• Our Networks
  • Energy CouncilThe Energy Council
  • Climate Council
  • World Refining Association
Energy Council
  • How It Works
    • Our Story
    • Executive Team
    • Women’s Council
      • 275 Top Female Executives
    • Success Stories
    • Contact Us
  • Resources
    • Market Intelligence & Interviews
    • Investor Insights Series
    • Webinars
    • Podcasts
    • Monthly Newsletter
  • Events
  • Partner
    • Why Partner
  • Investor Access
  • Membership
Select Page

Article

The role of the oil & gas supply chain in accelerating and supporting the energy transition

Published: 24th August 2022
by David Stent, Content Editor, Energy Council

In the grip of a global energy crisis, the perception of the oil and gas has wavered from incongruent with climate goals to necessary to achieve them. In light of consumer price constraints, the prevailing thought is to call for increases to oil and gas production in the short-term to secure some fuel price relief. However, for the oil and gas sector to capitalise on this reprieve as major emitters – there is a broad acceptance for their role in decarbonising their processes, lowering their asset’s emissions profiles and reimagining the supply chain to support the energy transition.

Many of the world’s largest oil and gas companies have shifted their operations to take account of these responsibilities, many independents are forging radical new paths hoping to capitalise on energy transition opportunities – while there remain a handful of laggards whose fortunes may currently be bright but whose future successes will increasingly diminish.

Defining and deciding on energy transition strategies is extremely complex in the context of highly technical and global operations, therefore identifying the areas that make the greatest impacts should often be the starting point for high emissions industries.

The Energy Council will consider the role of the oil & gas supply chain, from upstream to downstream, in accelerating and supporting the energy transition – and some of the leading players driving these shifts.

Upstream

The Upstream sector arguably has the greatest role to play in shifting their emissions profiles, as they contribute directly to Scope 1 & 2 emissions, and have a significant role to play in reducing Scope 3 emissions. The Oil majors, despite their core business being O&G production, are among the largest investors in clean, low carbon or decarbonisation technologies – understanding that the social contract for energy production now hinges on becoming aligned to global climate initiatives.

Dealing with Scope 1 emissions is the most direct emissions profile an O&G producer can lower immediately, doing so by powering their operations through a renewable baseload. There are a growing number of companies, especially in the North Sea where offshore wind development is highly favourable, that the majors: Equinor, bp, Shell, TOTALEnergies and the like are utilising wind to power their rigs.

The practicalities of lowering emissions in oil and gas supply should be their first port of call. Yet, the commitments by oil and gas companies in supporting clean energy technology and developments is one area that is somewhat underreported. The industry, especially the oil majors and leading NOCs, have committed to the transition. For one, bp has committed $5 billion annually to clean energy investments by 2030, with Shell committing a similar amount; TOTALEnergies has agreed to 10% of revenue channelled to clean energy investments; while the likes of Aramco’s partner company ACWA Power committing $30 billion to renewables projects.

While many might look at these energy companies with scepticism, the reality is global energy companies understand the market dynamics and processes necessary to maximise both output and profit. They do not place money where money cannot be made, and in this sense, they are actively seeking to grow the renewable market, in hand with more responsible oil and gas production  processes.

Midstream

The O&G midstream sector is the least known to most end consumers, as it occurs out of sight. From pipelines to shipping to terminals – the midstream sector creates significant emissions profiles due to the infrastructure requirements of energy transmission and distribution.

Pipelines are the most efficient method of oil and gas transport – yet their impact to the environment in their construction and the threat of serious damage when leaks occur, continues to trouble climate activists. Yet efficiency is what should be the highlighted, the capacity to transport magnitudes greater volumes of O&G reduces the need for heavy-oil fuelled ships.

Pipelines

Pipelines are crucial in reducing the environmental impacts of fuel transport – granted they carry their own significant risks if constructed improperly. The benefit however, is the capability to transport massive volumes of oil and gas efficiently and with very low emissions leakage. Moreover, most pipelines can be reutilised to transport Renewable Natural Gas or blended with Hydrogen to lower emissions profile of the natural gas. In this sense, the energy transition must take heed of where the existing infrastructures can be used, and repurpose them appropriately. Recycling and upcycling are not ‘green’ pursuits, but necessities for a sustainable future.

Renewable ammonia & Hydrogen transport

One of the more challenging problems that has arisen in pursuit of cleaner energy supply, is how to safely transport hydrogen from the source to the consumer – with ammonia being the leading solution. In essence, ammonia is able to store hydrogen in a more stable and far safer state than the complex and unstable process of super-cooling hydrogen into its liquid state.

Ammonia is a crucial element in a range of chemical products, most notably for nitrogen fertilisers used in agriculture. According to the American Institute of Chemical Engineers, “more than half of all hydrogen is used in ammonia production”, and beyond that, ammonia is “the second-most synthesized chemical on the planet (behind sulfuric acid)”.

The market demand for ammonia and hydrogen already exists in part, therefore expanding production to serve a wider energy market is achievable within the energy transition timeframe. Global green hydrogen and renewable ammonia will need to expand to serve clean energy targets, and in turn, the shipping sector will have to adapt to transport ammonia rather than oil (in the medium-term) and LNG (over the long-term).

Downstream

Downstream players face a difficult future, despite the current margins being enjoyed by a heightened price environment. With a market outlook of increasingly tight supply, there is an expectation of many more strong months ahead – especially for integrated refiners who have direct access to oil supply.

Efficiency & Optimisation

The obvious benefit of consistent and constant supply to refineries, in relation to energy transition pressures, is the increased efficiency of industrial processes. While not the most exciting solution to our decarbonisation conundrums, it is the most practical, cost effective and most effective route to lowering emissions. Moreover, the cost efficiencies provide refiners with greater leeway to invest in new technologies elsewhere. Any large emitter should first look at maximising the reductions of their  current operations.

Updating ageing assets to be digitally compatible is a core focus for any major industrial actor, providing the capacity to measure and monitor emissions, processes and efficiencies. Therefore, when seeking efficiencies, it is crucial to be future-thinking and consider how digitalisation can fast track decarbonisation efforts.

Biofuels

Looking to the future, refiners are preparing for the eventuality that EVs will take over from ICE vehicles, or ICE vehicles will be developed able to run on biofuels or renewable diesel, while airplace industry begins to mandate the shift to sustainable aviation fuels – and is where refiners expect to make the bulk of profits as demand shifts. Up to twice the margins that traditional fuel products achieve, according to Accenture Energy’s in-house analysis.

To achieve the correct supply, the downstream must seek to support the uptake of cooking oil collection and recycling, biomass development from the agriculture sector and assist in the lobbying of end-use sector to create the necessary demand.

Hydrogen

The refining sector holds a great deal of responsibility in facilitating the energy transition, part of which is facilitating the hydrogen economy. As Linde Gas, one of the world’s largest refiners explains, “Hydrogen (H2) is already indispensable for refining operations. Companies use this gas to remove sulphur from the fuels they produce in a chemical separation process called hydrodesulphurisation. In this reaction, hydrogen bonds with sulphur to form hydrogen sulphide, which is captured and further processed in another treatment step.”

Over 95% of Hydrogen is produced through this process, and while not ‘green’, this sector is a crucial foundation for the development of the wider hydrogen economy. The current green hydrogen supply is insufficient for the proposed level of demand, as such the role of natural gas within the energy transition extends beyond its own capacity as a fuel.

Sign Up To Our Newsletter

THE ENERGY COUNCIL NETWORK

  • Follow
  • Follow

You might also be interested in

 

  • All
  • Expert Insight
Is Gas the Answer to a Pragmatic, Smart and Secure Energy Transition?

Is Gas the Answer to a Pragmatic, Smart and Secure Energy Transition?

Expert Insight: Kongsberg Digital: Why digitalization should be a driver for energy investments

Expert Insight: Kongsberg Digital: Why digitalization should be a driver for energy investments

Industry Next Steps – A View of the North Sea’s Future

Industry Next Steps – A View of the North Sea’s Future

How continued investment into North Sea E&P plays a crucial part in advancing the energy transition

How continued investment into North Sea E&P plays a crucial part in advancing the energy transition

How can existing energy infrastructure be transformed into something that is suited to a diverse energy mix?

How can existing energy infrastructure be transformed into something that is suited to a diverse energy mix?

The Role of CCS in the Asian Energy Transition

The Role of CCS in the Asian Energy Transition

Energy Council 2022 Global Industry Survey Report

Energy Council 2022 Global Industry Survey Report

Energy & Infrastructure Insight by Shearman & Sterling

Energy & Infrastructure Insight by Shearman & Sterling

Sukuk Finance Roundtable: Understanding the structures, considerations and trends behind this emerging sector

Sukuk Finance Roundtable: Understanding the structures, considerations and trends behind this emerging sector

How is ESG driving Change?

How is ESG driving Change?

The Need for Public and Private Sector Collaboration to save Mexico’s Energy Sector

The Need for Public and Private Sector Collaboration to save Mexico’s Energy Sector

How can the Energy industry achieve Operational Efficiency and remain cost-competitive?

How can the Energy industry achieve Operational Efficiency and remain cost-competitive?

Through turmoil and transformation, the oil and gas industry keeps its sights on decarbonization

Through turmoil and transformation, the oil and gas industry keeps its sights on decarbonization

Offshore Opportunities in Senegal

Offshore Opportunities in Senegal

What do the changing energy markets mean for raising debt in the upstream oil and gas sector?

What do the changing energy markets mean for raising debt in the upstream oil and gas sector?

Financing Options for Marginal Fields, Nigeria

Financing Options for Marginal Fields, Nigeria

The drive to net zero – has the oil & gas industry got what it takes?

The drive to net zero – has the oil & gas industry got what it takes?

In The News: Total’s Southern African gas discoveries; a change in fortune for regional energy security?

In The News: Total’s Southern African gas discoveries; a change in fortune for regional energy security?

Digital Dialogue: Exploring Gas Opportunities in Nigeria

Digital Dialogue: Exploring Gas Opportunities in Nigeria

Digital Dialogue: Exploration & Production: is it too late for Africa to profit from its resources?

Digital Dialogue: Exploration & Production: is it too late for Africa to profit from its resources?

Investment Focus – What Next for African Oil & Gas?

Investment Focus – What Next for African Oil & Gas?

Diversity Is Better For Business

Diversity Is Better For Business

Digital Energy Festival to fuel six weeks of inspiring energy engagement for Africa!

Digital Energy Festival to fuel six weeks of inspiring energy engagement for Africa!

The IOC Tracker – mid-term scorecard (2020)

The IOC Tracker – mid-term scorecard (2020)

Edge, a USD 5bn, 13bn, 43bn+ marketplace

Edge, a USD 5bn, 13bn, 43bn+ marketplace

Mid-size gas power companies should pay attention to datacentres

Mid-size gas power companies should pay attention to datacentres

Debate Highlights: The Oil & Gas industry cannot attract the right talent

Debate Highlights: The Oil & Gas industry cannot attract the right talent

Are we witnessing the death of the O&G Private Equity Company?

Are we witnessing the death of the O&G Private Equity Company?

Realising the potential of Nigeria’s Gas Reserves

Realising the potential of Nigeria’s Gas Reserves

APAC Crisis Response Report

APAC Crisis Response Report

An Alliance with Finance: Big banks and Insurance Companies join the Green Recovery Alliance

An Alliance with Finance: Big banks and Insurance Companies join the Green Recovery Alliance

Interview with Vinson & Elkins

Interview with Vinson & Elkins

APAC Crisis Response Report

APAC Crisis Response Report

Iman Hill considers how the energy industry will change over the next decade

Iman Hill considers how the energy industry will change over the next decade

Amy Bowe, Wood Mackenzie

Amy Bowe, Wood Mackenzie

2030: How is the energy industry different from 2020?

2030: How is the energy industry different from 2020?

Energy Storage in Mexico

Energy Storage in Mexico

How to Win a Diversity & Inclusion battle in times of COVID-19?

How to Win a Diversity & Inclusion battle in times of COVID-19?

Maintaining the Momentum of Oilfield Safety in an Uncertain Market

Maintaining the Momentum of Oilfield Safety in an Uncertain Market

Heather Christie-Burns – Women's Energy Council Interview

Heather Christie-Burns – Women's Energy Council Interview

Hot Points: Ran Oliver, CEO, Viking Minerals

Hot Points: Ran Oliver, CEO, Viking Minerals

Investment in the Energy Transition

Investment in the Energy Transition

Hot Points: Interview with Darin Zanovich, CEO, Mesa

Hot Points: Interview with Darin Zanovich, CEO, Mesa

WECA Advisory Board Takeaways – Part 2

WECA Advisory Board Takeaways – Part 2

The Current Landscape and National Oil Companies. Winners and Losers

The Current Landscape and National Oil Companies. Winners and Losers

The Importance of Local Content at a Time of Crisis – What Covid-19 will Teach the Industry

The Importance of Local Content at a Time of Crisis – What Covid-19 will Teach the Industry

WECA Advisory Board Takeaways – Part 1

WECA Advisory Board Takeaways – Part 1

Competitive access to Nigeria gas infrastructure

Competitive access to Nigeria gas infrastructure

Deal flow as important as gas flow rates in the new Algeria

Deal flow as important as gas flow rates in the new Algeria

Morocco Oil and Gas Sector Kicks to Life in 2020

Morocco Oil and Gas Sector Kicks to Life in 2020

LNG pricing coals final death knell

LNG pricing coals final death knell

Developing local capacity in a new market environment

Developing local capacity in a new market environment

The 2020 MSGBC Summit – Time to Take Stock

The 2020 MSGBC Summit – Time to Take Stock

Unlocking the transformative potential of Grand Tortue Ahmeyim

Unlocking the transformative potential of Grand Tortue Ahmeyim

Sandra Antonovic – Women's Energy Council Interview

Sandra Antonovic – Women's Energy Council Interview

Awards Of Excellence 2019 – Female Executive of the Year Nominees Katie Jackson

Awards Of Excellence 2019 – Female Executive of the Year Nominees Katie Jackson

Awards Of Excellence 2019 – Female Executive of the Year Nominees Fiona MacAulay

Awards Of Excellence 2019 – Female Executive of the Year Nominees Fiona MacAulay

Awards Of Excellence 2019 – Female Executive of the Year Nominees Kristin F. Kragseth

Awards Of Excellence 2019 – Female Executive of the Year Nominees Kristin F. Kragseth

Awards Of Excellence 2019 – Shortlisted Nominees for the Small-Cap of the Year Award

Awards Of Excellence 2019 – Shortlisted Nominees for the Small-Cap of the Year Award

Small and Mid-Cap Companies of the Future: Gil Holzman, Eco Atlantic Oil & Gas

Small and Mid-Cap Companies of the Future: Gil Holzman, Eco Atlantic Oil & Gas

The Energy Transition & the Deployment of Capital: Peter Tertzakian, ARC Financial Corp

The Energy Transition & the Deployment of Capital: Peter Tertzakian, ARC Financial Corp

Small and Mid-Cap Companies of the Future: Mitch Flegg, Serica Energy

Small and Mid-Cap Companies of the Future: Mitch Flegg, Serica Energy

On the Spot with North America Assembly Speakers 2019

On the Spot with North America Assembly Speakers 2019

Energy Transition – the US version

Energy Transition – the US version

South America Assembly 2019 – Key Takeaways

South America Assembly 2019 – Key Takeaways

The Brulpadda Discovery

The Brulpadda Discovery

Stimulating African E&P Through Attractive Regulatory Frameworks

Stimulating African E&P Through Attractive Regulatory Frameworks

Business Innovation Platforms for accelerated, robust decision making

Business Innovation Platforms for accelerated, robust decision making

Siemens – New Technologies

Siemens – New Technologies

Siemens – FPSOs

Siemens – FPSOs

Siemens – Eliminate Downtime

Siemens – Eliminate Downtime

Siemens – Digitalization

Siemens – Digitalization

Siemens – Artificial Intelligence

Siemens – Artificial Intelligence

Newswire: Clean Energy in Latin America – March 2019

Newswire: Clean Energy in Latin America – March 2019

A Primer on Offshore Upstream Development Finance in the US

A Primer on Offshore Upstream Development Finance in the US

Commercially viable LNG supply chain infrastructure: 5 critical planning steps

Commercially viable LNG supply chain infrastructure: 5 critical planning steps

Block Energy – Increased production rates at Norio field, Georgia

Block Energy – Increased production rates at Norio field, Georgia

Newswire: Clean Energy in Latin America – February 2019

Newswire: Clean Energy in Latin America – February 2019

Why Should you Pay Attention to LeTID?

Why Should you Pay Attention to LeTID?

WECA – Key Takeaways

WECA – Key Takeaways

Newswire: Clean Energy in Latin America – January 2019

Newswire: Clean Energy in Latin America – January 2019

Bifacial is the Future

Bifacial is the Future

Women in Energy – Fiona MacAulay

Women in Energy – Fiona MacAulay

Newswire: Clean Energy in Latin America – October 2018

Newswire: Clean Energy in Latin America – October 2018

Latin America: Competitive landscape will mitigate policy volatility

Latin America: Competitive landscape will mitigate policy volatility

Due Diligence: the devil is in the detail

Due Diligence: the devil is in the detail

Newswire: Clean Energy in Latin America – September 2018

Newswire: Clean Energy in Latin America – September 2018

The Quest for a Balanced Host Government Contract: an MSGBC Basin Perspective

The Quest for a Balanced Host Government Contract: an MSGBC Basin Perspective

EPEUS – Which one was yours and why will the next one be better?

EPEUS – Which one was yours and why will the next one be better?

Shearwater GeoServices – Changing The Face of the Seismic Sector

Shearwater GeoServices – Changing The Face of the Seismic Sector

Newswire: Clean Energy in Latin America – August 2018

Newswire: Clean Energy in Latin America – August 2018

Vivek T.A. Warrier, Bennett Jones

Vivek T.A. Warrier, Bennett Jones

A greater industry for all

A greater industry for all

Deloitte – Trends in oil and gas M&A

Deloitte – Trends in oil and gas M&A

Deloitte – M&A Trends Report 2018

Deloitte – M&A Trends Report 2018

Kevin Price, Societe Generale

Kevin Price, Societe Generale

Newswire: Clean Energy in Latin America – July 2018

Newswire: Clean Energy in Latin America – July 2018

Siemens – Taming the Technology

Siemens – Taming the Technology

Siemens – Digital Twin

Siemens – Digital Twin

Siemens – Bridging the Cyber Readiness Gap

Siemens – Bridging the Cyber Readiness Gap

Siemens – LNG to Power

Siemens – LNG to Power

WRA – Electronic Vehicles Report

Newswire: Clean Energy in Latin America – June 2018

Newswire: Clean Energy in Latin America – June 2018

Newswire: Clean Energy in Latin America – May 2018

Newswire: Clean Energy in Latin America – May 2018

Alessandro Bacci, Independent Energy Consultant, A Snapshot of South Sudan’s Oil Sector

Alessandro Bacci, Independent Energy Consultant, A Snapshot of South Sudan’s Oil Sector

Akshai Fofaria, Partner, Solicitor & Avocat and Regional Chair of the Africa Group, Pinsent Masons LLP

Akshai Fofaria, Partner, Solicitor & Avocat and Regional Chair of the Africa Group, Pinsent Masons LLP

Alessandro Bacci, Independent Energy Consultant, Algeria’s and Libya’s Petroleum Fiscal Frameworks

Alessandro Bacci, Independent Energy Consultant, Algeria’s and Libya’s Petroleum Fiscal Frameworks

Upstream Oil & Gas M&A: Co-operation for innovation

Upstream Oil & Gas M&A: Co-operation for innovation

The MSGBC Basin: No “One Hit Wonder”

The MSGBC Basin: No “One Hit Wonder”

Anass Joundy, Principal Banker, European Bank for Reconstruction & Development (EBRD)

Anass Joundy, Principal Banker, European Bank for Reconstruction & Development (EBRD)

William Pollen, Director, Invest in Africa

William Pollen, Director, Invest in Africa

Newswire: Clean Energy in Latin America – April 2018

Newswire: Clean Energy in Latin America – April 2018

What is the optimal energy mix?

What is the optimal energy mix?

What is the optimal energy mix?

IOC Tracker

IOC Tracker

Siemens – Data-driven

Siemens – Data-driven

Jérôme Halbout, Managing Partner, 4D Global Energy Advisors

Jérôme Halbout, Managing Partner, 4D Global Energy Advisors

Natural Gas & LNG – the bridge & ocean of Energy Transition

Natural Gas & LNG – the bridge & ocean of Energy Transition

Integrated Oil Companies in Energy

Integrated Oil Companies in Energy

Siemens – Making the digital leap with Topsides 4.0

Siemens – Making the digital leap with Topsides 4.0

Guy Casteels, Founder, GFinance

Guy Casteels, Founder, GFinance

Alessandro Bacci

Alessandro Bacci

Siemens – Expert Insights

Siemens – Expert Insights

Diversity Is Better For Business

Diversity Is Better For Business

Expert Insight: CGG

Expert Insight: CGG

Mexico Assembly – Key Takeaways

Mexico Assembly – Key Takeaways

Siemens – Extracting more oil for less

Siemens – Extracting more oil for less

Oil & Gas VS Renewables

Oil & Gas VS Renewables

Africa: Untapped Potential

Africa: Untapped Potential

World Energy Capital Assembly : Key Themes

World Energy Capital Assembly : Key Themes

World Oil & Gas Week – Key Themes

World Oil & Gas Week – Key Themes

Expert Insight: White & Case

Expert Insight: White & Case

Five Things We Learned About South America

Five Things We Learned About South America

Alessandro Bacci

Alessandro Bacci

Matthew Brown, Partner, Latham & Watkins

Matthew Brown, Partner, Latham & Watkins

Five Things We Learned About North America

Five Things We Learned About North America

Four Things We Learned in China this Month

Four Things We Learned in China this Month

North Sea decommissioning: Primed for a boom?

North Sea decommissioning: Primed for a boom?

Pride before the fall – Lest we should forget

Pride before the fall – Lest we should forget

After a disruptive year, what next?

After a disruptive year, what next?

Expert Insight – White & Case

Expert Insight – White & Case

Why digital and collaboration are the future of offshore

Why digital and collaboration are the future of offshore

Long-term Contracts – What Price?

Long-term Contracts – What Price?

Nigeria Assembly: Key Takeaways

Nigeria Assembly: Key Takeaways

Gas Naturally Complements Renewables

Gas Naturally Complements Renewables

Alternative Energy is now anything but

Alternative Energy is now anything but

Asia Pacific Assembly Takeaways

Asia Pacific Assembly Takeaways

Five Things we Learned from Mexico Power Day

Five Things we Learned from Mexico Power Day

Expert Insight, Patrick Pouyanné, Chief Executive Officer, Total

Expert Insight, Patrick Pouyanné, Chief Executive Officer, Total

Spotlight on the North Sea

Spotlight on the North Sea

Royalties and Minerals – a maze of uncertainty

Royalties and Minerals – a maze of uncertainty

ENGAGING ENERGY
EXECUTIVES
GLOBALLY

Popular Links

  • How it works
  • Membership
  • Events
  • Thought Leadership
  • Podcasts
  • Contact Us

Connect

  • YouTube
  • Twitter
  • LinkedIn

Terms & Privacy
Energy Council © 2020. All Rights Reserved.

CLARION ENERGY LIMITED (Co.Reg.No 07098632) is registered in England and Wales, Registered Office: Bedford House, 69-79 Fulham High Street, London, SW63JW, United Kingdom. VAT No. GB 843845601

×


Subscribe To Our Monthly Newsletter

×

Thank you for your interest - please let us know if you are an Investor or an Oil & Gas Executive

I'm an Investor
I'm an Oil & Gas Executive