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The Oil and Gas Industry's Green Future

How Leaders Approach Sustainability in a Complex World

Two Views of Two Global Energy Players

In early 2020, just before the world’s economy shook and shivered, many of the energy industry’s leading players assembled in Dahran, Saudi Arabia, for the annual International Petroleum Technology Conference (IPTC). They gathered to discuss the global energy picture, as well as the application of technology to create a sustainable oil and gas future. 

Yasir Al-Rumayyan, chairman of Saudi Aramco and governor of the Saudi Public Investment Fund, highlighted the opportunities the global energy transition gives Saudi Arabia and the industry as a whole. He talked about the “flawed vision and narrative” that is in the world of public opinion today and said, “Disagree we must. We will make our voices heard.” 

He talked about the decades ahead of the world in navigating energy transition, that the energy value chain is far too complex for simple answers and that there will be multiple energy transitions globally and regionally. As such, there is an opportunity to make transformational change, and push technological possibilities to “lighten the carbon load” of energy. He summarized that Saudi Arabia intends to deliver on two visions:  the first is to make transformational change; the second is to power economies around the world (according to the World Health Organization, 3 billion of the world’s 7.5 billion people still get their food and heat from indoor fires; and 1 billion have no access to electricity).

As Saudi Arabia looks ahead to a low-carbon future, their goal is to lead in reduced carbon intensification and greater energy efficiency. To reach this goal, they believe science, technology and innovation will be the guiding forces. Al-Rumayyan noted at IPTC that they report having reduced carbon intensity 8% from 2012-2018.

Additionally, to drive operational efficiency, a culture of science and a focus on energy, Aramco is transforming the technical skills of the workforce. By focusing on AI and machine learning, and enabling people to use this technology, they believe they can deliver a sustainable energy future. 

 

Total’s CEO, Patrick Pouyanne, meanwhile, discussed the company’s strategy to evolve from an oil and gas company to an energy company. He discussed society and activists’ pressure on the energy industry and how Total’s role is to answer the demand for energy. Pouyanne believes that through 2030 and 2040, the most significant global trend that needs to be addressed is going to be the increasing demand for electricity. He talked about the possible evolution of marine shipping to natural gas as a cleaner fuel and the evolution of power generation to renewables, to their limits.

 

Both leaders, together with the leaders of several other global players, emphasized that the global oil, gas and energy picture is complex and interdependent meaning it will become increasingly more challenging to satisfy global demand.

 

 

Sustainability in Oil And Gas in The Face of Low Hydrocarbon Prices


Now, in May 2020, the economic playbook is substantially different. But the basic drivers towards sustainability and energy transitions have not changed. According to John Ehrenfeld, the respected retired head of MIT’s Technology, Business, and Environment program, the world needs to be viewed as a system, and we are in danger of destabilizing it. 

 

Jim Fitterling, CEO of Dow Chemical Company said at the end of March, “We cannot lose momentum on the important work we have all been doing to address big global challenges — such as moving to a more circular, more carbon-neutral global economy. This will take collaboration and urgency, like the fight against COVID-19.”

 

Dow Chemical was one of the first global chemical companies, beginning some 20 years ago, to understand that all efforts made to increase sustainability were in fact profitable for Dow, because interlinked with those efforts they added energy efficiency, reduced wastes and disposal costs, and reduced legal liabilities.

 

McKinsey, in one of their most recent reports, opined that as energy companies come out of the current economic crisis, they will focus more on digitalization, and that sustainability will be even more front of mind.

 

Current energy company initiatives are achieving meaningful sustainability advances. 

ADNOC, at their Shah Gas Field, has implemented an asset-wide digital twin to monitor and identify ways to reduce fugitive emissions, water use, and energy use. So far, they have reduced fugitive emissions 1% and have made significant strides in water and energy conservation. 

Bharat Petroleum (BPCL) deployed an integrated digital twin to optimize sulfur recovery — encompassing software to improve contaminant removal, as well as a key performance indicator (KPI) dashboard. In six months, the implementation resulted in 90% reduction in sulfur emissions and economic (and circular economy) value from recovered sulfur. In another project, BPCL implemented a digital emissions monitoring and prediction system, that allows the company in its Kochi Refinery to effectively address an increasingly rigorous and dynamic regulatory environment.

 

And Saudi Aramco is investing significant R&D resources into new carbon capture technologies and hydrogen passenger vehicles.

 

American and global energy companies, both in the upstream and downstream sectors, will need to incorporate sustainability integrally in their efforts as they plan and execute for the economic recovery in the next period. To learn more, watch the on-demand version of my recent webinar with ARC Advisory Group's Peter Reynolds and Hydrocarbon Processing.
 

 

 

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