These are challenging times across all the utilities sectors, but none are facing such a period of transformation as oil and gas. On the one hand, events in Russia and the Middle East are sending prices through the roof. This led to unprecedented price hikes for consumers in terms of both utility bills and fuel prices on the forecourts.
On the other hand, the “big picture” outlook depicts an industry whose days are numbered, with internal combustion engines and carbon based electricity generation both to be phased out over the next two to three decades. Let’s see how these factors will combine to influence a handful of key trends in the oil and gas sector over the coming months.
Exploring green energy solutions
The drive towards net zero is seen by some as a threat to oil and gas companies. However, there are opportunities, too. Higher oil prices provide the potential for businesses in the sector to plough more investment into alternative energy solutions. For example, carbon capture, utilisation and storage (CCUS) is going to be a vital component in meeting government targets over the next 30 years.
It’s a mammoth undertaking and one that will demand the collective input and investment of energy companies across the value chain. Now is the time to take a pioneering role and shift the business focus towards sustainability.
Redefining oil field services
In the current political environment, it will come as no surprise that investment in oil field services (OFS) has declined. Decarbonisation initiatives will lead to a steady decline in demand, but rather than just phase out OFS, several of the larger oil and gas companies are exploring ways to diversify. The skills, knowledge and even infrastructure can be used to enable and drive low carbon and new energy initiatives.
There are numerous projects on the go and strategic partnerships being formed that will redefine OFS and keep it relevant into the second half of the 21st century. These include a number of subsea CCUS initiatives, a joint venture to set up the world’s first “blue” ammonia plant in Norway and even using offshore expertise to partner in the maintenance of renewable plant and equipment.
The transformation that’s necessary in the oil and gas sector touches every aspect of the value chain. One area that will directly affect every single one of us will be at the forecourt. Already, the shift towards EVs and hybrids is visible, but the shift is still in its early stages.
For oil and gas companies, there is more to do than simply replacing petrol pumps with charging stations. Over the next 20 years, the baby boomers will fade into history. Forecourts will be primarily meeting the needs of millennials, Generation-Z and the emerging Generation-Alpha. They value convenience above price, so the forecourt of the 2030s needs to recognise this.
Non-fuel services such as convenience stores, pharmacies, ecommerce pick ups and so on will be core to the transformation. For example, envisage a forecourt where the driver can refuel, collect groceries and drop off an Amazon return, all without leaving the car.
All these initiatives require long-term vision. But change needs to start happening today. We will be monitoring developments closely and will provide updates over the coming months.