I learned so many things from our guests, and today is another great example. Carolina Ortega, VP of Sustainability at Milestone Environmental, was a fantastic resource for our listeners. There are so many regulations, and it is almost impossible to keep up. The penalties for not keeping up would be worth companies visiting with her before the auditing started.
Check out Milestone Environmental HERE: https://www.milestone-es.com/
Thank you, Carolina; I had an absolute blast!
Highlights of the Podcast
01:06 – Introduction of Carolina Ortega, VP of Sustainability at Milestone Environmental Services.
01:26 – Overview of Milestone’s sustainability efforts and waste management for oil and gas companies.
02:27 – Discussion on handling slurry waste and its environmental impact.
04:23 – Introduction to regulatory issues and scope one, scope two, and scope three emissions in the oil and gas industry.
05:43 – Explanation of how Milestone’s services impact scope one and scope three emissions.
06:39 – Importance of waste management for net-zero goals in oil and gas.
07:00 – Discussion on methane fees and financial impact on EMP operators.
10:27 – Clarification of scope one, scope two, and scope three emissions and waste management.
12:09 – Challenges in accounting for scope three emissions, especially in waste management.
13:08 – Milestone’s role in providing clarity and data on carbon emissions in waste management.
14:31 – Potential ROI for oil and gas companies using Milestone’s services.
15:54 – Introduction to Milestone’s exploration of value creation and plans for sustainable ROI data.
18:29 – Excitement about the upcoming release of Milestone’s 2023 sustainability report and plans for specific value data.
19:46 – Introduction of Milestone’s triple verified framework.
21:57: Discussion on the workload and the upcoming release of Milestone’s 2023 sustainability report in April.
24:35 – Emphasis on Milestone’s commitment to being a partner in the energy transition.
26:21 – Description of Milestone’s facilities and locations in Texas and New Mexico.
26:52 – How to reach out to Carolina Ortega – LinkedIn and Milestone’s website.
Other great resources from Sandstone and Energy News Beat
Real Estate Investor Pulse
1031 Exchange E-Book https://alternativeinvestments.sandstone-group.com/en-us/tax-benefits-sandstone-group-0-1-1-0
ENB Top News https://energynewsbeat.co/top-news/
ENB https://energynewsbeat.co/
Energy Dashboard https://app.sandstone-group.com/enb-dashboard-version-2
ENB Podcast https://energynewsbeat.co/industry-insights-2/
ENB Substack
https://theenergynewsbeat@substack.com
– Get in Contact With The Show –
Stuart Turley [00:00:07] Hello, everybody. Welcome to the Energy News Beat podcast. My name Stu Turley, president and CEO of the sandstone Group. I got an exciting guest today. We’ve got some gigantic changes in the regulatory issues coming around the corner for scope one, scope two, and scope three in the oil and gas space. How it impacts the consumers. More importantly, how it also impacts the bottom line for, oil and gas, trying to just get the job done and meeting the regulatory issues. I’ve got, Carlina, Ortega. And she is with Milestone Environmental Services. And I mean, we have a van tastic discussion. Just sit back and enjoy. And then I’ll have all of our contact information in the show notes. Thank you all very much. Carolina de, welcome to the podcast.
Carolina Ortega [00:01:06] Thank you so much, Stu. It’s a pleasure to join you today.
Stuart Turley [00:01:09] Oh, I’ll tell you what. You know, you’re you’re a VP of sustainability, and I don’t know, after our little chit chat before we got started, that that truly describes what you’re doing. And I’m pretty excited to visit with you about what you guys are doing.
Carolina Ortega [00:01:26] Yes. Thank you. We’re doing some really interesting stuff. Doing sustainability for an, company that sequesters and manages the waste of oil and gas, exploration and production companies. It’s kind of, you know, you don’t always see the connection, but I’d be delighted to tell you more about it.
Stuart Turley [00:01:50] Oh, I’ll tell you, there’s a lot of regulations that are coming out, and it’s it’s even worse when you sit back and think about the scope one, scope two, scope three emissions that are coming out and those all those new regulations, and you’re kind of bringing up some of those things about scope one, scope two, and scope three on the solutions that you guys have. So, you know, when EMP operators are out there and they’re just, drilling everything out, you started at that slurry that comes out. How do you guys take care of the slurry as it comes out?
Carolina Ortega [00:02:28] Well, when the slurry is brought to us in truckloads, we take the contents of those trucks and essentially separate the heavy solids from it. Sometimes there’s pieces of cement or whatever that may be, and then we take it to, a re injection wells. And essentially we’re inject the slurry deep, deep underground way below the watershed so that it is stored there permanently. Okay. That slurry is really heavy and hydrocarbons. So if the slurry were not re injected what a lot of operators are legally allowed to do in Texas. Right. Spreaded on ground. On land. They they spread it very, very thinly on land. And it’s left there essentially to turn into greenhouse gas emissions. So what we provide is a pretty cost effective and environmentally responsible alternative to manage that waste. Now what? Yeah, it’s super cool. It’s a proprietary technology. So Stone is the only one using that technology to to re inject that slurry. And what we’ve also done this is where like the sustainability side of it also comes in okay is we’ve developed some methodology to understand exactly how much carbon or carbon equivalent metric tons there are. There is in that slurry. So what that means is that we are able to tell all of our customers exactly how many metric tons of carbon equivalent we have sequestered from their waste.
Stuart Turley [00:04:23] Well.
Carolina Ortega [00:04:24] You see, and that is where, where scope three comes into place. So I don’t know how much you know about, you know, scope one, two and three, but scope three is really, really difficult to account for. For many companies, it’s all of your indirect, greenhouse gas emissions. And it can be pretty, you know, a very daunting task for many companies, especially in oil and gas, to account for them in scope three. There are a lot of different categories, and one of those categories is waste management. So. If you are an oil and gas producer.
Stuart Turley [00:05:09] Right.
Carolina Ortega [00:05:10] And you manage your waste on the site. On your site, it’s a scope one emission.
Stuart Turley [00:05:18] Right?
Carolina Ortega [00:05:19] But if you send it to somebody like milestone. Right. It becomes the scope three emission because it’s being dealt with by somebody else. Right. So by milestone. Right. And your whole carbon accounting, if you’re not managing your waste on site and you send it to somebody else, you move those emissions from your scope one to your scope three.
Stuart Turley [00:05:43] Okay.
Carolina Ortega [00:05:44] Where this is interesting too is that unfortunately, not all oil and gas companies are actually even measuring that waste in their scope or not. So when they bring their waste to us, we’re able to tell them exactly how much carbon we sequestered from their waste, and they’re able to account for it in their carbon accounting. And the reason that this becomes really important is because you may have seen a lot of the oil and gas majors, right. And some of the large independents have committed to a net zero barrel of oil. Right. And you know that the emissions that are created from producing a barrel of oil will be net zero.
Stuart Turley [00:06:39] Right.
Carolina Ortega [00:06:40] So. In that whole production lifecycle. Waste management plays an important role.
Stuart Turley [00:06:49] Oh, yeah.
Carolina Ortega [00:06:50] Reduce oil and gas if you don’t have waste. And if you don’t deal with your waste in a way that sequesters the carbon, you can’t count it as a zero.
Stuart Turley [00:07:00] Okay, this is huge from about 16 different things. And and I when I’m sitting here thinking about all these other things going on and, and, Michael Tanner and I, my other co-host, we do deal evaluations in oil and gas, and we use what’s called, combo carbon, combo curve in looking at the offset wells as we take a look at the royalties and, what’s the cash flow coming out of these wells? And then Combo Carbon is another one of those, and it’s in their, best interest to be able to to because if you don’t have accountability and you can’t tell what kind of carbon that you’re actually capturing, you’re going to be toast on these regulatory issues. The rules that came out, the methane methane fee will be $900 per ton, that you’re going to be over the limit that you’re on, on as an MP operator, and it’ll rise to 1200 per ton in 2025. That’s going to be a lot of money to those MP operators. Now let me ask a question on this one, because the, in the downstream, area, I’m, I may be under the mis, understanding and I’m with Oklahoma State, so you have to guide me a little bit here. The, scope one is what you’re directly responsible for as you’re pulling it out of the ground. I thought scope two would be like getting it to the midstream or getting the product into, like in downstream scope three is from the. In my understanding, I could be wrong that it’s the end user or the car that they’re now going to start trying to charge that back to the MP operator. So maybe I’m a little confused, on how that goes, but your what you’re talking about is huge. Because if you’re still getting to the scope three at the, where you’re getting the slurry fixed, that’s huge. And so maybe we can figure out after the thing and look at the nodes because, if, if that is a different path for the waste. So if the product goes to downstream and then it gets, into, you know, the refineries and then it goes to the car, I had no idea how they were going to try to figure out the scope three for the refineries and how it gets impacted. Back to the, MP. Yeah.
Carolina Ortega [00:09:42] Yeah, yeah. Does it.
Stuart Turley [00:09:43] Make sense?
Carolina Ortega [00:09:44] Well, yes it does. So there’s a few things that we can kind of piece apart here.
Stuart Turley [00:09:49] Okay.
Carolina Ortega [00:09:49] Cool that each scope one, two and three have different categories according to the greenhouse gas protocol that kind of created all this framework. Right, right. You are absolutely correct. Scope one is the direct emissions reductions the DMP producers are responsible for.
Stuart Turley [00:10:14] Right?
Carolina Ortega [00:10:14] If they choose to manage their waste on site, however, that may be right. They account it as scope one emissions, the emissions related to the waste.
Stuart Turley [00:10:27] But they gotta have accountability there.
Carolina Ortega [00:10:30] I mean, they have to have accountability, right?
Stuart Turley [00:10:32] Measuring data. Right.
Carolina Ortega [00:10:35] Okay. Cool. Yes. Now the challenges that for for many of them that when they set zero goals right, they are measuring those goals or when they have commitments to reduce greenhouse gas emissions. Scope one emissions by a certain percentage. Right. They usually do it against the baseline. So they’re saying, for example, we’re going to reduce emissions in 2040 by 50%, right against 2008 a 2008 baseline. Right, right. So that is what they’re using to to get to that percentage reduction. Right. But many did not account for their waste in their baseline. So some of them are redoing their entire baseline, meaning they’re going back all the way to 2008, 2019, whatever their baseline is, to understand the emissions from the waste they sequestered. Right. So that’s one issue. Okay. And they do. Many of them are pretty good in that they realized that they had holes in their accounting several years ago. And so they’re going back to fix it. Right now there’s other companies that don’t manage the waste on site. And there’s a lot of them actually. So when they send that waste down their supply chain to a contractor like milestone.
Stuart Turley [00:12:09] Right.
Carolina Ortega [00:12:09] And it becomes one of the 15 categories that make up scope three. Wow. So in scope three you have two different categories. It’s all of your supply chain, the cars that would use the gasoline and those emissions. But one of the stories is waste management right. So since milestone is in charge of managing that waste for many companies. Right. And we are able to tell them exactly how many carbon, equivalent metric tons we sequester for them. Wow. We are essentially giving them that data. I don’t know if you you know, if you’ve heard a lot of empty producers say we can’t be made responsible for scope three emissions because it is really hard to account for. Yeah. Well, what Marston is doing for them is saying.
Stuart Turley [00:13:08] I think you are in the same meetings that I was in.
Carolina Ortega [00:13:12] You see, I’ve heard and I’ve been around this and this industry for many years, but. This is what monster does is we are allowing them to say yes and be very difficult to account for some of the categories in scope three. Okay, but there are others, like the waste management category that we now understand. We now have clarity over the data of our emissions in that category. Well, and it’s so happens that it’s a zero because we’re sequestering it. You see. So that’s where we become a really valuable player in that race to produce that net zero barrel of oil.
Stuart Turley [00:14:04] You know, I’m sitting here trying to look at a, return on investment for your services and an ROI statement. I can get my crayon, and it would probably happen fairly quick on a return, because this would go into a sustainability and ESG report for that EMP operator, that they could go back and not pay as many taxes as it goes to the bottom line, and they get more investors. So did I get that right?
Carolina Ortega [00:14:32] Yes. You know what? They’re huge. Of course, they also reduce social risk. Do you know what the risk is of contaminating land?
Stuart Turley [00:14:44] Oh it’s huge.
Carolina Ortega [00:14:46] And you, if you do land farming, this practice of spreading the waste is called land farming or putting it into landfills that aren’t necessarily up to the most rigorous industry standards that prevent all that leakage. The hydrocarbons back down into the into underground. So there’s a lot of, there’s social risk reduction by ensuring that communities aren’t impacted by contamination of land. There is also a return on investment by protecting biodiversity and ecosystem. Tables and water tables. So do the part that is really exciting about what you’re saying for me is that in our sustainability report, right. Like this, the one that we published in 2023, we started kind of exploring the idea of value creation, right? So how are we creating value through our business.
Stuart Turley [00:15:56] Right.
Carolina Ortega [00:15:56] And, it’s a really interesting chart. I encourage everybody to see it. It’s you’ll find it in the in our sustainability report on page ten. You can tell that I know the report well, but what we’re doing this coming year in 2024. Is we are going to publish. And obviously we’re working on it right now, but we’re going to publish a lot more specific data on how much value we are creating. We’re going to try to value like put. Dollar signs on that value. And so hopefully, we’ll be, you know, we’ll be able to have a nice conversation on exactly how much sustainable return on investment we are creating through our practices. And so it’s really exciting. It’s something that will be new to us and relatively new in the oil and gas industry. I haven’t really seen anybody else do it, so it’ll be really interesting. We’re going to try to really put numbers to that value that we’re creating.
Stuart Turley [00:17:07] I’ll tell you what. And I think that it just got more important with the new regulatory issues that just popped in in 2024. So, and if the EMP operators don’t take care and listen to what you’re saying and what some of these other things, it’s going to be pretty brutal, to their bottom line. And, and so your numbers on a return on investment statement would be critical for CEOs. And, I’m going to try to I’d like to have a technical dive with you later on, and try to see if combo carbon, which helps us on evaluating a in a oil and gas companies, their profitability. Take a look at how that would fit in that may be able to solve some of your financial, formulas already because, our, our solutions are already cooked, and worked great with being able to look at oil and gas deals in royalties. As we take a look at, is it a good deal to invest in this and is it a good deal for M&A? It might this would be some pretty fun things to visit with your team on.
Carolina Ortega [00:18:29] I think. So I think we I believe that the services that we provide in waste management. Do make MP per MP companies a lot more, better environmental stewards.
Stuart Turley [00:18:46] Oh, yes.
Carolina Ortega [00:18:47] So if they’re able to show that. They are looking at the different parts of the project life cycle of the production life cycle. Right. And say we are also looking at how the waste is being managed, and we now have clarity over the data, over the carbon emissions being sequestered and how that impacts our net zero goals. I mean, it’s, you know, it’s it’d be pretty remarkable for them to be able to say it. And what we’ve done on our end is also to develop. We call it a triple verified framework.
Stuart Turley [00:19:27] So a triple verified framework. That sounds like something I would. And I’m going to let my podcast listeners know how old I am. That sounds like something I would get out of a crackerjack box when I was a kid in the spy ring with a triple decoder ring in it.
Carolina Ortega [00:19:46] Well, we do the triple verified and this is all done in. It’s not from cracker Jack, but, you know, hopefully it’s a little bit more rigorous than that. And with less sugar, for sure. We have developed a framework where on one hand, we have one third party consultant review all of our data and our sustainability report to make sure that it is aligned with sustainability reporting standards. So that’s one, one, prong, so to speak, of the three stool. What is three legged stool? The second part is we’ve worked with another third party consultant to develop the methodology to account for the carbon emissions that are sequestered. So and we have the methodology written out and it’s transparently provided in our sustainability report. Okay. So that’s prong two. Prong three is we, we engage our financial auditors to review that procedure that we use to to get to our carbon sequestered numbers. So essentially they go in and they review all the numbers. Right. And the calculations and then they publish and we publish this in our sustainability report, a letter stating that the numbers that we published that were publicly published are correct. Nice. So what we’re doing in all of this is trying to create or build trust in the method that we have the methodology. So the producers can say, yes, this is this is a, you know, a systematically, collected data and it’s been verified and it’s up to industry standards. And we can therefore use it in our carbon accounting. So that’s what we’ve been trying to do as well, to give credence and trust to the process itself. Right. And so hopefully that would attract a lot more customers as well.
Stuart Turley [00:21:57] I’ll tell you that’s kind of cool. I’ve got your 2022, here off of your website, so it’ll be fun to take a look at your 2023 and, have a link to that in, in our show notes as we get this, published out there. So, I’m looking forward to visiting with you again. Here and in the next, bit as you get your ROI statements out there, because, we visit with a lot of MPP companies, and, just on a daily basis in our day job. So this.
Carolina Ortega [00:22:32] Yeah, that would be great. Our report will be published in the middle of April.
Stuart Turley [00:22:36] Okay.
Carolina Ortega [00:22:37] So, you know, we should definitely touch base again. And I can talk to you more about the results of all that analysis. We’re doing it in partnership with two other very reputable third parties. Nice. So, one of them is a university, and I don’t want to spill the beans, but, we’re working with a university on this methodology and analysis, so I’d be really excited to tell you about it in April.
Stuart Turley [00:23:04] Oh, that will be fabulous. I just will get your schedule back out out here. But as we take a look, as you’re getting ready for that, that sounds like a lot of work. And, b, I hope you have a family life between. And maybe after that you’ll have a family life. I don’t know if it’s that much work, but, you know, it seems like you’ve got a lot of work going on there. What kind of customers are you looking for? Or who are your victims? I mean, who who are you looking for on that?
Carolina Ortega [00:23:35] Well, all oil and gas producers in Texas for the most part. We have ten facilities in Texas and New Mexico. Okay. Right on the border. And we’re expanding, and, we really try to be the, the energy waste management company. Okay. For the industry. And really, the it’s we’re the only true partners in the energy transition when it comes to energy waste management.
Stuart Turley [00:24:10] This is huge. I really appreciate your time on this because, the regular legislation, through regulatory action that’s going on with this current administration is putting a high cost on, the oil and gas companies, the wind companies, the solar companies and the nuclear companies. And so it’s nice to have a decent solution.
Carolina Ortega [00:24:37] Yes it is. We’re proud of what we do. We hope to continue to grow. We also have a carbon sequestration subsidiary that will do only that. So we’re really trying to to be the, you know, the the partner of the ENP producers. So, they’re able to reach their energy transition goals.
Stuart Turley [00:25:05] For your customers that are, your target customers that may have been listening to this. So you’re in the Permian, and that would be your are you in the Eagle Ford and several of the others in the. Are you.
Carolina Ortega [00:25:17] In there?
Stuart Turley [00:25:17] Yeah, Bill.
Carolina Ortega [00:25:18] Yes, we are, we are. You can see all of our ten locations in Texas. Okay. And our website. Great. But, yes, we are. We are in all of those in the Delaware Basin as well. Cool. And, they’re essentially for those who who haven’t seen one of our facilities, they essentially look like, gas stations. So the trucks come in and we have, like, different islands where they go in, and that’s where the, the, the truck loads are emptied and cleaned and all of that. And then obviously, the part that doesn’t look like a gas station is where we separate the solids, and do a different like triage kind of side of the, of the slurry. And then very close by we have the re injection. Well right there. So the waste doesn’t travel far at all. We’re talking, you know, a few yards. Right. And the well is right there and that’s where it’s re injected.
Stuart Turley [00:26:21] So if it looks like a gas station, do you get many people coming in for some, you know, Cokes and.
Carolina Ortega [00:26:27] Jobs, liquids. Yeah. We’re not lucky. So, yeah. No, it kind of looks like it. But we don’t have, you know, a little, convenience store and all that that that would be fun. But, no, we’re not in that business.
Stuart Turley [00:26:42] Oh, no, that that saves money. I mean, you got to save money in this day and age, how do people reach out to you, on your LinkedIn and the website? Right.
Carolina Ortega [00:26:52] That’s the the best way to reach me specifically is on LinkedIn on our website as well. Okay. For just more a better descriptor of our services, I invite everybody to look at our website and the inquiries or anything to direct them through there as well.
Stuart Turley [00:27:09] It sounds fantastic. Thank you so much for stopping by the podcast today. We’ll talk soon.
Carolina Ortega [00:27:16] Thank you so much for having me. I’m very grateful and I look forward to speaking to you soon.
