The fall in oil prices transformed the global oil & gas industry. In the wake of its devastating consequences, companies have formed new business partnerships and become more open to embracing innovation.
The industry is now recovering as prices have started to rise again, but the downturn has been a catalyst for continued evolution. Let’s take a look at what’s going on in the industry in this era of transformation. Here are three key trends from oil & gas professionals and experts at International Petroleum Week.
Natural Gas – Fuel For Future
Gas consumption is increasing. This sector is growing 3 times faster than oil. Natural gas is a suitable source of energy to fuel the need for heat and the power, making it an influential player on the market. According to the BP Energy Outlook 2040, natural gas currently accounts for about 25% of the world’s energy consumption. The demand is predicted to be growing at a rate of 1% globally until 2050. Liquefied natural gas (LNG) plays a huge part in this upward trend. Global LNG export capacity is constantly increasing and there are a large number of liquefaction projects at different stages of construction worldwide. The current top seven exporters of LNG in the world are Qatar, Australia, Malaysia, Nigeria, Indonesia, Algeria and Russia.
Renewables & Low Carbon Energy – Shift in The Energy Supply
A major trend is the shift from traditional oil & gas to renewable energy. In recent years, the market presence for renewables has strengthened, having been driven by technological progress and rising consumer demand. An interesting point from BP’s perspective – which was highlighted in the group CEO Bob Dudley’s presentation – was that by 2040, 25% of the supply would be energy and the rest 75% oil and gas. It’s time for renewables to step into the limelight. With this in mind, it is important to create new partnerships with innovators in the sector to support development initiatives. Leading oil & gas corporations are realizing this already and – with the expected impact of renewable energy in the oil & gas industry – the number of business acquisitions is increasing.
Our aim is to safely deliver energy to our customers and to create value for our shareholders, all while adapting to a changing world. That changing world includes the inexorable long-term transition to a lower carbon economy. This is a profound change that society is demanding and we are going to be part of it.
Bernard Looney, CEO Upstream, BP
New fuel options such as biofuels, hydrogen, electricity and gas are becoming more important, especially for transport. Low carbon sources and natural gas meet 85% of the increase in global demand. Cleaner energy mixes will be driving global fuel trends. On a wide scale, China is considered as a large influencer in the energy market and may dictate a new economic model. According to the International Energy Agency (IEA), the renewable energy industry is expected to grow 13% in the period until 2021.
Innovation And Technology – Enabling Transformation
Speakers and delegates at this year’s IP Week offered a vision of the oil & gas sector’s need to be more adoptive and more adaptable when it comes to technology and innovation. Honed assets, slimmed down workforce and lower cost production all need automation, from the digital monitoring and management of health and safety to such developments as extended reach drilling and the ability to tease out the last drop of resource where it counts.
There are a number of key technological challenges for the industry in the period of digitization. Solving these challenges involves the development of new analytical tools and IT solutions for business activities in the industry.
Nick Cottam for Environment Analyst
The first key challenge is driving sales through both systematic and unsystematic customer insights. The second challenge is leveraging insights to drive safe, efficient and effective operations. Related to that, the final challenge is optimizing supply chain and capital usage through secure transactions. Smart technology is going to be the backbone of solutions for oil & gas companies. New projects and partnerships are expected to lead to increased efficiency of operations.
According to the IDC FutureScape WorldWide Oil and Gas 2018 Predictions, published in December 2017:
“By 2018, 75% of all oil and gas companies will have at least one digital transformation initiative in full operation deploying cloud, big data and analytics, process automation, or IoT (Internet of Things) for the organization to advance their IT environment.”
Conclusion
In the coming years, there will be more synergy between operators and service providers looking to move in a more environmentally friendly direction and unlock new revenue streams. Agility in IT technology would aim to progress the transformation. The key role of digitalization is enablement of transformation smoothly and increase the efficiency of operations.
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