Consideration of Energy Transition for Oil and Gas (Mar 2024)

CONSIDERATION OF ENERGY TRANSITION

FOR OIL AND GAS

The fossil fuel industry covers all coal, petroleum, natural gas, oil, oil shales, bitumen, tar sands and heavy oils for energy production.  These fuels have been powering economies for over a century. In early 2024 these fuels account for around 80% of the world energy production and over 70% of the emissions derived from energy production. This energy production has powered economies, transport and industries allowing the immense progress that has been made in multiple countries and economies over the past 70 years or more.

How will the fossil fuel industry, with particular focus on the oil and gas industry emissions, transition into what isas a low carbon, low emissions era.  The starting point is not with a doomsday scenario for the oil and gas industry. It is fallacious to propose that the oil and gas industry should be stopped in some way.  There will be a continuing need for the oil and gas industry for decades if not centuries to come.  It may have to evolve into something different and adapt different technologies or invent new ones.  Most industries have evolved, executives who once used Bakelite desk phones are now using mobile handsets to do business anywhere.  So why shouldn’t the oil and gas industry turn to other technologies to improve their business and their public profile?

The oil and gas industries successful domination of energy production and transport fuel for nearly a decade has shown resistance to change and a dedicated and unified approach to thwarting threats.  It has shown some ability,admittedly using relatively known catalytic converter technology, to attenuate the emission from power stations. There is a challenge for the oil and gas industry to look at things through a different lens and find ways to apply technology to emissions reductions to the extent it can.  The approach needs to embrace a way to cooperate across industries to address the issues the oil and gas industry has been reluctant to address.

Is it sensible to continue the huge amounts being invested, including by the industry and governments, in the idea that emissions can be captured from the flue stack or from the air and piped toa cavern underground or under the sea?  The cost of the infrastructure to create this type of storage will be enormous and no engineer designer of contractor will give any warranty that the stored emissions will not escape of percolate back into the surrounding formations or the atmosphere or be released by unforeseen seismic activity.  Modelling of these scenarios seems to be ignored.

Investment into technologies that give a secure, infinite and reliable solution is what is needed. History shows that when requirements arise industrialists can rise to the challenge as they did in the Nox and Sox reduction era.

So, this is the first part of the transition solution for the oil and gas industry - FIND TECHNOLOGIES TO REDUCEEMISSIONS!

The extracted hydrocarbons from crude oil are used in multiple ways in everyday life such as, components of medicines, food additives and protection, hair and beauty products, dental and surgical components and tools, media storage,containment and production, clothing, furniture and perhaps most interestingly renewable energy components such as solar panels and wind turbines and blades.  The point is to notice that the highly efficient ways in which the hydrocarbons are produced, and useful products manufactured makes a huge contribution to the economies of countries and living standards irrespective of the emissions from energy and transport.

The emissions argument amongst others is used by the so-called renewable energy industry to rail against ongoing use of fossil fuel energy production.  Two things arise from this:

Firstly- there is no such thing as “renewable” energy - absorption of energy from the air is a transformation of energy from one from to another allowing it to be transmitted to end user points through grids and networks.  To date there has been no meaningful research or data produced to show the climatological effect of capturing energy from one part of the planet’s surface, transmitting it hundreds or thousands of miles and releasing it.

Secondly “renewable” energy is not emission free. It uses significant amounts of energy to create the components, transport them, install and maintain them and to decommission them with lifespans which are in rough terms equivalent to the lifetime of a gas power plant.  Comparative analysis shows the cost, overall emissions and waste outputs of renewables to be less favourable than the “renewables” industry claims.

Hydropower has a much better profile but is in relatively limited supply in many countries as is geothermal power.

The moves to create energy efficiency in buildings and reduction in emissions from cars are excellent examples of well-intended actions which have limited success in their application unless the buildings, homes, offices, schools, etc have built in systems to achieve the intended outcome.  Experience shows that retro fitting for district heating and energy efficient buildings is less successful than hoped for.  The conflicting interests between energy production, and efficient energy consumption are real issues to be addressed it is something that only regulation can properly address.

With nuclear energy there are also pros and cons although there is a growing lobby in favour of advanced nuclear power using SMR, AMR and MMR technologies and growing scientific evidence that the use of nuclear energy for power, heat and steam needs of industry and for district uses, is the lowest emissions and lowest cost solution to many of the issues now being faced.

On one view the energy sector has become dysfunctional because of lack of government control, direction, policy and strategy.  On another the industry has inflicted wounds for which emergency treatment is required.  Energy production from secure, protected affordable sources is the single most important factor in economic growth and stability.  The empirical evidence is that areas with high availability of low-cost energy with suitable adjacent infrastructure and supply chains are the highest growth areas for industrial and economic development. This creates a conflict because energy companies are conflicted in cooperating together to create energy parks where appropriate energy generation at low cost can be made available in micro-grid spaces, with surplus exported to network or grid. It is not in energy companies interests to produce energy at the lowest possible cost to the consumer.  So, the energy sector left to its own devices will maintain high charges and profits which in turn places a burden on business,industry and consumers.

The industry but particularly the oil and gas industry should use this period of energy transition to low emissions energy production to capture the initiative and secure its own future.  It should work with other industries and energy producers to create an energy production strategy which supports long term low-cost low emissions energy sources for current and future needs.

To do this oil and gas companies need step up and take the lead in the clean energy transition and whilst they find ways to make their own fuel sources operate at acceptable levels of emissions, to support low carbon energy generation which can be developed in multi-generation facilities all with low emissions credentials.  In the short term (3-10years), these low emissions generating plants and energy hubs - may use hydro,wind, solar, battery storage, transmitted offshore wind to meet the low carbon agenda and commitments.  In the longer term (5-20 years), use of SMR, AMR and MMR nuclear plants will provide an operating model which can align with and support or potentially replace the gas, coal and oil plants, whilst maintaining the necessary energy support for refining and other positive uses of the oil and gas production cycle.  Investment into these technologies, perhaps particularly nuclear may, ironically, be the saviour of and long-term partner of fossil fuel industry to provide a vital service to industry and economies.

If the vast resources of the oil and gas industry were to be deployed in supporting a national strategy for low-cost low emissions energy production,with a 60-100 year timeline return on investment, the industry has the opportunity to once again to hold a place at the top of popular views and the stock markets.

For an example of what this may look like in term of timeline and delivery have a look at the animation in the attached link:  https://www.castletownlaw.com/papers/energy-transition-and-nuclear-energy.

In the UK’s 2023 Spring Budget UK, it was announced that the government planned to launch the Great British Nuclear (GBN) programme, which was first announced in April 2022.  The GBN concept was first announced as part of plans to source 95% of the UK’s electricity from “low carbon” sources, of which nuclear would be one source.  The government planned to support new nuclear builds, notably the development of Small Modular Reactors (SMRs).

Great British Nuclear (GBN) has been set up to deliver the government’s nuclear programme.  It was envisioned to support the government’s ambition to deliver up to 24GW (this target has also been re-confirmed in the latest roadmap, ‘Civil nuclear: Roadmap to 2050’) of nuclear power in the UK by 2050.  However,little clarity was available on how GBN would deliver these ambitions.