OIL and gas must adjust to new conditions and begin to seriously invest more in emissions-free technology and longer term make the transition from ‘oil and gas’ to ‘energy’ if companies hope to survive, a report from the International Energy Agency released at the World Economic Forum today says.
Most important to the transition will be companies cutting emissions from their own operations.
Worldwide oil and gas production makes up 15% of energy-related emissions.
Combatting fugitive methane leaks and ceasing flaring and venting will be important, as will electrification of some processes at LNG plants.
"Minimising emissions from core oil and gas operations should be a first-order priority for all," the report said.
"Reducing methane leaks to the atmosphere is the single most important and cost-effective way for the industry to bring down these emissions."
In US shale basins the US Energy Information Administration suggests flaring and venting of gas associated with oil production that does not have a path to market is being flared and vented at a rate of up to 1.1 billion cubic feet per day.
In the middle of last year Rystad Energy released research that found flaring and venting across the Permian Basin alone hit 650 million cubic feet per day.
But overall the transition will be easier for some than others. Many national oil companies will struggle to adapt.
The attention is usually focussed on the world's seven majors which account for 12% of oil and gas reserves, 15% of production and 10% of "estimated" emissions from industry operations. However, NOCs account for half the world's production and more reserves again.
"There are some high-performing NOCs, but many are poorly positioned to adapt to changes in global energy dynamics," it said.
Economies reliant on oil money will also struggle.
Across the entire industry investment in non-core areas is around 1% of capital and "there are few signs of a major change in company investment spending".
That average rises among what the IEA calls ‘leading individual companies' which may spend as much as 5%, largely on solar then wind. Others have bought battery tech, or EV charging tech and some are moving to electricity distribution (think Shell's plans for ‘molecules and electrons').
Source: Energy News Bulletin
Read more here