Russ: Hi, I’m Russ Capper, and this is The EnergyMakers Show, coming to you today from the offices of PKF Texas, and I’m very pleased to have as my guest, Jason Ethier, the Founder of Dynamo. Jason, welcome back to the show.
Jason: It’s good to be back, Russ.
Russ: You bet; 2013, I believe.
Jason: Yeah, that sounds about right.
Russ: We had a good discussion. It’s admirable to see you still in business. For those of you who didn’t watch that, tell us about Dynamo.
Jason: Dynamo is a power solutions company that uses a gas turbine to provide reliable onsite power for oil and gas companies. And we do that by uniquely operating on any gas; be it flare gas, natural gas, propane, and we’re the only technology that can do so reliably with really high power quality.
Russ: Ok, from what I know about saying any gas, that’s pretty hard to do, but I would guess also though that when you say any gas, some of them work better than others even for your turbine, right?
Jason: Yeah, we designed our system specifically to run on any fuel found in the oil field without knowing what the fuel is ahead of time. By contrast, other companies typically need to know; this is the gas, this is what’s in it, this is how much energy is in it, but our system recalibrates during start up and in real time. And that reduces a lot of things like maintenance, down time. It leads to a truly reliable system.
Russ: Ok, well having some fuel right close by is obviously very valuable. I didn’t ask this last time, but I thought about it this time, I have to ask: what triggered the idea to do that?
Jason: A lot of it was actually participation in the SURGE Accelerator Program, which I was in when we last talked. I didn’t know anything about oil and gas until I came down to Houston and actually talked to a lot of the operators, and the number one thing that they told us was, ‘Can you get us to run on this flare gas?’ And it sounds very easy to do on the outset, but when you talk to different operators in different fields, the gas is all different. Some of it has more butane in it, some of it has more H2S in it, and being able to have a one fit solution that burns all of it, anywhere you might want a wellhead, was a hard technical challenge. And we went down a path and identified that there was a good solution that we could implement within a gas turbine, which is how we ended up where we are today.
Russ: So back then you knew you had some good turbine technology, in fact, I remember a miniature version too. But you were just looking for a home and an application for a small turbine and then found the fact that taking multiple sources of power would be of value?
Jason: Yeah, that’s basically the path. We were experts in small gas turbine technology. We knew the technology had evolved to the point where it needed to come to market, but understanding the value proposition and developing that product market fit was a key task for us over the last few years. What has evolved since then, both what’s in the turbine, but also how we sell it and position it for the market.
Russ: Ok, that almost sounds like a testament to SURGE Accelerator, too.
Jason: It was a great experience for us.
Russ: So, the company has evolved since then, though, but you’ve stayed committed to what you discovered down here. How long did it take to get a turbine that would work on multiple sources of fuel?
Jason: We demonstrated the ability to run on different fuels in 2015. We actually launched a product with a company called Multitech for a flameless heater technology. We demonstrated that product, end of 2015, early 2016, what I would consider an alpha prototype. That product is on sale today. The value, though, for this market is more for power generation. Getting a power generating gas turbine is more complex than just a standalone engine. We also discovered there was a need to support the more complex loads you find at a wellhead, and doing so requires the development of additional technology. We’re still in the early stages of validating that with two-fuel trials that are going to be installed this year. Everything we can tell from the lab tests showed that the system works in a way that really hasn’t been seen with small turbines before, and allows us to truly support the types of loads you would expect to see in a microgrid.
Russ: Ok. So, power generation, we’re talking about making electricity.
Jason: Yeah, making electricity.
Russ: Ok, wow. So, you have two trial installations coming up? Tell us about that.
Jason: They’re both in the pipeline and midstream markets. One is with one of the largest pipeline infrastructure companies. Another is with one of the larger equipment manufacturers who supports the pipeline industry. They’re both adjacent to one another. The first is in a cathotic protection application. In this application, you help the pipelines from rusting by putting electricity through them, and our solution is a genset, and it requires significantly less maintenance than what they use today. Similarly, the application for the equipment manufacturer is in reducing methane emissions related to the compression of gas in the pipeline. We help them basically reduce their fugitive emissions by converting the methane emissions to electricity.
Russ: Ok, very interesting. So, we’re talking about out in the middle of nowhere, a pipeline that has a problem, and you can take your turbine out there and generate electricity by tapping fuel out of the pipeline. In that first example, you were talking about you sort of replace some other method of protecting a deteriorating pipeline. What was the other method?
Jason: Traditionally, when you install a pipeline, you put a protective coating around it, but those protective coatings decay over time. As a factoid, the majority of our pipeline infrastructure was installed after World War II, and as a result, you can imagine most of those pipelines are more than 50 years old, and the paint decays. So, what they do today, is they take your traditional genset, put it out in the field, and produce the electricity they need to provide the power for cathotic protection. Due to regulations and then the nature of reciprocating engines, they do maintenance every two months. Our system, because it’s based on a gas turbine, needs maintenance only annually, and we expect the first annual overhaul to occur at about forty thousand hours. So, a significantly longer lifespan than what they use today.
Russ: Do you have remote monitoring capabilities?
Jason: We do have remote monitoring on the system. That is also something we will be demonstrating in these first trials, and we’re actually using a module from another SURGE company.
Russ: So, wow, these two tests sound like they’re very important. How confident are you that they’re going to work?
Jason: I’m 100% confident in the technology. We’ve deployed this product before in our trials over 2015. I think our main concerns today are around product risk, infantile mortality risks around the product. But those are things you have to discover with early trials and early tests, and we will overcome them in short order.
Russ: Ok, so are these two turbines that you’re putting out there, are they like beta versions of your product?
Jason: So, the core technology between these products and what we had over 2015 are the same. A lot of what we’ve added are added functionality using off the shelf, commercial components. A lot of what we’re doing today is prepping the product for formal launch around power generation; whereas before, it was very focused on heat generation, and a lot of that is driven by the fact that power generation is a larger market with a harsher need than heat generation.
Russ: So are you going all the way to the point where power generation will have a product, product name, and all that stuff?
Jason: Yeah we are, and we are launching that product as the Powercore 10, PC10 for short. And what’s interesting about this product is that although it generates 10 kilowatts of electricity, we can support a very sophisticated microgrid where we can actually support 18 – 20 kVA, which is something very challenging for a diesel generator to support. Usually, they’re rated for something called a power factor of 80%, and we can do power factors as low as .2, or 20%.
Russ: Impressive. So, I’ve got to ask you this question though because I remember from previous times when you were looking at the oil and gas space, you were looking at the wellhead, and thought, boy, there was a lot of opportunity there. Do you still think there’s opportunity there?
Jason: Yeah, I think the opportunity is largest for us for powering a wellhead. Typical wells need about 45-100 kilowatts of power continuously, all day long. One of the challenges with that market is the power needs are larger than what we have today. They typically, like I said, need 50-100 kilowatts, and when you’re powering the primary means of revenue for a company, they want to know that the reliability is there. These applications that we’re going into first are a better fit for market entry because we’re more of a secondary risk. If the cathotic protection system goes down, you don’t need to be there tomorrow morning to get back up and running. The timeline is more, you should be up there fixing it within a week. So, those are reasons why we enter the market where we did.
Russ: Ok, so what was the wakeup call that got you converted from upstream to midstream?
Jason: A lot of it was the change in oil price. We were very strongly pursuing customers in upstream oil and gas, but then all of their budgets froze for new demonstration projects around the same time, and the only guys who were still taking projects were in the midstream market, and we followed the market at that point.
Russ: Ok, so you started calling on midstream and somebody said, yes, bring it on down?
Jason: Actually, what’s interesting is the midstream application was always something we were contemplating, and it was always on the backburner, because we knew that the major value was in upstream oil and gas. But then we brought that project forward when we realized there was an application, it was large enough for us, and it had these lower barriers to entry, which made sense at the time.
Russ: Well, Jason, I really appreciate you sharing that. It sounds exciting.
Jason: Thank you.
Russ: Alright, and that wraps up my discussion with Jason Ethier, the Founder of Dynamo, and this is The EnergyMakers Show.
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