Oil and gas companies are experiencing a period of unprecedented change, where even the idea of what it means to be a business in the sector is being transformed.
Climate change concerns, a shifting global economic map and digital technologies are all forcing a radical rethink of what it means to be an oil and gas company in the 21st century.
Shell, for example, is aiming to be not only one of the world’s largest oil and gas companies, but also the world’s largest electricity company by 2030. It plans to invest up to $2 billion a year into new technologies, including renewable energy.
Norwegian national oil company Statoil underwent an even more radical transformation in 2018 when it changed its name to Equinor, reflecting the fact it was no longer solely an oil and gas company but also a major wind farm operator.
Shell’s announcement was made at the start of March’s Ceraweek 2019 energy conference in Texas, United States, and both companies were in force at the event.
Speaking at a session on sustainability in the oil and gas industry, Equinor’s Senior Vice President for Sustianiability Bjørn Otto Sverdrup said his company’s mission “is to provide energy for people and show progress to society”. He added that means more than being solely a provider of oil and gas.
“The world needs both oil and gas and low-carbon solutions,” he said.
“We have chosen to evolve ourselves to become a more broad energy company and expand our renewables business. If you are going to solve the climate issue you need to change the energy systems.”
Sverdrup’s comments reflected the fact oil and gas companies are being forced by investors to demonstrate not only that they are committed to cutting the sector’s impact on global warming, but also that they are future-proofing against tighter regulations.
“We are working with suppliers to make sure we build resilience to future regulations,” he said.
“For example, could we use battery solutions in our supply vessels?”
Such innovative thinking about how the oil and gas industry can respond to climate change and the energy transition was everywhere at Ceraweek: from discussions of how hydrogen can be a clean alternative to natural gas, to the use of artificial intelligence to increase energy efficiency and bring more renewables into energy systems.
Fuels of the Future
Conversation about decarbonization and the energy transition wasn’t limited solely to renewables.
The potential of natural gas to become the main global fuel of choice – and a lower-carbon alternative to oil and coal - was another major theme of the conference.
By liquefying its vast shale gas reserves, the US has become a net exporter of liquefied natural gas (LNG) and could soon become a net energy exporter overall.
This is having a global impact on LNG supply, not only in terms of quantities being made available by the US – which could soon overtake Qatar and Australia as the world’s biggest exporter of LNG – but also in encouraging many other countries to pursue their own export plans.
Speaking during a panel discussion at Ceraweek called “Fuels of the Future” Cheniere Energy president and CEO Jack Fusco said companies must focus on ensuring that natural gas is a “sustainable fuel choice for the future.”
“We're going to support, with our money, research and development with technology innovations, to make sure that natural gas has a meaningful role not today, not 20 years from now, but forever,” said Fusco.
Delegates at Ceraweek heard about LNG production facilities being built in countries including Argentina, Canada, Mozambique and Saudi Arabia.
And as more LNG becomes available around the globe, prices should continue to fall. This is good news for the fast-growing economies in Asia looking to use LNG to move from coal-fired electricity production to a combination of power from natural gas and renewables.
“The energy industry is shifting away from coal-fired generation to more sustainable energies - natural gas and renewable energy,” said Hiroaki Osaki, President of Mitsubishi Heavy Industries America’s Oil & Gas Division, speaking at a session on LNG at the conference.
With more and more oil and gas companies following the lead of the likes of Shell and Equinor, the shift to natural gas and renewables looks set to continue to change the face of the industry.
John McKenna is an award-winning business journalist with specialist experience in the energy, infrastructure and industrial sectors, John's stories have appeared in leading British newspapers including The Times and The Daily Telegraph.