Preparing for a net-zero future

adipec net zeroAn ADIPEC panel session moderated by Carlos Pascual, IHS Markit, examined how the oil and gas industry can transform upstream oil and gas operations to prepare for a net-zero future

Pressures to decarbonise energy have grown over the past few years, impacting companies’ social licence to operate. More and more countries are committing to net-zero emissions targets, with the EU and the US president elect committing to net zero by 2050, and China by 2060, while ESG is becoming an increasingly important factor affecting investment decisions.

How can the industry continue to drive efficiency, reaffirm its social licence to operate and connect with the investment world, at this challenging time of low oil prices and low demand?

The panel of distinguished industry leaders were united in their declared commitment to net zero operations, and discussed strategies for achieving this.

Abdulmumim Saif Al Kindi, executive director ADNOC PT&CS directorate said it will be a "continuous effort to clean up our act.” 

“There is no option but to find ways and adopt best processes and technologies to do this if we are to ensure a marketplace for our products,” he commented.  He highlighted the importance of a good supporting culture. “ADNOC’s commitment to ESG since its inception proves that responsible investment doesn’t erode value or entail missed opportunities for higher yields,” he said. From the elimination of flaring in offshore fields, to investment in LNG plants, ADNOC’s investment decisions have not been determined solely by business drivers, but also by environmental factors and the elimination of waste. “The same values we have adhered to in the past will drive our decisions for the future,” he said.

But is the industry doing enough to recognise change and act on it? Mario Mehren, CEO Wintershall DEA said that as a European independent oil and gas company, Wintershall intends to play an active role in Europe’s clear political commitment to deliver net zero economy by 2050. 

“We can deliver as a company with our gas-focused portfolio, deliver by producing our products in the most efficient and responsible way through energy efficiency, digitalisation and other innovations. We can deliver by investing as a company and industry in new technologies, for example CCUS, and hydrogen, which will make a difference in the future,” he said, adding that the gas industry is in a “perfect position to make use of hydrogen”. He stressed that while future technologies are part of the story, there is also a need to operate efficiently in a responsible way.”It is important for us to continuously reduce our footprint by addressing the small things.” He gave as an example the power from shore concept which the company has introduced in an offshore field in Germany using wind power instead of gas. 

“Is the industry doing enough? It has the means to do enough, it is important we walk the talk and not only announce targets towards 2050 but have very specific near-term targets,” he said.

Lorenzo Simonelli, chairman and CEO Baker Hughes, echoed his remarks on the role of gas. “It’s important we as an industry own the narrative around the importance of gas and the role it can play in the short term to bring down carbon footprint and help the journey to net zero,” he commented. “Add to that detection, monitoring, carbon capture and hydrogen and there are a number of steps companies can take. Even though it is a difficult time for the industry, there are ways of moving down the path to net zero that are economically viable. Remote operations decrease the carbon footprint, and the demanning process can result in increased productivity and efficiency. We can look at integrated capabilities, taking out silos, interfaces between different operators and different suppliers – and there is low hanging fruit from stopping flaring and increasing efficiency of equipment. Decarbonisation is possible for the industry, and it’s also vital when you look at the growth of energy needs around the world.”

“Transforming oil and gas operations and preparing for a net zero future is critical for all of us,” agreed Takayaki Ueda, president and CEO Impex Group, noting the commitment of the new Prime Minister of Japan net zero by 2050. He stressed the responsibility of IOCs to provide cleaner, affordable and ample hydrocarbons, with demand from Asia in particular increasing. “Natural gas will continue to play an important role, at least for the time being, as an easy and portable energy, especially for Asian countries.” 

Ueda argued for the commercialisation of carbon, saying added that carbon dioxide is “not just an evil that has to be eliminated....sequestering and utilising this CO2 to produce energy and even hydrogen could be a business in itself, while helping to address climate change.” 

There was some discussion about the future of hydrogen and CCUS, with blue as well as green hydrogen needed to enable industrial producers to decarbonise their operations. Also underlined was the need to continue research and develop the right business models, and to focus on the demand side as well as the supply side of hydrogen and CCUS, for example in automobiles and power, to realise a hydrogen society. 

The importance of partnerships and collaboration to bring together industry capabilities was highlighted, which would result in a better outcome for decarbonisation as well as increased efficiency and productivity.

Al Kindi stressed the priority attached by ADNOC to partnerships bringing value in terms of environmental and social responsibility, HSE and technology, giving as an example the partnership with Baker Hughes that adopts integrated drilling services to minimise interfaces.  

Commenting on the role of policy and regulation, SImonelli commented that “the commitment by all is there”, but clarity is needed over how net zero is defined. “There needs to be a cohesive effort to do that in a transparent way, which allows us to have the key process indicators and metrics in place, as well as the regulatory foundation and subsidies. The service industry and the supply base can supply the technologies - we need to find the right business models so there is a financially viable outcome.”

Mehren added,“ To stay in business and have access to financing, it s necessary to have good targets in ESG and provide transparency. We can do a lot as companies if we are transparent and set clear targets, but at the same time we hope policy makers remain technology open. “

“Innovations, ESG, financial markets are a good motivation for companies to move forward, providing the guiding principles to a low carbon society,” commented Ueda.  “But there is a difference between aspiration and reality.  We need good strategies based on realistic projections.”

Finally, attracting the younger generation into the industry will be essential , the panel agreed. “What we need to do is go out with our narrative, share our story and the positive things the industry offers and our ability to continue to attract talent and develop rich careers for people joining us,” concluded Al Kindi. 


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