The oil and gas industry has long been the “bread and butter” for the Houston economy. It’s a major employer, it drives the economy, it underwrites local nonprofits — but it is changing.
The world is in the midst of a major energy transition, fueled by major investors looking at ways to transition a world into a low carbon future. This move has spurred research into new technologies, sparked creation of new companies, and provoked public and private funding for new projects — everything from traditional wind and solar to carbon capture, hydrogen and battery storage.
Texas energy lawyers are at the forefront of the change, advising their clients, whether new or traditional oil and gas companies. Just like Spindletop 120 years ago, or the shale revolution less than 20 years ago, many of the same firms are now helping their clients navigate into a low carbon future.
When Danielle Patterson graduated from the University of Texas Law in 2010, the East Texas native knew her practice area would be related to the energy industry. What she didn’t know at the time is that over the next decade, the industry would transform multiple times; first, because of hydraulic fracturing, and later with the green energy transition.
“I got out of law school had an interest in the energy industry,” Patterson, a partner at Vinson and Elkins energy transaction and projects practice, said. “I grew up in Northeast Texas. The oil field was a big part of the economy. It was just something I was familiar with with.”
Today, Patterson describes herself as an energy mergers and acquisitions lawyer, but in the energy space, her work is broader — doing joint venture work, commercial contracts and project development. Her clients include well known investors like Carlyle Group, Goldman Sachs and Apollo Investment Corp.
Advised Buckeye Partners and Nala Renewables in their acquisition of Swift Current Energy.
Advised Apollo-backed Takkion Holdings on its acquisition of South Dakota-based Renew Energy Inc.
Advised Antero Resources on a $220m VPP agreement with J.P. Morgan
Patterson joined Vinson and Elkins right out of law school and assumed (“Naively,” she says) that she would be a renewables lawyer because that is where the industry was heading. But Patterson was starting her career in the midst of a different transition: the shale revolution. During that time, hydraulic fracturing — the hydrological drilling technology known as “fracking” — was established and economic enough that U.S. companies were able to penetrate shale formations and produce oil and natural gas that was unavailable before.
For the first two years out of law school, Patterson spent about 80 to 90 percent of her time doing shale joint venture transactions.
“That wasn’t my plan by any means, but that’s just what was going on in the world at that point in time,” she said.
Patterson was still interested in renewables and during that time and was able to work on large wind projects. Her work was 80 percent traditional oil and gas and 20 percent renewables, but over the past few years, the numbers have evened out to about fifty-fifty, shifting towards more renewables work.
“Last year, I probably did 60% renewables work and maybe 40% oil and gas,” Patterson said. “The E&P business has obviously been very busy. There’s been lots of work there; that’s V&E’s bread and butter. But there’s just been so much growth in the renewable space that it’s just kind of been constant for me to even out what I’m doing.”
Trevor Pinkerton, a partner in Norton Rose Fulbright’s Houston office, also began his career in during the shale boom. A Houston native, Pinkerton graduated law school from Emory University during the great recession. He returned to the Bayou City and joined Bracewell, not only because of the ties to his hometown, but because of the energy industry which was “going gangbusters at the time,” he said.
“I started at Bracewell, and Bracewell did a lot of oil and gas work and a lot of the corporate work that was related to oil and gas,” Pinkerton said. “I was in the corporate group, and the fracking deals were the bread and butter of what we were working on.”
After Bracewell, Pinkerton worked at a litigation boutique for a couple of years before joining Norton Rose Fulbright in 2014. At NRF, Pinkerton returned to corporate work with the vast majority of his time spent working with oil and gas companies, energy technology, and energy service companies.
“That was the most of my practice for the last few years, all the way up until 2019, when I started to really feel the shift,” Pinkerton said.
Led $1 billion sale of Montage Resources to Southwestern Energy Company.
Represented several California utility companies and underwriters in $1.2 billion issue of wildfire recovery bonds.
Pinkerton became a partner at the start of 2020 and said there’s been an increase in renewables work.
“It’s become apparent to me that energy doesn’t just mean oil and gas energy; it also means renewable energy and everything related to the energy transition,” Pinkerton said. “So increasingly we’ve worked on technology deals, on solar projects.”
While Pinkerton doesn’t work on project finance, he said the increase in renewables and energy transition impacts the work the corporate group does as well.
Travis Wofford also started his career shortly after the great recession. Wofford, now Corporate Department chair for Baker Botts in Houston, graduated from the University of Texas at Austin in 2009. He started his career in New York at Cravath Swaine & Moore before returning to Texas in 2013. He joined the Baker Botts office in Houston and his mix of clients shifted toward oil and gas.
“It wasn’t like some people suspected,” Wofford said. “It wasn’t 100 percent oil and gas. It was actually probably fifty-fifty, oil and gas and solar.”
In New York, Wofford’s work included securitizations for telecom, which was helpful when he began to work on securitizations for residential solar, he said. These days, Wofford said his practice is probably around 40 percent oil and gas and 60 percent renewable and clean technology.
Advised Carrizo Oil & Gas in public offering of 9.5 million shares
Advised Conflicts Committee of Williams Partners in its $10.5 billion acquisition by The Williams Companies
Represents Sunnova Energy International in $400 million “green bond” offering
The three energy attorneys have a front row seat to what’s been referred to as the energy transition. Due to policy and market pressure to change the fuel mix and reduce emissions to combat the threat of climate change, more renewable projects are coming online, including traditional wind, solar projects as well as carbon capture and sequestration, battery and even hydrogen.
As a result, law firms have been working with clients on mergers and acquisitions of renewable companies, such as traditional oil and gas companies adding power and renewables to diversify their portfolio or helping smaller renewable companies grow. Firms are also advising clients on environmental, social and governance, or ESG. There are also a growing number of technology companies looking to create services in the renewable space and need legal help with project development.
Over the last decade, not only have Patterson, Pinkerton and Wofford seen growth in the renewables area — which they say has exploded over the last year — but they all noted the convergence of work with traditional oil and gas work and renewables.
“It used to be that I had my traditional hydrocarbon work, and I had my renewables work and these were just two separate work streams, two separate sets and types of clients,” V&E’s Patterson said.
“I think what we’re really seeing with the energy transition is really a convergence here. I’m working with the same deal team for private equity clients, for example, that used to be investing in the hydrocarbon space and are now moving over to renewable and sustainable investment sides. So same deal teams, they’re working together, they’re transitioning [and] I’m transitioning with them.”
For example, a private equity investor focused on infrastructure might have invested in pipelines is now investing in wind farms as well. And Patterson says she has also been counseling her traditional oil and gas clients on ESG issues — working with them and “think tanking.”
“We’re getting together and they’re saying, ‘We need an ESG plan. We’ve got to figure out how to be carbon neutral. What are our options? What can we do?’”
Patterson has spent much of the last 10 months with her traditional hydrocarbon clients talking they can do.
“They’ve got to get on the wave, and be more sustainable-friendly,” she said. “They’ve got to make changes. So, it’s really fun when my knowledge of both industries come together, and I can help a particular client in the energy transition.”
Pinkerton’s experience mirrors Pattersons. He works with large traditional energy companies that are starting to diversify into renewables.
“Traditional oil-and-gas isn’t going away,” Pinkerton said. “I think that’s an important thing to know it’s going to be here. It’s more the case that those major companies are diversifying into renewables.”
Even oil and gas field services companies are increasingly transitioning into a broader range of energy services that include the renewable segment, Pinkerton said. His clients, public companies, are also focusing on ESG issues.
“The SEC and investors are increasingly focused on ESG and ESG concerns,” Pinkerton said. “You see those issues percolating into their SEC filings. But also people are taking a more SEC-type eye towards things like their sustainability reports that they might release publicly.”
Wofford, who does securitizations, spends a lot of his time looking at organizational structure and talking to company boards of directors about their business strategy.
“For energy transition the decade that I’ve spent on technology and renewables is very helpful to large oil and gas companies that are trying to understand what their place in this new energy economy is going to look like,” Wofford said.
When Wofford is talking to his clients regarding energy transition, he asks what the sustainability of their business model looks like to them. Some are still strong believers in hydrocarbons, and some are less sure. As the economy transitions to a low carbon future, some are focused on improvements to existing operations, new uses for old fuels, while others are looking at new, clean sources of fuel, Wofford said.
And while renewable and energy transition work has increased over the last 18 months, Patterson, Pinkerton and Wofford don’t see their traditional oil and gas work ever going away.
“I don’t think the energy transition is a zero-sum game: where it transitions and then all of a sudden there’s only renewables and there’s no oil and gas,” Pinkerton said. “I think that more accurately, traditional oil and gas will continue — and it’s still necessary and important and critical to the economy — but that the energy transition is also occurring.”
For Patterson, who imagined the world on the brink of an energy transition 11-years ago, this time feels different.
“It (energy transition) really has the momentum now that I think we all feel hadn’t been there before,” she said. “This is the path that we’re going down.”