In a world that is rapidly turning green, a traditionally dirty industry is making great strides to clean up its act and in fact, has a great deal to offer the world’s energy transition in terms of skills, technology, and capital.
PEi editor-in-chief, Kelvin Ross spoke to a panel of experts about the transition of the oil & gas sector in detail. Ricardo Gorini, Senior Programme Officer – REmap, IRENA and author of the paper Oil companies and the energy transition, Iman Hill, Executive Director of International Association of Oil & Gas Producers (IOGP) and Will Webster, Energy Policy Manager, Oil & Gas UK tackled the tough questions and shared insights into this rapidly transforming space.
Committed to the transition
There’s no getting away from it: oil & gas plays a critical role in meeting global energy demand, however, increasing pressure is being applied post-pandemic to decarbonise operations associated with energy production.
Speakers agreed that, though there are different paths to achieving the lower carbon transition, there is no doubt that the goal is a shared one, with the oil & gas sector fully committed to the transition.
Says Iman Hill, IOGP: “Transitioning to a lower carbon world is a decades-long journey and one that cannot be made without the partnership of the only source of reliable and affordable energy available to the world right now, which is oil & gas.”
Even though oil & gas might currently be the most reliable baseload, decreasing LCOE is increasing the cost-competitiveness of renewables. This is opening up business opportunities and encouraging countries to make more ambitious climate pledges. Furthermore, a variety of industry sectors are transforming operations to decarbonise and financial preferences related to changing taxonomies are evolving – the energy transition is already happening and the oil & gas sector must be onboard to ensure a sustainable future.
The panel agreed that as coal and oil will experience a rapid decline, natural gas will contribute as a transition fuel. Blue hydrogen with carbon capture, utilisation and storage (CCUS) will play a big role, an opportunity for oil & gas companies to share insights concerning hydrogen, offshore technologies, electrification and liquid biofuels. Speakers believe that oil & gas companies will contribute a great deal to the innovation needed to drive deep decarbonisation.
Said Ricardo Gorini, IRENA: “There is a huge opportunity behind this energy transition. I think the oil companies are very well placed to bring enhancements to renewable energy work.”
Currently, the sector is employing a number of strategies to increase decarbonisation efforts. These include:
- Reduced flaring
- Reducing emissions in operations
- Switching from coal to gas
- Investing in renewables
- Carbon capture utilisation and storage
- Clean hydrogen
Transition and technology
An example of how the sector is working to clean up its hydrocarbons is the North Sea Transition Deal, a recently agreed package between Oil & Gas UK and the UK Government. It’s a targeted effort to transform the UK continental shelf from an oil & gas hot spot, currently producing 1.5 million barrels per day, to a more renewables-focused region, developing hydrogen, offshore wind, and CCUS.
The project will focus on decarbonising the supply chain, rather than reinventing it. Well-established competencies will be deployed to achieve this within the oil & gas sector and in other sectors and will contribute to offshore operations and pipeline developments of the future energy landscape.
Increasing operational efficiency will allow the sector to meet UK regulatory targets and will be achieved through the development of a variety of innovative technologies.
Says Webster: “The 2020-2030 period will be about developing a range of technology options at scale to achieve a certain level of maturity… We can see that fixed and floating wind will be really important, CCS and hydrogen will also be important, but we have to get all these to a suitable level of maturity so they can all contribute to the enormous challenge of net zero.”
Webster provided the perfect summary: “The main point is that there isn’t one solution to this, there is a range of technology options to be considered.”
Therein lies the secret to a successful transition, we need to understand that the goal is shared, we need to collaborate rather than compete and adopt an inclusive approach to innovation and technology to ensure we stand the best chance of meeting net zero targets.