Competing for a sustainable future in oil and gas

As we enter an era of post-COVID-19 recovery, the global energy industry is once again faced with the stark reality that resilience, development and equality must be the driving forces for the transformation to a decarbonised oil and gas industry. According to the International Renewable Energy Agency, the events of the last year have “sharpened investors’ interest in sustainable and resilient assets, including renewables” and oil and gas companies must sustain their efforts to decarbonise their operations and value chains in order to reach their net-zero emissions targets.

To avoid the worst climate impacts, global greenhouse gas (GHG) emissions will need to drop by half by 2030 and reach net-zero around mid-century. According to the International Energy Agency (IEA), the oil and gas industry’s operations account for 9% of all human-made GHG emissions. It also produces the fuels that create another 33% of global emissions.

The IEA’s World Energy Outlook 2020 recently debuted a scenario in which the world’s energy sector would achieve net-zero emissions by 2050, which forecasts that “green” hydrogen (hydrogen made through processes that do not generate carbon emissions) and other clean fuels would represent about 25% of the fuels mix.

Fortunately, today, technologies exist that have the potential to deliver a net-zero energy system. As these sustainable technologies keep developing and their costs fall further, the commercialisation of these technologies creates value and represents major strategic opportunities in the coming years.

For example, data analytics systems and tools yield quick returns and reduce the environmental impact of operations. At the same time, equipment such as gas scrubbers, which is an installation that merges gas with a liquid, works to eliminate the harmful gaseous components from industrial exhaust streams. Taking operational efficiency to the next level, cloud technologies and big data have given rise to the ‘digital oilfield’, speeding up calculations and increasing productivity in the field.

In the Middle East region, where nations are competing to reposition themselves as champions of low-carbon energy as they look to diversify their economies by making strategic sustainable energy investments, oil and gas companies operating in the region are searching for ways to build a more resilient core business, explore profitable growth options in low-carbon businesses, and changing company operating models to increase competitive edge.

Currently, Saudi Arabia is working with many countries on green and blue hydrogen projects. While state energy giant Saudi Aramco is leading the nation’s efforts with blue hydrogen, Pennsylvania-based Air Products & Chemicals and local firm ACWA Power International are building the world’s biggest green hydrogen plant at Neom on the Red Sea coast.

Meanwhile, the UAE is investing in technologies to further reduce the carbon footprint of its energy sources. Abu Dhabi National Oil Co, the UAE’s biggest energy producer, is accelerating exploration and oil development projects to boost its crude production capacity to 5 million b/d by 2030 from over 4 million b/d today. However, Abu Dhabi wants to achieve that target while reducing its GHG intensity by 25% by 2030.

In Oman, BP Oman has identified and implement proactive ways of reducing GHG emissions in Khazzan Field for new well cleanups. To eliminate these emissions, BP Oman engaged with Schlumberger to introduce green completions to the Khazzan field. This technique that redefines well testing from a GHG-producing activity that prevents GHG emissions by routing the hydrocarbons to the production facility.

Bahrain’s National Oil and Gas Company (Noga) recently signed an MoU with Italy’s Eni Rewind to help implement the UN 2030 Global goals for sustainable development in Bahrain, including water, soil and landfill management. Similarly, Eni and Bahrain’s Tatweer Petroleum are collaborating in the country’s liquefied natural gas (LNG) sector to target a more sustainable and efficient energy mix to meet Bahrain’s future energy needs.

According to McKinsey & Company, to play its part in mitigating climate change to the degree required, the oil and gas sector must reduce its emissions by at least 3.4 gigatons of carbon-dioxide equivalent (GtCO2e) a year by 2050, compared with “business as usual” (currently planned policies or technologies) – a 90% reduction in current emissions. Upstream operators can reduce their emissions by changing their power sources, for example, or reducing fugitive emissions or electrifying equipment. Meanwhile, downstream operators have the to options to adopt downstream-specific energy efficiency technologies such as green hydrogen, High-temperature electric cracking and using greener feedstocks to extend the lifetime of refining assets.