Learning from the Past For Future Growth In Oil And Gas

Resiliency in capital, carbon, and operations are essential to meeting short-term energy demands while planning for a more sustainable future.

FREMONT, CA: Oil and gas firms must balance the competing priorities of meeting the growing need for inexpensive, reliable power worldwide with the pressing need to act on climate change. The energy trilemma — affordability, security, and sustainability — recalibrates amid economic and geopolitical stresses as we watch the balance within the energy trilemma shift.

It is necessary to increase supply in the short term, while it is important to reduce greenhouse gas emissions in the long run. Refineries are not ideal for solving ten-year problems. Still, this logic persists despite the inflationary economy and the war between Russia and Ukraine.

Unsurprisingly, oil and gas management teams prioritize ESG issues, given the attention the US Securities and Exchange Commission (SEC), investors, and the worldwide regulatory environment have paid to climate disclosures. A pressing need exists to turn more in-depth reporting into actionable results on climate change. In 2021, when the effects of the COVID-19 pandemic began to fade, energy consumption and carbon emissions reverted to pre-pandemic levels.

Managing the complicated political landscape requires oil and gas firms to be thoughtful and upfront about who they are and where they want to go. This is especially true given the contradiction between increasing capital expenditures to enhance supply and decreasing fossil fuel usage. As a result, many businesses are revising their sustainability materiality assessments to better fit their ESG strategy.

Required steps:

Carbon reduction

Oil and gas companies have made it a top goal to reduce the amount of carbon dioxide they release into the atmosphere during their daily operations. Using strategies like carbon offsetting, electrifying processes, and carbon collection, utilization, and storage technologies makes it possible to decarbonize activities without interfering with the core business. Once a company has determined its strategy for decarbonization, it can move on to the implementation phase. Future success will depend heavily on the company's ability to provide transparent information about the results of strategic decisions and implement decarbonization across its remaining assets.

A collaborative effort

Even though businesses must set their sustainability targets, the industry is starting to realize the importance of working together to achieve real results. The private sector, the supply chain, and government officials must collaborate to create new sustainability agreements and norms. Commitments to full lifecycle assessment standards, for instance, can have far-reaching effects throughout the value chain. Creating shared benefits for all stakeholders through active collaboration on sustainable solutions is a powerful force that will propel us toward a meaningful, lower-carbon future. By working together as a team, we increase the likelihood that our standards will trickle down throughout the organization, our habits and outlooks will change, and we will have a stronger overall influence.

The digital revolution

When it comes to furthering the digitalization of operations, digital ESG is a major driver. A solid foundation of operational data is necessary for near-real-time monitoring of emissions and embedding operational decarbonization throughout an oil and gas organization. Companies can add fast operational intervention to their decarbonization toolkit with the help of carbon-enabled digital twins and carbon management platforms. In certain areas (including California and Asia), oil and gas companies are exploiting the trackability of these systems in conjunction with high-quality offsets to provide distinctive goods at a considerable margin premium. Premiums and market access will be significant in the European market.