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Paul Hobby, Genesis Park LP – Part One

Episode 20 | October 2, 2018

All Things Energy – A Houston Perspective. Paul Hobby is the founding partner of Genesis Park LP, runs Texas Monthly, sits on the board of NRG, and has wide-ranging expertise on energy, media, and Texas politics. In the first of two episodes (listen to part two here), Paul sits down with hosts Kyle Frazier, Sherren Harter, and guest host Bret Biggart from Freedom Solar Power. Their wide-ranging discussion covers Houston’s future as the Engineering (not just Energy) Capital of the World, and innovation at the intersection between water and energy. Plus, post-Harvey emergency preparedness, the net impact of fracking, the future of nuclear power in Texas, and why electric cars are the future.

Paul Hobby’s background spans practicing the law, his family’s media business, and now making private equity investments in technology, telecom, business services, and other holdings such as Texas Monthly magazine. He thought of himself as a “non-energy guy” when he started Genesis Park LP but discovered that energy had an inescapable pull. Of course energy touches all of our lives as consumers, and Paul realized that the industry was more exciting than he initially thought. From efficiency to the diversifying electricity mix to wholesale and retail market design, Paul says that energy “pulls you toward it, particularly as it gets more complicated and more technologically sophisticated.”

Houston and Hydrocarbons – and Beyond

Houston remains the global hub of hydrocarbons both upstream and downstream, and that business will be around for the foreseeable future. While recognizing that fracking has negative impacts that must be controlled, Paul also notes the net positive impact of shale gas. He even goes so far as to say that “shale saved the American economy right at the moment it needed to be saved” by lowering the price of power to consumers, providing jobs and supporting the balance of trade at a critical time for our country.

With all of that said, Paul envisions a much more expansive leadership role for Houston in the future.

As the chairman of the Greater Houston Partnership, he frequently said: “If Houston wants to be the Energy Capital of the World, we need to broaden our definition of energy [beyond hydrocarbons]” and in fact to broaden the city’s sense of itself. “If you think about what links the major industries in Houston together,” says Paul, “medical, energy, deep space, transportation – it’s all engineering. Deep in space, deep in the water, deep in the genome – it’s all engineering.” He sees Houston “as a very can-do place” that is already leading the way for other cities as a role model.

Emergency Preparedness Through Infrastructure (and Cofferdams)

In Paul's view, the aftermath of Hurricane Harvey hasn’t changed the conversation about energy as much as one may think. Rather than getting stuck in larger climate issues, Houston went to work on rebuilding with infrastructure investment. The city just passed a $2.5 billion bond resolution with overwhelming support. “Houston got the memo that you have to do something about surface water and sheet flow [fresh water runoff from the northwest],” Paul explains, in addition to protecting against storm surge from the southeast.

Resilience is also key an individual level, and people are learning to prepare in different ways for storm events that are becoming more common. As an example, Paul cites inflatable cofferdams that can be placed around an entire home to protect against rising waters. He says that “everyone is realizing that this is not an aberration. It’s not a 100-year or 500-year thing. It’s something that happens [regularly], and you’d better be ready.”

A Texas Approach to Electric Cars and Water Innovation

Texas has a quirky and independent approach to driving change, generally driven by economic rather than environmental concerns. “We have a weird way of getting around to solving problems here in Texas,” Paul observes, “but it sort-of works.”

Electric Cars and the Merit Order of Fuel

Paul has friends who are “die-hard hydrocarbon guys” yet who have fallen in love with their electric motorcycles. Internal combustion engines aren’t going away, but as with electricity the merit order of different fuel types is getting more complicated. “You need nuclear baseload because it’s carbon-free and always on, you probably need a little coal, you need a lot of storage, and wind is doing a heck of a job in Texas and solar is growing fast.” Paul sees that more complex merit order as a positive result for both the electric grid and vehicles.

Water Innovation in Fracking

One issue resulting from the energy industry also affects our water supply. The dirty water resulting from the fracking process is currently injected back into the ground in saltwater disposal wells (SWD). “In a state that tends to be drought-prone,” Paul says, “to foul a lot of water and then to get rid of it by cramming it back into the earth through a saltwater disposal process – that’s rapidly becoming an unacceptable solution.” He says that the solution is simple, because we already know how to clean up water. “You can take to an EPA drinking-water standard and just drop it on the ground.” In addition to recharging the aquifer, it will avoid the seismic issues of SWD and reduce trucks on the highways.

Thus, one simple solution has environmental, economic, and quality of life benefits. Even better, the water clarification process could be powered with an efficient renewable energy source. Paul asks, “How cool would that be if you had a wind turbine or a solar array with a battery that was able to create some distillation capacity or reverse osmosis process to clean the water?”

Stay Tuned!

Listen next week for more of our conversation with Paul Hobby. We’ll talk about the Texas electricity market structure, wind and solar power, and energy industry disruption.

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