LESSONS IN LEADERSHIP: An Interview with Jessica Shumlich of Highwood Emissions Management

When it comes to accurately measuring and reporting fugitive emissions in the oil and gas sector, we are living through a hinge-point moment. The industry is facing the uncertainty of increasingly out-of-date regulatory standards while public and investor expectations for sustainability only grow in rigor. Companies are being asked to stray from the traditionally reliable path of following the basic legal requirements, and to start future-proofing their operations, anticipating new standards and exploring new emissions tracking technology. As leading companies commit to voluntary initiatives, new methodologies are coming into existence. This uncharted frontier of inconsistency and pitfall, of urgent need and hidden opportunity, requires bold new leadership.

Fugitive Emissions Journal had the pleasure of speaking to Jessica Shumlich, CEO and co-founder of Highwood Emissions Management, a Calgary-based software and consulting firm delivering solutions for real, transparent, and provable emissions reductions in the oil and gas industry. She discussed being mission driven, the need for defensible methodologies in emissions reporting, and the ‘Alberta advantage’.

By Justin Yule

As an undergraduate student with a passion for international development, Jessica worked in Ghana for a period. At this early moment she was visited by a lasting insight: secure and sustainable energy is critical, and when access to energy is cut off, the flourishing of human life is seriously hindered. “What struck me while I was there was the idea of energy security and energy poverty; whether it is kids finishing their homework or reading books at night, or women cooking in the kitchen to feed their families, humans can do amazing things when they have stable access to energy and electricity.” Throughout the conversation, Jessica connects the ideas of energy security and energy sustainability in the manner of someone who sees the horizon clearer than others. It was in west Africa that Jessica saw not just the fragility of the Ghanaian energy grid, but the overwhelming contingency of humanity’s harnessing of energy generally. Returning to Canada to start a career in the energy sector, she was unable to shake the sense of vocation and mission.

In 2020, Shumlich, along with her business partner Dr. Thomas Fox, jumped off a cliff together, so to speak. They started Highwood Emissions Management, a venture-capital backed consulting firm with a goal to provide the oil and gas sector with solutions for accurate methane inventories. Having at this point spent almost a decade as an engineer in various roles at Shell – developing expertise in energy and the environment – Shumlich naturally attracted other like-minded professionals who had a vision for change. She met Fox, a PhD from the University of Calgary who had been working on evaluating leak detection and repair (LDAR) methodologies for the oil and gas industry. Bolstered by each other’s confidence in this undertaking, they jumped into the void – just in time for COVID19. Highwood is in some ways a child of the pandemic; Shumlich was able to put in 80 to100 hour weeks amid the structureless uncertainty of isolation and working from home.

When asked about her role, Shumlich said, “the job of a CEO is to remove barriers to other people’s success.” It is a fitting short-hand for her own approach: for her, leadership is about transforming the limiting conditions around other people and showing them a new direction. As such, her average day is filled with ascertaining clarity in her own vision, and then communicating that vision to others in a way that opens doors for them, whether it is her team or her board of directors. This model of leadership also speaks to the industry role of Highwood and other emissions consultancies. Shumlich’s business is about creating a culture of trust around emissions reporting by establishing defensible emissions metrics. In this way, Highwood and other consultancies open up space for petrochemical companies to build trust with the public, stake holders, and regulators. Shumlich explains the issue:

“The Oil and Gas sector is extremely complicated when it comes to emissions. This is because assets are very dispersed, infrastructure is of differing ages and scales, and there are all these different intermittencies, weather patterns, etc. As a result, it is complicated to understand where all those emissions are coming from. We are trying to figure out methodologies, frameworks, etc., so that when oil and gas companies say, ‘Hey, I got to near zero methane!’, it is defensible, and the public and financial institutions believe it. We are not there right now, but I would love to be able to help support that.”

Defensibility is about establishing the grounds of trust. The public and civil society care about slowing and mitigating climate change, and want to see the oil and gas sector taking the problem seriously. It is in the interest of the oil and gas sector to avoid the scorn of the general population and the legislators, and be part of the solution. The way to achieve this culture of trust is by establishing metrics that are thorough enough to be trusted by the public, and innovative enough to be practicable by companies. An emissions consultancy works to triangulate between these competing pressures, providing solutions to the oil and gas sector that are rigorous and doable.

Oil and gas companies are most often inclined to simply conduct their business, following the regulations that they are legally obligated to follow. This means that it is regulators that most often define the expectations for emissions measurement and reduction. In recent years, however, regulators have fallen behind the cutting edge and best practices of emissions measurement technology, out of an abundance of caution over interfering with private industry. This leniency has done the sector a great disservice as companies, doing merely what they are obligated to do, have in fact been found to be drastically under-counting their emissions

Some oil and gas companies, however, are built different. Voluntary initiatives are “coordinated efforts managed by administering organizations that enable participants to take standardized voluntary steps toward targeting, achieving, and/or taking credit for emissions reductions”. Many companies, seeing what is on the horizon, are opting to explore cutting edge emissions measurement technology as a way of credibly publicizing their real investment in change. And this credibility is on display. Pioneering industry players, organized by these voluntary initiatives to explore new methodologies, are starting to write the frameworks and standards for emissions reporting faster than the regulatory bodies, and in fact they are able to produce the most rigorous guidance on emissions reporting. This means that voluntary initiatives are a compounding benefit: they lead to reduced emissions, they communicate that the participant is serious, and they allow the participant a seat at the table in writing the industry standards.

Shumlich talks about the global scope of her work. “We are based in Calgary, but we have staff in the U.S. and we have contracts around the world. In North America we can get caught up in our own context. Oil and gas is produced in almost one hundred countries, most of which have far less infrastructural resources than we do here. If we want to truly solve the emissions problem and get to net-zero, we need to address ourselves to Nigeria, Gabon, Kazakhstan, etc., just as much as we do in North America.”

She goes on to characterize the issue with innovation in Canada. “One thing I have noticed is Canada’s general appetite for risk, or lack thereof. In order to develop a software, we need to pilot it. We have had many customers in the U.S., for example, who see our innovative software as a potential differentiator, and agree to pilot it. They want to help you develop it, test it, etc., because it could be an important part of how they decarbonize. We are struggling with this in Canada because organizations are saying, ‘go out, test it in the market first, then come back once you have proven you know that it works well.’ I am of course generalizing somewhat, but what might be viewed as a differentiator in the U.S., is often viewed in Canada as a potential pitfall.”

One notable exception to this is the provincial government of Alberta. One of Shumlich’s favorite projects has been working with the Alberta Energy Regulator (AER), an independent governmental body that regulates the development of energy resources in Alberta. Putting into practice her brand of leadership, Shumlich helped the AER write an equivalency framework that allows innovations in technology to be responsibly integrated into regulation, removing barriers to other people’s success. Reporting standards used to require the use of a hand-held Optical Gas Imaging (OGI) camera. “You would basically go around and take a picture of every flange and valve on site.” This could amount to thousands of pictures taken individually over a prolonged period; naturally, this has been a fertile space for innovation. OGI drones have been developed that fly over a site, fitted with an array of sensors that gather OGI imagery in a single fly-over. Highwood have worked with the AER to put together an equivalency framework that ensures that these innovations in the space, like OGI drones or planes, are doing the job as well as the traditional hand-held OGI cameras. This has subsequently encouraged innovation more broadly in Alberta, ultimately leading to better emissions tracking and more streamlined processes.

When asked about the most urgent issue in emissions reduction today, Shumlich brings up methane. While CO2 is the far more prevalent GHG, methane is much more potent. On a one-hundred-year scale, Methane is 25 to 28 times more potent, and over a 25 year period it is 84 to 85 times more potent. In terms of climate change mitigation, attention paid to methane will help reduce the most immediate danger. Methane is also a growing issue as it constitutes between 55% and 98% of natural gas, a fuel that has seen growing usage in recent years. Shumlich highlights the opportunity: “methane is the low hanging fruit. The main factors of methane emissions are things that can be fixed, such as unlit flares, ruptures, those sorts of things. Using new technology, we can start to see these big events as they happen and fix them quicker.”

When asked about what she would want to see in the future, she responded with ‘convergence’. “I would love to see convergence on a single methodology for how to report emissions from a measurement basis. For example, if you have a plane that flies over and takes measurements once a quarter, what assumptions should we make about what is happening in the meantime? You have to make these inferences and extrapolate, you have to manage uncertainty and think about these challenges that could be handled in different ways. I would call for convergence on a ‘most accurate and defensible’ method of reporting. There is currently the problem of multiple books: one methodology in the EU, one methodology to the EPA, etc. And the numbers often come out different to different jurisdictions, but it is not nefarious, it’s just because the guidance is different. Convergence will help build trust.” Let us hope that others in the industry can see what’s coming over the horizon as well as she can.

REFERENCES

1. https://www.nature.com/articles/s43247-023-01081-0, https://www.nature.com/articles/s41467-021-25017-4
2. https://highwoodemissions.com/consulting/voluntary-initiatives/