As the shift away from fossil fuels gathers momentum, and the global appetite for cleaner and cheaper energy strengthens, more and more oil and gas companies are starting to ramp up their green energy growth strategies.
Global investment in the low-carbon energy transition rose 9% from $458.6 billion in 2019 to $501.3 bn in 2020, with renewable energy, the largest sector, attracting $303.5 bn (a 2% year-on-year), according to a report by Bloomberg NEF.
Oil and gas industry supermajors such as BP, Equinor, and Total can see the writing on the wall and are already in the process of expanding their renewable resources portfolio and are looking to increase their renewable power capacity.
Total, which has invested $8 billion in renewable power since 2016, has set itself the target to increase its renewable capacity to about 100 GW in 2030, while Equinor announced it expects to invest $23 billion in renewables from 2021 to 2026.
Throwing the baby out with the bathwater isn’t an option
Although companies are taking different steps to reach net zero, a major unifier among all these operations within the oil and gas industry, is the need to make this journey as seamless, sustainable and cost-effective as possible.
This means that despite rising pressure to reach net-zero faster, oil and gas companies are unlikely to do anything radical overnight that puts their survival at risk.
So, you can bet that exploration, development and operations won’t be shelved anytime soon or that existing assets will be abandoned.
Oil and gas expertise is transferable to green energy
Oil and gas businesses are still, by and large, viewed as the ones who will be key drivers behind diversification into renewables through their investment and development of new green technologies.
Aside from their market clout, they also bring to the table their expertise and long-term experience in the energy industry, their in-depth understanding of the supply chain from start to finish and their global visibility.
With this strong skill-set, extensive knowledge base and existing infrastructure, the oil and gas industry is best placed to take the lead and benefit first from renewable sectors such as offshore wind, geothermal, CCS, and hydrogen.
Hydrogen in particular is a good fit for the oil and gas industry due to the similarities between the two sectors in terms of concept design, execution, project management and maintenance.
And, with dwindling margins in an unpredictable market, expanding into territory you are already familiar with becomes a very enticing option.
So, rather than going in at ground zero, like other energy sectors will, oil and gas companies can build on the back of the work they have already done.
After reassessment and modification, existing assets, such as pipelines and platforms, can be reused and redeployed, thereby enabling operators to get the most value out of their ongoing and planned projects.
With 8800 km of natural pipelines in operation and over 50 platforms in the North Sea earmarked to be removed over the next ten years, it’s easy to see how hydrogen provides a unique opportunity to drive the transition to green energy.
Digital twin technology can speed up decarbonisation
McDermott International and FutureOn’s latest case study on hydrogen transportation, which was presented earlier this year at AOG Energy, proposes that digital twins are the ideal solution when it comes to developing new sites or maximising the value of current assets.
The case study states that a Cloud based digital twin platform, like FieldTwin Design, supports hydrogen projects by enabling engineers to do the following:
- Create a 3D visualisation for Hydrogen Cluster, including pipelines and storage
- Monitor the state and capacity of the asset e.g. flow rate, pressure, corrosion
- Design H2 pipeline including old pipeline for reassessment
- Reduce asset maintenance costs including H2 pipelines
- Select concepts based on cost analysis and feasibility studies
- Run simulations and explore more ideas in minutes rather than day
The detailed nature of the data provided by FutureOn’s digital twin solution, ensures that every aspect of the project, from the seabed to the pipeline width can be taken into account, allowing for maximum optimisation and risk reduction.