Net-zero energy: How oil and gas fits in

‘Put a tiger in your tank.’ – The public face of oil and gas looks very different today from the end of the last century, when this popular slogan reappeared. In the past messaging has laid the blame for manmade climate change at the feet of the oil and gas sector. As an industry we have never shied away from our responsibilities to operate, and that does not change today but there is drive and energy to ensure that we operate in a more sustainable manner. The UK’s 2050 commitment to net-zero carbon emissions will spur wider change, creating new sources of energy and new opportunities.

The UK is the first of the G7 group to legally commit to reaching net-zero carbon emissions by 2050. Net zero means no greenhouse gas emissions or those generated being balanced by offset schemes. By amending the Climate Change Act, and leading the Paris pact, the impetus moves to exploring all greener energy options.

It is well known that many of the ways in which we sustain our economies, well-being and life, has an impact on the environment and the world is full of unintended consequences. In 1894, for example, cities were saved from the horse manure crisis that killed tens of thousands of people, by a booming automobile industry, which in turn emitted smog, carbon monoxide, and other toxins. In an effort to make the automotive industry greener, electric cars were introduced, however mining minerals such as cobalt, lithium and nickel is a high intensity process not without its unintended impact on health and the environment.

Solar and wind industries are creating jobs. Clearly beneficial to both the economy and the earth, beneficial facts about renewable energy point to the wind and sun. Green energy is a new and upcoming industry. It has already created jobs and will continue as demand grows, and the power grids adapt. Now, solar and wind industries are creating jobs much faster than the rest of the economy. More jobs mean more work and more opportunities. The industry now employs 4 million people and is only expected to continue growing.

The reality is that the UK will need its oil and gas resources today, tomorrow and beyond 2050. On the energy argument alone, renewable technologies have some way to go, especially with energy storage. When the wind stops blowing, a nation still demands power and increasingly so. The nuclear energy route is expensive, with several perceived barriers to further development. Then, there are the essential by-products of the petroleum industry to consider. From fertilizer to flooring, insecticides to perfume, and of course pharmaceuticals.

Opportunities alongside the challenges

Whilst decarbonisation can seem complex, solutions for oil and gas are emerging. The industry has a clear and dynamic role to play in moving towards a low-carbon economy.

It is essential to consider not only moving to renewable and sustainable sources of energy, but also how to decarbonise. The industry has a significant target for reducing its emissions by at least 3.4 gigatons of carbon dioxide equivalent (GtC02e) a year by 2050 (Mckinsey, 2020, The Future is now: How oil and gas companies can decarbonize, January, 2020), and according to McKinsey, there are three approaches the industry could consider: The first is optimising operations which require few process changes and results in a reduction of intermittent flaring, venting and fugitive emissions. The second involves implementing sustainable design choices which have a positive economic benefit. Thirdly, producers should start to re-balance their portfolios across the spread of emission intensity therefore preparing for possible risks from future policy scenarios and investment choices. (McKinsey, 2019, Toward a net-zero future: Decarbonizing upstream oil and gas opportunities).

More than 150 years ago, wood supplied up to 90 percent of the nation’s energy needs.

Furthermore, according to McKinsey these approaches will depend on a range of factors such as geography, asset mix (offshore versus onshore, gas versus oil, upstream versus downstream), and local policies and practices (regulations, carbon pricing, the availability of renewables, and the central grid’s reliability and proximity).

As a specialist technical consultancy, Lloyd’s Register (LR) is committed to supporting the energy industry to transition to a more sustainable energy mix. Recent projects include an in-depth, cross-disciplinary study for the Oil and Gas Authority (OGA). The UKCS ‘Energy Integration’ report explores upstream opportunities in UK waters to cut greenhouse gas emissions. This includes current possibilities through platform electrification, gas to wire and gas storage as well as wider opportunities of hydrogen and energy hubs, which go beyond the now to support the UK’s 2050 pledge.

Solutions include marrying both existing and new oil and gas infrastructure and depleted fields with evolving carbon capture and storage (CCS) technology are costly at the moment but may become less expensive in the future. The future may even see the industry move into hydrogen production and storage or be part of integrated energy hubs with offshore wind farms.

These recommendations shouldn’t be restricted to the UK Continental Shelf but explored globally. Speed is of the essence and many of these greener solutions must be embraced over the next decade or so to see a return on investment over a field’s remaining life. However, for large-scale projects or where fresh collaborations are possible these new ideas need to be built into field development plans. Rapid change will be required along with investment if businesses are to be successful.

If taken advantage of to its fullest extent, sunlight beamed on the earth for 1 hour could meet world’s energy demands for an entire year!

What we can agree on, though, is that cross-sector collaboration is fundamental to future success. There are significant synergies between the oil and gas and renewable energy industries, as well as important lessons to be learned.

The oil and gas sector is often considered slow to respond, and unresponsive to technology advancement, however my own career experience suggests this is far from the truth. I’ve worked with forward-thinking teams who have taken a leap of faith, resulting in the development of new technology, new science and new thinking that has led to game changing outcomes for the North Sea. One thing I am sure of is that the dynamic, flexible, ultimately curious mindset of the skills base within the oil and gas sector is invaluable in the future of energy transition.

The thinking driving this change will be a fundamental part of advancing the renewable energy industry; these minds already understand how to analyse risk, how to use data, how to adapt. It is important that we integrate this knowledge with domain expertise to ensure best practice is at the centre of all we do.

As the investment market and shareholders place increasing focus on sustainability as 2050 approaches, it is this focus which will drive the energy sector to collaborate and effectively support the creation of a cleaner, more sustainable future for generations to come.

If taken advantage of to its fullest extent, sunlight beamed on the earth for 1 hour could meet world’s energy demands for an entire year!