The Right Purity Is the One That Pays

Years ago, back when Total Stream was still finding its legs, one of our engineers came into my office with a beautiful piece of work. He had built a reporting module that could slice production data in ways I had not seen before. The output was clean. The structure was right. The logic held up under anything you threw at it. It was, honestly, a pleasure to look at.

I asked him who had requested it.

He looked at me a little sideways. No customer had requested it. He just thought it would be useful. And he was not wrong. If somebody had needed exactly that cut of data, at exactly that level of detail, for exactly that use case, it would have been a beautiful answer to their question. But nobody had asked that question. He had built a solution for a problem that did not exist, and we had paid him to do it, and I had let him.

That was the day I started watching more carefully for a very specific mistake. Not poor engineering. The opposite. Over-engineering. The kind of mistake a good engineer makes when he loses track of who he is actually building for.

Alex Economides brought this right back to the surface for me when he sat down with Kevin and Philip.

Six Hundred Dollars, or Eighty-Five

Alex runs the math on carbon capture the way a reservoir engineer runs the math on a well. He told Kevin there are different grades of captured CO2, and the grade you produce decides what you can sell it for. If your CO2 is going straight into a compression station hole in the ground, you do not need it pure. If you are selling it to a food-grade buyer, you can get six hundred dollars a ton for it instead of eighty-five.

Read that again. Eighty-five dollars a ton from 45Q. Six hundred dollars a ton from a food-grade buyer. A seven-times multiplier sitting right there in front of you.

So what stops everybody from just producing food-grade? Two things, and Alex named both of them right away. First, the food-grade market is, in his words, a tiny tiny tiny market. Philip made a joke about Buc-ee's fountain drinks, and Alex laughed and said, sure, kind of, but that is the whole market. You are not going to build a national carbon capture business on Buc-ee's. Second, getting CO2 from decent to food-grade costs real money. Every percentage point of purity after about ninety-five costs more than the one before it. If your buyer does not need the extra purity, every dollar you spent getting there is a dollar off your margin.

The Spec Comes From the Outlet

Here is the part that made me sit up. Alex talked about a conversation he had been having with operators who run compression stations. A compression station sits on top of a place where you can put CO2 back in the ground. The stuff is going in a hole. It does not need to be pure. Seventy percent purity, his words, might suffice. You are not selling it to anybody. You are sequestering it. You are capturing the emissions, eliminating the environmental hit, and collecting the credit. Everybody is happy and you did not over-build a single valve.

Kevin picked up on the real idea there. Ninety-five percent capture versus ninety-nine percent capture is not a meaningful difference when you are talking about environmental impact. Alex said it plainly. Effectively zero. You have eliminated the impact almost entirely. The last four points of purity cost you real capital and did not move the needle.

That is the whole principle in one conversation. The spec comes from the outlet. You do not decide how pure your product needs to be by asking yourself what looks best on a data sheet. You decide by asking yourself what your actual buyer actually needs. Then you build to that, and you stop.

Where This Gets Us in Trouble

I have told our engineers at Total Stream for forty years: you can be creative with the data you use to find better solutions, but you cannot be creative with the structure underneath the data. The structure has to be true. What Alex is adding to that, and what I wish I had said out loud more often over the years, is that the polish on top of the structure has to match what the customer is actually going to do with it.

Put it on the well pad. If I am handing a drilling engineer a number he is going to use to decide weight on bit in the next thirty seconds, he needs that number to be right and he needs it now. He does not need it to be beautiful. He does not need it tied to a dashboard with six colors on it. He needs it true, fast, and visible. If I spent six months making it pretty and he was waiting the whole time, I cost him money and I cost him trust.

But that same number, rolled up at month-end for a partner meeting with a co-owner who has a million questions and a lawyer beside him, needs to be audited, sourced, tied to every field ticket behind it, and able to hold up under a room full of scrutiny. Same number. Two completely different specs. And if you serve the drilling engineer the month-end version, he cannot use it. If you serve the co-owner the real-time version, you are going to lose the meeting.

See, the other guy figured out which version goes where, and you are still building one beautiful product for every audience. That is how good companies burn good money.

The Over-Engineering Trap

Here is what I have watched happen over and over. A founder raises some money. He is proud of what he is building. He wants it to be the best in class. So he spends his first eighteen months polishing the exhaust, as Alex would say, instead of shipping the thing to a customer who needed something less pure but needed it yesterday.

Meanwhile, another founder in the same space has a rougher product, has shipped it, is getting paid, is learning what his customer actually wants next, and is putting the money from those sales back into the product. Eighteen months in, the second guy is three product cycles ahead of the first one. The first guy still has a prettier data sheet. The second guy has a business.

This is true in carbon capture. It is true in software. It is true in anything where the temptation is to perfect the thing before you ship the thing. I have been guilty of it myself more times than I want to admit. It feels like discipline. It is really just fear dressed up in engineering clothes.

It Depends Is the Right Answer

When Philip asked Alex where he thinks the captured CO2 ought to go, Alex said: it depends. He said it almost with a laugh, because that is the answer consultants get teased about. But then he explained exactly what he meant. Sequestration, pipeline, enhanced oil recovery, food-grade, compression station injection. Each one has a different spec. Each one pays differently. Each one demands a different build. You do not make one answer fit everywhere. You figure out the specific application and then you design for it.

That is the discipline every operator ought to be borrowing. It is not glamorous. It is not a keynote slide. But it is the difference between a company that knows what it is building and a company that is building the most impressive version of something nobody asked for.

Final Thought

My dad was a farmer and a carpenter. He built houses and he built sheds. And the thing you learn watching a man do both is that you do not frame a shed the way you frame a house. Both take good work. Both need to stand up to the weather. But if you frame a shed the way you frame a house, you have wasted lumber, wasted time, and wasted a customer's money. And if you frame a house the way you frame a shed, you have a problem you are going to regret for a long time.

Know which one you are building. Know who is going to use it. Know what it needs to carry and what it does not. Then build to that and stop.

Alex put it the plainest way I have heard anybody say it on a podcast in a while. Eighty-five is good money, if your capture cost is forty. Six hundred is great money, if you have a buyer. But a valve you did not need to install cost you every dollar you paid for it, and it cost you every day you spent installing it, and you cannot get either one back.

The right purity is the one that pays. Everything past that is pride.

Alex Economides is a fractional CFO at Occam's Technology and an energy transition advisor to New Tech Global. He holds two US patents on carbon market design. On Wisdom at the Wellhead, Kevin Fischer and Philip Richard sit down with him to talk through the economics of matching carbon purity to the buyer, why the compression station application changes the whole build, and how good operators keep themselves from over-engineering their way out of a margin.