Most of what we do, most of what we own and even where and how we live and work is in one way or another a result of the development of the oil and gas industry.
Our standard of living in the West is as high as it is because we worked out how to use oil and gas as a feedstock for so many things, some essential, some perhaps less so. It’s the range of products from pharmaceuticals to smart phones that has given oil and gas such importance, not just fuels.
Yet, here we are nearly 175 years after the first major oil discoveries in the USA and 2,600 years since it was first found in China, trying our best to wipe this massive and once highly revered industry off the face of the earth as fast as we can.
So why so ungrateful? It’s simple, it’s the awful impact that the burning of oil and gas and its emissions has had on climate change and the real danger that holds for all of us. We’re scared and rightfully so.
Not all the fault of oil and gas of course. The burning of coal kicked off the process but oil and gas have been the chief culprit – particularly in the West – since the middle of the 20th century.
By the way, coal is still an issue with our “friends” in China. The Global Energy Monitor in the USA and the Centre for Research on Energy and Clean Air in Finland found China is building six times more new coal plants than other countries and one of their excuses for doing this is the damage climate change has done to Chinese hydropower capacity. Words fail really.
But the fact remains that the need to transition from oil and gas to other forms of energy is indisputable and we have to get used to that idea.
However, that the oil and gas industry has potentially a major role to play in that transition is also indisputable.
What surprises me though is that very few oil and gas operators seem to have realised that yet or if they have, not yet developed a strategy for it.
What surprises me even more is that some who have made at least a partial move into sectors such as wind are openly talking about reeling back on their involvement due to shareholder concerns. In short, they’re not making as much money out of renewables as they do with oil and gas.
So I’m afraid they are once again putting shareholders first and the planet second. This is not clever politics and very short-termism. The impact on a workforce that’s been underpinning the industry for decades will be catastrophic.
I dread to think what the job market in north-east Scotland is going to be like in 20 years time.
With the electrify everything lobbyists and political parties such as the Greens objecting to the use of hydrogen because – in part – they say they don’t like the fact that currently the main source of hydrogen is reformed natural gas produced by those nasty oil and gas companies, the industry is already up against it.
In my humble opinion, it is also incredibly cynical of the oil and gas industry to promote the use of offshore wind to “decarbonise” their production.
Frankly, nobody with an IQ greater than 1 could see that as anything other than “greenwashing”. Now if they said it would enable them to carry on global production of oil and gas as a feedstock for all the “stuff” I mentioned above, but we’re going to stop burning it, the proposal would have some credibility – but that’s not what’s happening.
So whilst we should be thankful to the oil and gas industry for all that it has brought us, we shouldn’t be nervous about ensuring that it understands it could be doing more to achieve the so-called just transition, and indeed its shareholders should be thinking like that as well if they want the industry to still be around in 50 to 100 years time.
Currently though, they’re having rings run around them by a whole host of new and more agile players ranging from electric and hydrogen car builders to wind turbine, solar panel manufacturers and others.
Some oil and gas companies are tinkering around the edges of these new technologies but it’s the electricity supply companies who are driving the use of technologies such as heat pumps, albeit for them it’s a great way of selling more electricity.
I can’t help but think that with very few exceptions, the oil and gas upstream sector has lost its ability to genuinely innovate not just technologically but in its thinking.
The supply chain though is showing signs of having seen the light. I was – for example – mightily impressed by Baker Hughes’ recent decision to buy a large stake in the Estonian fuel cell and electrolyser company Elcogen. Hydrasun has invested in hydrogen fuel cells.
The “OGA Plan” is to be based on the revised North Sea Transition Authority strategy that “places an obligation on the oil and gas industry to assist the Secretary of State in meeting the net zero carbon by 2050 target.”
So far that seems to mean a focus on reducing emissions from UKCS production facilities.
I’d prefer they adopt the Danish Energy Authority plan which has just issued its largest offshore wind tender for up to 10 GW of new capacity and is making plans to use some of that for green H2 and e-fuels.
That is the oil and gas industry’s real future. I’m just not sure they realise it yet but time may not be on their side.
Shell is now producing bio-LNG in Germany but it’s not enough. Others are already eating their lunch. Let’s show our gratitude for what the industry has done for us by urging them on and occasionally planting a boot where it hurts.
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