this.

00;55;29;16 - 00;55;56;06
Unknown
Yeah. Leveled out a lot over the years. And like so I'm thinking if you think back on your career, what some advice would you give to someone who, you know, is starting out today maybe, and wants to be entrepreneurial? I would say my, my biggest advice always is figure out as soon as you can, not the can we do it, but should we do it?

00;55;56;08 - 00;56;19;25
Unknown
Is in the end you you can do most everything if you put your mind to it and put enough money into it. But figuring out if there is real value that can be unlocked, even if you don't know exactly how this looks like today. But do you see there's value in based on that getting the customer feedback as early as possible to get to the product market fit?

00;56;19;28 - 00;56;39;27
Unknown
I always like the concept of minimum viable product. It's tough to do with high tech. It's easier to do it with software to do a quick demonstration, but even taking a tech data sheet to a customer and ask them, would you buy this? Would this add value to you? And based on that really understanding, are you solving the right problem?

00;56;39;29 - 00;57;04;22
Unknown
And I see the oil and gas industry, it's a wide open playing field. Is there still so many unsolved problems. You just think how geothermal is developing over the last several years from we are niche to having some big players in that space based on thinking differently about it and based on markets evolving. So and besides it. Yeah.

00;57;04;25 - 00;57;29;17
Unknown
Should you do it? It's a finding the right set of advisors who challenge you. You know, who challenge your thinking, who are familiar with the market, familiar with where you want to play, and find a few customers who you can talk with and validate. Are you working on a problem that should be solved? And as you might have already, as much as you might, you have the right idea.

00;57;29;17 - 00;57;53;02
Unknown
You might also not think about what is the right way to pivot into it, as I'm I'm also a mentor at CDO Texas, which is a Texas alum. The creative destructive labs in last. Fall. I mentored several companies as part of that. And for me, it's really about helping you understand where the product fits to the how they think about the business model.

00;57;53;04 - 00;58;18;26
Unknown
It's yeah, figure out where you can really play and know your competition. That's very good advice. Yeah. For anybody building a business. So thank you for coming on and sharing your story. Thank you so much for having you. So you having me. Of course, will come on your show. Yeah, yeah, yeah, yeah. Thank you. Thank you so much.

00;58;18;26 - 00;58;40;14
Unknown
Yeah. And it seems like you've got some exciting projects coming ahead. So, looking forward to following what you guys are doing. Absolutely. And, yeah. Exciting times. Yeah. Exciting business to be good. Thank you. We appreciate you having me here. Thank you for listening. I hope you enjoyed today's show. If you like the show, share it with a friend or give us a review on your podcast platform.

00;58;40;14 - 00;58;47;20
Unknown
Lastly, if you have an entrepreneur in Houston that you'd like to hear more about, let us know and we'll try to bring them in. See you next week on Energy Tech Startups.