Innovating for a Sustainable Future in Energy

In this insightful interview, Paul Espenan shares his extensive experience in the energy industry, emphasizing the importance of leadership, innovation, and long-term thinking in environmental and operational excellence. Discover how his career journey, technological advancements, and visionary initiatives are shaping a sustainable future.

Transcript

SPEAKER_01 0:02

This is Under Pressure. Compressor talk by Midwest Compressor. Strategies, systems, and stories from the compressor world. With your host, David Abshire. And now, on to the show.

SPEAKER_02 0:20

Good morning. This is David Abshire with Under Pressure Podcast. This morning we have Paul Espinen. And Paul is going to visit with us this morning about some of his experience in the industry. Paul, thanks this morning for jumping on with us.

SPEAKER_00 0:34

Thank you, David. Wonderful to be here today with you.

SPEAKER_02 0:37

Yes, absolutely. Well, thank you so much. Paul, you've got a master's in environmental science. And when you graduated with your EPA classmates, literally they called you a sellout for going to work in the industry. How did how'd that go for you?

SPEAKER_00 0:50

Yeah, this was an interesting time in my life. This was at the University of Texas in Dallas. And so it was at night school. Most people were going, you know, they worked during the day, some of them at EPA, some in industry. So it was a great conversation going on there. But they all thought that I was going to go work for the cause. And when I told them I was going to work for industry, they really did call me a sellout. I think I said something back then that has held true, and that is that I'm going to make more of a difference working for industry on the inside than you'll ever make on the outside. And that has been so true, David. I got to tell you, you know, we all have ability to influence in so many different ways. And even if our companies are out there setting a great example, others will copy that. Others will imitate it, they'll learn, and they'll wind up spreading that approach to other things. And so I believe that if I look back at my career of over 38 years, that's exactly what happened is I've made a huge difference in caring for the environment, reducing emissions, helping people to go home safe every day. And that has been multiplied by all those who have looked at us and said, hey, we can do that too.

SPEAKER_02 2:09

Awesome. No, that's that's amazing. And I love to hear that. And you're exactly right, Paul. I I think being on the inside and being able to create habits and people are just going to copy that, right? It's human nature. They're going to look. Other companies are going to follow suit. And especially if you're leading the ways, that's that's amazing. So you started at Holliburton and Brown and Root before making the jump to operators. What did the Service Company Foundation give you that carried your throughout your whole career?

SPEAKER_00 2:36

Yeah. So many people go through an entire career and they they do it without a customer focus. And I certainly cannot imagine ever doing that. I believe that all of us have a customer, whether we realize it or not. And that if you don't know who your customer is, you you really need to do some soul searching because it's right there in front of you. And so it is that approach to what's the customer's next need going to be? What's the customer's uh most concerns are? How can I help serve them better? How can I be a servant leader? Those kinds of questions that allow you to get ahead and to be visionary. Because in the end, I think all of us just want excellent customer service. Uh I've had some recent conversations with some providers. And I said, look, I'm gonna make it real easy for you in terms of earning our business. All you got to do is proactively own your product. That's it. You don't have to, you know, but I don't want to be the one finding problems in your business. I want you to go find those problems, fix them, and then uh we'll have a great relationship. And also to continue earning our business, all you got to do is provide that kind of a service and nothing more. And so that's my mindset that I got from working at Brown and Root, which was really just so much variety. Oh my goodness. We went from inside of industrial plants, the military support aspects of it. Every week there was something new, something different. And then Halliburton, you know, just total customer focus there. So great environments to learn what customer service actually looked like.

SPEAKER_02 4:12

Absolutely. And I definitely appreciate that, Paul. That's one thing that I preach to my team on a daily basis is the customer service aspect. And, you know, lots of times throughout the day and throughout the week, we all get busy and we forget about the customers' needs. And that's so important with any service company and anything you do in business as well. Burlington Resources is a legendary for producing future CEOs. You walked in in on a day overwhelmed with air permits and told your wife you might have bitten off more than you could chew. How do you look back on that today?

SPEAKER_00 4:48

I kind of laugh at it because uh you you you don't know how much you're gonna grow. And it is in those moments where you just literally do take on more than you know how to deal with, that just incredible growth occurs. I was telling someone yesterday that in that environment there at Burlington, what you had was first of all, there's no place to hide. If you weren't getting results, you weren't there. Okay. Second of all, you had access to world-class coaching and you had access to world-class mentorship. And so all you had to do was allow yourself to be led, to be influenced, and to be taught. And so many of us think, oh yeah, I got this all figured out, you know. But in that level of humility, saying, No, I don't, and I need to be a sponge here, and I need to listen to what they're saying and do what they're telling me, it was in that environment that I learned how to do air emissions work. And well that I did, because as you may know, air emissions is just so much part of the energy business and big time. And it it's it's burning red hot and hasn't ever not been. And so to learn that critical skill of everything that goes into emissions management, that translated into understanding the carbon economy, trading carbon credits. It translated into greenhouse gas emission reduction, which is key. And more importantly, operational efficiency. If you understand how all this equipment connects, you're now in a unique position to do it better, do it more efficiently, do it less impact on the environment. So yeah, I I felt overwhelmed that day. Uh, but now I look back at it and I laugh it and I tell that story. And uh I mastered air emissions. I'm an airhead officially, and I love it.

SPEAKER_02 6:40

So I love it. That's that's so great. And you're exactly right, Paul. You know, one of the things that I've learned being on this side of the compression world, you know, of course, you you nailed it right on the head about your equipment operating efficiently. And, you know, by having that certain skill set to know that, you know, what everything does on every piece of equipment and being able to make it all run in sync and run smoothly. And obviously, too, the most important part, you know, being able to have it to where it's not polluting in the environment, right? And it it's so it's so important for every leader in the industry right now to, you know, try to do the best job they can and to get better at what we do. And, you know, this is one of those things that it's always evolving. And so it's it's really cool to hear that part of your story. So now you're leading a team of 70 at diversified energy, covering everything from environmental and safety to gas control and GIS. What does Diversified do differently from most oil and gas companies?

SPEAKER_00 7:43

Yeah, David, the best way to describe this is we take existing operating assets that others don't love and we love them. And we find ways to keep them producing. We find ways to reduce their emissions footprint. We find ways to be the best environmental steward. We take on things that people don't want to take on, so we're a bit of a contrarian, and it has worked out so well for us because we find treasure where others have not. And it's a great thing. And and not only that, we do it so sustainably. People think that it's hard, but it's not. And we have just again and again proven ourselves over our 25 years. We just celebrated our 25th anniversary with a ringing of the closing bell on the New York Stock Exchange. It was all those things that we did year after year, executing on a plan that was contrarian. Nobody else wanted these assets, so we took them and made them work. And our drill bit is acquisitions. We're not an active driller, and people may say, well, that's boring, but not to us, not at all. We find that exciting. And uh it's a lot of fun getting great results from these assets that other people have said, hey, we're not interested. So what a great niche that we're in. I know we've got some people who are trying to imitate us, and that's great flattery that they are.

SPEAKER_02 9:04

I love it. That's that's such a great story. And you know, Paul, to be completely honest, one of the things that I've seen over my career is operators like Diversified, of course, have more need for gas compression than other operators with the drilling program because they have less focus right on their gas compression side of the business and being able to produce the older existing wells. So it's interesting that you bring that up. And I love that because I'm definitely that's kind of where my heart is too, is you know, being able to keep the wells alive that are out there. And, you know, we also, of course, come in on new drills just like everybody does with VRUs and uh, you know, backside applications and stuff, and uh, you know, definitely clean outs and stuff up front. But that's one thing that's so cool about your guys' company is that you guys are able to go in and look at stuff that other people, you know, maybe have not tried to produce or you know, decided to go a different route with. So that's that's so cool. So you cut methane intensity in half in three years. Now you're working on something called methane slip that you think is generally transformative. What's that?

SPEAKER_00 10:13

Yeah, so we've had great success partnering with technology providers, emerging tech. So we find companies that have found some breakthrough that is going to be transformative and then work with them to bring it to market. So, you know, the old days companies had RD departments. You know, the big oil still does. We don't have that. So we have to build these partnerships with providers who bring this tech forward. And so we've been very successful using that model. This past year, working with a technology provider, we identified a way to reduce methane slip when, and methane slip, for those who don't understand what this is, this is unburned methane that's passing through your compressor engine. And so that's wasted fuel. And it's uh gets into the environment. And on certain engines, especially lean burns, it's a big issue. It's it's been estimated to be significant impacts. You can see it when you do aerial overflights. Big, big issue. So we found a way to reduce that methane slip by 30% using only keystrokes. Now, what I mean by that is that these are engines that have advanced controls, and you're able to detect a detonation. And detonation is a bad word because that means it's gonna attack your engine longevity and your engine performance. And so if you can find a way using computers and uh measurement data to detect those detonations and immediately address them, a couple of things are gonna happen. You're gonna reduce your methane slip, you're gonna increase your fuel efficiency, and then perhaps the biggest thing is you're gonna increase your engine longevity. Detonation is death to engines. And you will not have an engine that lasts very long if you allow it to continue to detonate. So we have found the way to do this, and we're working to expand it. And I'm gonna be speaking at the methane mitigation conference in June about uh the work that this amazing team that we have did. And so I think that that word needs to get out there that this is a huge opportunity for us as an industry to not only reduce our emissions, but to increase the longevity and life of those engines and many other operational benefits to that. So very, very excited about that, David.

SPEAKER_02 12:29

Yeah, no, that that's exciting, exciting and cutting-edge technology, of course. Where in the past, you know, generally when we get out there and adjust these big horsepower engines and try to do all these different things to, you know, make them run as efficient as possible and being able to look at new technology, it it's definitely exciting because, you know, we all know that the old gas engines or the natural gas engines that are out there generally most of the time are neglected and abused. And once we're able to start looking at those and making them more efficient, I mean, it's a win-win for everybody. It's a win-win for the compressor companies that are providing them. It's a win-win for the operators who own them. It's a win-win for the environment. It's just a win across the board. So that's extremely exciting. So you're also using AI for leak detection in a way that sounds like it would have been science fiction 10 years ago. So can you walk me through that?

SPEAKER_00 13:22

Yeah, we we're working with a company. I I guess it's okay to mention who it is, um company by the name of Explorabot. And we've been partnered with them for a number of years now. They were early days when we first started working with them, but they now have a device that's handheld and it it's basically going to make well has already made camera-based optical gas imaging obsolete. It's laser-based optical gas imaging. But now this handheld device, this exact same device, can be m put on a drone. So imagine you're an operator and you pull up to a location and you don't even get out of your truck, you press a button, the drone launches, it goes out and does an inspection of your facility, and not only does it find the leak, it quantifies the leak, and then through AI tells you what the component is that is leaking. So without any keystrokes at all, you're going to get that data uploaded to the cloud. And now expanding that to say, okay, what if I did my spill inspections with that same technology I can? What if I did my integrity assessments of my equipment for corrosion, rust, or other concerns with that same technology I can? So you can see the efficiency of an operator now. Instead of having to, well, maybe it'd be good that he did get out and get those boot prints on the ground there, right? Um, the highest and best use of that operator's time uh can now be leveraged using AI because we're it it's going to find the leak, say how big it is, say if it matters, say what component it is, gonna log all that and put it in there. So one of the biggest complaints we hear from our ops guys is how much time they have to spend on the computer typing this stuff in. If we can alleviate that through AI, that's just so great for them. They're gonna love it. Because then we can use their abilities, their knowledge to go out in there and optimize, right? That's the best use of their time is to optimize things, make it better, increase production. It's not necessarily doing these inspections. So very exciting times using AI and partnering with uh technology providers to do it. This is happening today. This is not sci-fi. This device exists today and we're using it.

SPEAKER_02 15:34

Absolutely. And actually, Paul, I think uh I'd seen them present at the Oklahoma Petroleum Alliance with their handheld device probably around, I think it was maybe last year, that they had a methane reduction conference that I set in on, and those folks were there, and it was very cool technology that they were showcasing. So that's exciting that you guys are using that and getting to hear the success part of it. And I completely agree a hundred percent with anything you can do with a drone to be able to maximize your operator's sign and let the operator work on the things, like you said, optimize. That's so important to be able to go out there and fix leaks and do the things that obviously is gonna protect the environment and to make it more efficient for everyone, right? Not just the operator, but for the for the owners as well of the production company. And of course, too, you're getting leaks fixed sooner than what they would have been fixed in the past, uh, just by having the technology. So impressive. That's that's really exciting for you guys. So could you tell me about the Mountain State Plugging Fund? Because the way you described it, this might be the thing that you're most proud of.

SPEAKER_00 16:42

Yeah, I I gotta give credit where it's due. And this is a huge team effort of literally turning on its end how assurance is done for well plugging in the United States. So typically states ask for a bond that is supposed to address any plugging needs for a company in the event of something happened to that company that you would have a way to get these wells addressed. So what we said was look, why not create what amounts to um a sinking fund that um is in a situation for the state. In other words, uh, the state has this fund for the benefit of plugging wells, but let's not talk about agreements that are 20 years or even 30 years. Let's talk about 100 years. Let's find a way to fund that asset retirement obligation for the next 100 years. And look, I'm not gonna be here and you aren't either in 100 years, but wouldn't it be great to be able to say that these wells are gonna be taken care of no matter what happens to any of us? And and so that's what we've done with the Mountain State Plugging Fund is we've created a way in the state of West Virginia to make sure that all of the wells that we have in the state are taken care of for the next hundred years. And so we really would like to have something similar set up wherever we operate. And I believe that this funding mechanism is going to supplant the traditional surety bond for plugging. As long as uh folks understand what's being done here and see the opportunity. Uh, I think that this is going to be transformative in our industry to where this will become more the norm rather than the exception. And it's certainly uh my goal to get this new way of looking at things into other states. And so looking to advance that in all the states that will care to listen to us about why this is a better solution. But we're very passionate about it and very excited about it because as you may know, uh Diversified has a lot of proven, developed, producing, long-lived wells. And a lot of questions can come up about okay, how are you gonna assure that this is taken care of? Well, this is the answer, and I think it's a very sound long-term answer so that all naysayers can now say, okay, they did what they said they were gonna do, they're gonna take care of this.

SPEAKER_02 19:01

No, I love it. That's that's a that's a great way of looking at it. And of course, too, like you said, it it takes for the long term, right? And I think that's one thing that when you when you start looking at the a lot of the policies in play today, they're all short term. So I mean, I think that's one of the things that I've seen, especially when you start reading into the different strategies that each state has on what to do with these wells uh at the end of their life. So that's that's definitely very visionary. That's such a cool perspective on it, too. And I'm excited. I I think, you know, if you, you know, are able to present it to other states and they're able to listen and you know be able to be open-minded too to solutions for this, because you know, in our industry, unfortunately, that's one of the big problems that we deal with. And of course, too, gives us a black eye in the industry and especially in the energy side of things as well. So you just published a book uh with 55 leadership stories. What's the one story you tell anyone who will listen, the one that literally changed your career?

SPEAKER_00 20:03

Yeah, this is amazing. So, first of all, yeah, excited about the book, The Heart and Soul of Safety, but I tell a lot of leadership stories in there, and then I use them to teach about what safety leadership looks like. And so it's a leadership book that can be customized for anybody. But here's the one story that I would tell. And this one is to happen to me. So when Burlington Resources was acquired by Conico Phillips, a coworker became my boss, and I kind of got my feelings hurt. And but but well, here's what happened. He came to me and he said, Look, Paul, I don't know why they made me your boss. You're more qualified than me. And I said, That's all I need to hear, Tom. So I gave him a hundred million percent. I gave him everything. But here's what I also did. I allowed him to lead me. In other words, I got rid of the idea that I was better. And I started living the idea that he could really steer me in a positive way. So um, 22 months later, Tom goes off with a group of individuals, former Burlington people, to start up Lynn Energy. And two weeks after he's there, he Tom calls me up. He says, Paul, we need to talk about what it's going to take to get you over here. No job interview, it's who you know, right?

SPEAKER_02 21:13

Yeah.

SPEAKER_00 21:13

And so I joined Lynn Energy. And under Tom's guidance and under the mentorship and sponsorship of others there, I went from being an individual contributor to a vice president. And when I say vice president, I mean only 10 in the company, and you had to be unanimously decided by each existing vice president that you were vice president material. So just stellar incredible growth occurred to become a vice president at Lynn Energy during that time. Now, all of that wouldn't have happened if I hadn't humbled myself and allowed Tom to lead me. So my message to everybody out there is that you could be talking to a coworker who could wind up being the person that influences your career greatly. You can get coached from anywhere. You can learn from anywhere. You need to be open to the idea that it's not all about you. It's about what others could build into you. So that's my story to anybody who will listen. Be influenzable, be teachable, be coachable.

SPEAKER_02 22:16

I love that. That's that's such a great story. And of course, too, um, you know, Lin Energy was such a huge, great company that, of course, I'd done business with over the years throughout my whole career. Uh, and it's such a cool story. And you're exactly right. Uh, you can learn from anyone and be led by anyone. You know, I try to tell my team that all the time. And we we definitely experiences like that are very humbling, especially when you get to look back at them and see where you know it took you in your career. So that's that's a great story. So you have a killer interview question. You ask every candidate, what is it and why does it tell you everything?

SPEAKER_00 22:54

Yeah, this is great. I ask people, I say, look, everybody has experiences in their life, technical, non-technical, and they're things that we kind of pick up along the way and they influence the way that who we are and they become part of our success formula. And I call them life lessons. And so I ask them, I say, hey, you got any life lessons you've picked up along the way? And if they say, well, yeah, I can't think of any, well, it ain't gonna work out for us because this person is not a lifelong learner. It's a test, right? And if they can't tell you some stories of how they've changed, how they've adopted, how they've overcome, or things that they hold as part of who they are, then I I don't know how much I'll be able to do to help them become that person, right? So, you know, it's great to hear their stories about how they've learned in their life because all of us have to be lifelong learners. And if we think we're done, we're wrong. You know, that's that's a recipe for disaster. So it's a test question to see if they have learned some things in their life and they're a continual growth mindset kind of person. And I think it's probably a good conversation to have with any candidate. If they say, nah, not so much, I don't know if I'd take it any further.

SPEAKER_02 24:07

I love that. That's so great. And you're exactly right. You have to be able to continue to learn uh, you know, throughout your career. And that's one of the things that definitely from visiting with you this morning, just being able to listen to your story and and how you've been able to grow through each experience and use those, you know, those great skills just to keep advancing you throughout your career. And it's so important for all of us. And I tell everybody that works with me on a daily, and my kids, of course, too, the same thing. It's like you have to be able to learn from each thing that you deal with and encounter with and to get better. And like you said, once you stop, you know, learning and being able to adapt, you know, it's really gonna, it's really gonna hinder you and hold you back from getting where you need to be and where you want to go.

SPEAKER_00 24:55

Absolutely.

SPEAKER_02 24:55

So you have a line people are starting to quote you on. Uh, can you can you say it and explain it to us this morning?

SPEAKER_00 25:01

Yeah, so all of us deal in transactional ways. I I get my fair share of dealing with governmental entities, and and this has been very true. So it says all conflict is a result of lack of shared context. And if you can just understand where someone is coming from and learn their context first, then and only then are you able to begin to transact or conversate or connect or build a relationship. Uh, but a lot of people will short circuit that part, right? I don't get your context and all of a sudden I'm right and you're wrong. Uh, and that's a mistake because if you don't stop and listen first and understand where somebody's coming from, uh, you're at a huge disadvantage because it may be that you're actually on the same page, but you just haven't made that clear. And so many times you may want what they want and it's just not clear. So I feel like if somebody is getting crosswise with you, it's generally because you don't understand their context or they don't understand yours. And you can't explain yours until you understand theirs. So that's it. It's worked well for me in just about any situation. But in particular with regulators, I will tell you this is something you don't want to skip.

SPEAKER_02 26:16

Yeah, absolutely. No, that's that's a great, great quote. And I'll I'll definitely be sharing that with my team because you know it's all it's always so important when you have two people with good intentions, right? And there's and of course, too, I always like to tell everybody generally when you see conflict, there's passion that's on both sides of it. Um so everybody, you know, just being able to listen to everybody's perspective, and that's that's such a cool quote. So if you had a a magic wand to fix one thing tomorrow, what would it be?

SPEAKER_00 26:47

Yeah, so I thought about this one, and there's something that we do on our team every other Friday. We call it the learning call, where the point of the call is to connect and to broker relationships away from the call. In other words, to work with people during the week who otherwise wouldn't connect on on a variety of issues. And so by sharing my treetops on a forward-looking basis, that provides that platform for connection. And what it also does is it makes it so that we are more of a family and that we can also understand each other's challenges and gratitudes, right? To be able to say, hey, this week I'm really grateful because um, you know, one of the team members, Heather, helped me out, or they really went the extra mile doing this, to get that recognition for going above and beyond, but not coming from the boss, coming from their coworkers. And that builds a camaraderie. And so if I had a magic wand, I'd make it so that every operating team took time to express that gratitude and took that time to connect and didn't take it for granted that people knew what was important to you, what you were working on, what your challenges were. And if nothing else, to just tell them, hey, we got your back, man. We support you, we're not gonna let you fail uh to hear those words and to know, hey, I'm ready to help. There's value in that. And so that's something I think that in Team Dynamics in 2026, do not forget to connect. Do not forget to find ways to work during the week with people you otherwise would not. That'd be it.

SPEAKER_02 28:25

Absolutely. No, that's that's such a a great analogy. And, you know, I think you're you hit it right on the head. I I think too, that's one of the things if you can really identify people's wives and let them know that you do have their back throughout the day-to-day, and you'll do whatever you can to help them and support them to get their job done. It really, really goes a long way. Well, Paul, thank you so much this morning for jumping on. I'll I definitely uh definitely appreciate your time. I know you're very busy. Thanks for working with my schedule. Um, and we'll definitely love to plug your book this morning. It's the heart and soul of safety. So I encourage anybody to uh get a chance to get out there and and pick up a copy of it. I I'm definitely excited to get a copy of it myself and be able to read it and be able to, you know, be able to share your experiences and your your journey along with it. So thank you so much this morning, Paul. I'm gonna stop the recording real quick and let them edit it and then Okay.

SPEAKER_01 29:26

This has been another great episode of Under Pressure. Compressor Talk by Midwest Compressor with your host, David Abshire. Until next time, keep pumping.