In popular culture, decarbonization to address climate change typically centers on replacing fossil fuels with renewable energy—as fast as possible. Oil and gas industry experts know better. In fact, fossil fuels are expected to drive 48 percent of the global energy mix by 2050. Which is why companies and investors are regrouping to find realistic paths to a sustainable future.
Some financial firms are rebranding ESG commitments and investor rewards and penalties. Meanwhile, oil and gas leaders like ExxonMobil and Occidental Petroleum (Oxy) are investing in carbon capture technologies and facilities to offset emissions as they explore renewables.
Co-innovation with partners is another cleaner energy strategy. Chevron is codeveloping renewable-power projects with Algonquin Power & Utilities Corporation and has plans to invest $250 million by 2025.
Intelligent asset management powers sustainability
Adding renewables to the already complicated energy supply chain has oil and gas organizations in search of efficiencies. The idea is to save costs near term so they can increase investments in clean energy down the road.
“Companies need to produce reliable, cost-effective, lower carbon energy while maximizing profits and shareholder return,” said Peter Reynolds, industry analyst at ARC Advisory Group. “It’s more than just an energy transition. They are managing an evolving infrastructure comprised of modern and legacy systems within the company and across partners. A digital technology advantage plays a key role in maintaining this balance, and the speed of adopting new processes is a new measure of progress. For industry leaders, information technology (IT) and operational technology (OT) are coming together more holistically using agile frameworks for operational excellence from intelligent asset management.”
Digitalization powers business resilience
Like all industrial resource-intensive sectors, the oil and gas industry has digitalized to better manage the drill rigs, mud pumps, tanks and vessels, pipelines, and other equipment that produces energy across complex and volatile supply chains. Sustainability comes down to corralling insights from extensive networks of connected data that span thousands of internal and partner-run operations from land lease exploration and extraction to distribution. This is far more nuanced and complicated than swapping out gas-powered cars for electric vehicles (EVs) or deciding where to park our 401k funds.
“Digital provides companies with end-to-end visibility across systems, helping them build resiliency and flexibility for growth in the low carbon world,” said Stephane Lauzon, head of oil, gas, and energy at SAP. “Our customers are interested in mobile inventory, warehousing, and logistics that capture real-time data in the field for efficient resource management and cost control. For example, SAP’s field to logistics solutions help customers track rented and owned equipment through the entire lifecycle. Companies know where equipment is in the field and the best next steps including redeployment, rental return, or recycling.”
Intelligent asset management saves energy in numerous ways. With preventative maintenance that provides real-time data alerts before equipment failures, companies can avoid carbon-intensive measures like overnight air shipments or idle production lines as workers wait for parts. People can diagnose and support operations remotely minus time-consuming and expensive long drives or plane rides to far flung locations.
With the emergence of generative AI, oil and gas companies are expected to transcend earlier sensor-based tools that monitor equipment performance by pressure, flow, temperature, and other variables.
“Companies can use large language models to institutionalize the intelligence that’s in every document,” said Reynolds. “Generative AI changes how people learn and understand what’s happening in any environment. Reliability systems could use models to show when for example, pipes or vessels will be available. Precise 3D systems could prevent equipment clashes between assets during design and even onsite vehicles and other equipment in motion in operations”
Realistic investments towards net-zero
Oil and gas leaders aren’t standing still when it comes to renewables. ExxonMobil has broken ground for a lithium production operation in Arkansas and aims to become a leading producer of lithium, an important component of EV batteries. Sustainable aviation fuel has joined ethanol, biodiesel, and low-carbon hydrogen as lower carbon emissions options. Companies are also making significant advancements at the molecular level to manufacture reusable plastics and recyclable products.
That said, the transition to clean energy will be a much longer process than originally predicted.
“Companies have reset to pragmatic net-zero goals that are grounded in secure, affordable, and resilient energy,” said Lauzon. “EVs are only a small slice of the sustainability challenge. The oil and gas industry, along with consumers, needs to factor in non-combustion usage of hydrocarbons that touches just about every material we use in our daily lives.”
Article Credit: forbes