A fast-expanding number of oil & gas companies are planning to shift investment to renewable energy projects this year, with offshore wind expected to spearhead this campaign, according to major new research from DNV GL
Some 44% of those polled by the consultancy for its New Directions, Complex Choices: The outlook for the oil and gas industry in 2020 report said they would be boosting their clean-energy spend, up from 34% last year, and 63% expect offshore wind would “lead this effort”, up from 40% in 2019.
Capital spending on large oil & gas projects is foreseen being reined-in in 2020, the polling found, as companies along the oil industry supply chain expect to divert investment to position themselves for the global energy transition, with 60% of respondents saying their organisation is “actively adapting to a less carbon-intensive energy mix” in 2020, up from 44% two years ago.
Despite the growing climate crisis, two thirds (66%) of the 1,000 senior oil & gas professionals contacted by DNV GL for its report, now in its tenth year, said they were confident of industry growth this year, down only 10 percentage points on 2019.
“While the industry is experiencing persistent uncertainty, growing complexity, and new risks, we also see an industry taking bold decisions, building greater efficiencies and rising to long-term challenges as the world pivots towards a lower-carbon energy future,” said DNV GL Oil & Gas CEO Liv Hovem.
“Our research shows that the oil & gas industry has placed decarbonisation at the centre of its agenda, and it will remain a priority despite uncertainty from volatile market conditions and stalling expectations for industry growth in 2020.”
The survey found that more oil & gas companies are taking action to decarbonise, with the number planning to “increase or maintain” investment in decarbonisation rising to 71% from 54% in the last 12 months.
This spending will take “multiple routes”, including diversifying into renewable energy, decarbonising oil & gas production, and upping investment in hydrogen both green – produced from electrolysis and renewables – and grey – from natural gas combined with carbon capture and storage.
Overall, the oil & gas sector remains optimistic, though a question mark hangs over its growth 2020. Industry executives polled said they expected to “weather the storm”, according to DNV GL, “drawing on hard-earned cost efficiencies from the past five years to make margin”, with 64% predicting their organisations would hit profit targets this year, a figure largely in line with 2019 when 62% returned this opinion.
DNV GL’s latest Energy Transition Outlook forecast that oil and gas would remain at the heart of the global energy system in the coming decades, accounting for 46% of the energy mix in 2050 compared with 54% today – a contribution that will result in emissions creating global heating that will far overshoot the 1.5°C target set out in the Paris Agreement.
Hovem said: “More and more people in our sector are realising that we cannot sit and wait for the perfect solution to jump to a completely decarbonised energy system. The industry will emit too much CO2 in the meantime, so we have to start working on decarbonising the oil and gas sector with the technologies we have already in order to meet national and international climate goals.”
The International Energy Agency in a report released yesterday (20 January) said international oil & gas companies had a “crucial role” to play in accelerating the shift toward a planet-saving net zero global energy system, both by rapidly cutting emissions levels from their operations and ratcheting up investment in a range of key clean-energy technologies.