We are seeing a major shift in sentiment towards sustainability from the major oil & gas companies. More and more major oil & gas producers are acknowledging climate change and that actions can be taken to change the impact on future generations.
Some of the motivation behind these shifts can be attributed to public opinion and more recently, added pressures from the investment community. Recently a major investment institution withdrew investment funds from one of the largest O&G companies in the world stating that the O&G producer is not adequately addressing sustainability.
This sends a message to oil & gas companies that sustainability ought to be a critical part of their company strategies, not just a PR campaign.
To immediately and completely shun fossil fuel is not realistic, but gradual decarbonization is a practical one. Fossil Fuel power generation will decrease from 60% to 50% from 2020 to 2040, primarily decreasing in coal sources while natural gas is forecasted to continue growth.
The shift to gas is a major transition strategy because electrification comes from power generation, burning gas generates 50-60% less CO2 than coal. Electric Vehicles (EV) are projected to grow by a few million in 2020 to about 160 million by 2040, therefore electrification is forecasted to grow drastically.
Without committing to any particular sustainability goals set by regulations, oil & gas companies need to show that they are making sustainability improvements year over year.
An automation cliché stays true here— “You cannot improve what you cannot measure”. Companies need to be able measure their sustainability KPIs, make them visible and show improvement made on these KPIs year over year. Shareholders of some companies have even started insisting to include such KPIs in company’s annual reports.
Most companies are focused on improving operations to become more sustainable through better design, safer operations, use of renewables, electrification of processes, use of local content, local labor, and development of local economy etc.
However, other more progressive companies are taking it further, and are diversifying their investment portfolios into greener businesses like renewable generation, electrical distribution, EV charging infrastructure, bio fuels etc.
Oil & Gas companies have the real opportunity to reduce the segment’s carbon footprint with measurable initiatives like reducing methane emissions/leakage, primarily in the upstream segment. Other opportunities include reductions in combustion emissions and developing carbon capture, utilization and storage options, and developing uses for natural gas in the transportation sectors.
Digitization advances offer great opportunities in improving energy efficiency by data integration, visualization, advanced analytics and optimization.
Schneider Electric can be a key partner to help Oil & Gas Companies improve sustainability through several digital transformation strategies:
1. Sustainability Compliance Reporting
Plant to Enterprise Sustainability visibility helps manage energy, sustainability and efficiency data across an enterprise. Better optimized on-site energy resources and easily tracked, forecasted and visualized data maximizes your facility’s efficiency.
2. Sustainable power sourcing
Schneider Electric helps clients to source renewable energy strategically by providing expertise to navigate the rapidly evolving renewable energy markets. In traditional energy markets, Schneider Electric also has consulting services to know when to purchase energy at optimal rates and times.
3. Resilience/Microgrid management
Schneider Electric integrates real-time control for microgrid stability with advanced analytics into a comprehensive, scalable management system. Our open solutions can be connected with Schneider Electric or third-party systems, for both new and existing infrastructures
4. Improve Energy efficiency
Through integrated power and process systems, and software technologies like advanced process control, real time optimization and data analytics, operators are presented with real-time information on energy economics, instilling accountability in operations. Optimized energy management increases process efficiency by reducing the total cost of energy per unit of output (e.g., balancing demands for electricity, gas, and steam consumption).
Sustainability is now at the center of strategy and investment decisions, and major oil companies have to invest in companies and technologies that bring renewable, low-carbon energy to consumers and to reduce their own environmental and carbon footprints. Adoption of newer technologies and digitization will broadened the scope and pace of growth for low-carbon energy, electric vehicles, energy efficiency, and distributed energy.