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Time travel to 2035: Oil & Gas in the Net Zero Economy

Author

Luca Corradi

Luca Corradi

Innovation Network Director

I had the pleasure to present at a few conferences recently on the topic of the future of fossil fuels - including All Energy and the Future of Oil and Gas - debating how the Industry can or should be part of the Net Zero Economy.

Because, and let me clear about that, we need to get to net-zero emissions. I have young kids and I want them to live in a world which still has coral reefs, where there’s fish and not plastic in the oceans, and when the planet can support human life, and humans support the planet.c

I think oil and gas, and the industry, have a key role to play in future - albeit a very different one from today.

Let's time travel to 2035 then, half-way to the net-zero target. A date far away enough for big changes to happen, but close enough to start action today if we want to see them. 

For the past fifteen years we have been implementing the recommendation from the CCC, half of us are now vegan, we keep home temperatures at 19C in our homes, which are also much more insulated.

Electric cars are growing, they are 50% of new sales now, from the 2.2% of 2019 and 80% of new buses are electric, while commercial vehicle are also growing.

We have also started using transport as a service. Autonomous electric cars reducing traffic and pollution in big cities, while Virtual Reality has significantly reduced business related travel. So while tourism kept increasing since 2019, overall air travel hasn’t.

So that’s 2035 and we’re half-way to the net-zero target. Did we get rid of fossil fuels?

No we haven’t.

Gas provides flexibility to compensate for solar and wind intermittency for electricity generation and strategic seasonal storage, which have been crucial in two additional “beasts from the east” cases between 2020 and now.

Heating of old house is migrating to hydrogen, blended up to 20% with natural gas. In some pilot districts we have 100% hydrogen heating, and heat pumps are installed in new buildings.

Heavy industry is progressively moving towards hydrogen but many still need heat and power that can’t be delivered by electrification, at least yet.

Let’s be super optimistic and imagine that all countries decided to ban internal combustion engine (ICE) car sales from 2030 like Denmark, the Netherlands and India (the UK ban is currently from 2040, like China, and Scotland from 2032).

There were more than one billion vehicles in 2019, of which four million were electric. Now in 2035 we have about two billion vehicles, and assuming the global ban convergence I mentioned above, we still have about a billion ICE vehicles.

Oil is still the feedstock for most lightweight materials, included those needed by electric vehicles, and all the other literally thousands of products - used in manufacturing, packaging, medicine, agriculture, etc. Petrochemicals now account for a third of the increase in global oil demand, and it will be 50% of it by 2050.

The good news is we have finally become much better at managing the waste chain and at recycling plastic, bringing it into the circular economy. We still need some feedstock, just like we mine copper for electrification and lithium and cobalt for batteries.

So a lot of oil and gas is still needed, as all scenarios predicted back in 2019.

We are, however, on track to achieve net-zero by 2050 as we have in the meantime started an Industry Transition.

The industry now looks very different than 2019. To start with, it is a highly digitised industry.

The digital project supported by the OGTC contributed back in the ‘20s led the way to optimise production and increase uptime. We have far less workers off-shore thanks to Industry 4.0: automation, 5G communication, robotics. Most of the Industry jobs are on shore, in offices that look like the Nasa Houston control centre.

It is a cleaner industry too, as we only use renewables for power generation, building on the Energy Integration projects we started back in 2019, like subsea power hubs and the floating wind to power marginal developments.

It is also not an “oil and gas only” industry anymore.

We have started capturing CO2 from Industrial Clusters and storing it in the UK continental shelf (UKCS), and we have started producing Hydrogen at scale offshore, building on an initial feasibility study and business case project launched in 2019.

And the oil and gas industry was a key asset to make that happen: the skills, the knowledge, and the data from the Industry, its Research and Development network, its Supply Chain and Technology…

… and also its infrastructure. As an example, we preserved 3700 km of pipelines that were due to be decommissioned in 2025 and reused for CO2 transport to offshore storage locations, saving 75% of the capital costs, as estimated by the Acorn Project back in 2019.

So now in 2035 we have a digitised integrated offshore industry, which is progressively producing less oil and gas and more hydrogen, and is storing more and more carbon from industrial emission.

And this has been achieved through a combination of policy framework and collaboration across energy industry segments, keeping us on target to a net-zero Britain by 2050 which is great news.

I strongly believe that our industry has the ability to transition and realise this vision, to be ‘fit for the future’ and driving the change that our society demands.