Is there any end in sight for the industry’s rollercoaster ride? On the one hand, the price of Brent crude has reached the heady territory of US$73 a barrel; hefty contracts are being awarded for the Bacalhau and Tilenga projects in Brazil and Uganda respectively; and, as revealed by KPMG on pg. 11 of the magazine, contractor confidence in the UK Continental Shelf has rebounded impressively in the space of just six months.
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On the other hand, the International Energy Agency recently published its ‘Net Zero by 2050’ report, with one of its many bracing conclusions being that investment in new oil and gas exploration projects must be halted immediately. While a report can be ignored, the judgements of shareholders or a court of law are less easy to shake off.
In a remarkable day for the Western oil majors (even by the standards of the past year), on 26 May ExxonMobil’s board was transformed by the appointment of three members keen to promote greener technologies, while Chevron shareholders endorsed a motion backing substantial cuts to the carbon emissions generated by the company’s products. Across the Atlantic, Shell – which on paper has a much more ambitious decarbonisation strategy than its American rivals – was ordered by a judge in the Netherlands to cut its carbon emissions by 45% by 2030 from its 2019 levels. CEO Ben van Beurden said the company would appeal against the ruling, but conceded that Shell would look to accelerate its energy transition strategy.
Wood Mackenzie called the day’s events a ‘defining moment’ for the oil and gas industry.1 The industry is now caught between impatient investors, civil society and governments wanting decarbonisation at a greater pace, and the need to meet the increasing demand for oil as the global economy tries to rebound from the effects of the COVID-19 pandemic.
As Barry Rust and Peter Bradshaw from Tata Steel argue in these pages, it is understandable therefore that offshore supply chain companies are struggling to come up with coherent, robust business strategies that look much beyond a few years ahead. Ideas they suggest would help the offshore supply chain during the energy transition include increased early vendor engagement, greater dialogue and data sharing. I’d recommend taking the time to read their article, which starts on pg. 14, with care: there’s a lot at stake if we don’t succeed.
Not that this uncertainty has stopped companies from continuing to innovate. Take, for example, Neptune Energy’s repurposing of virtual reality (VR) technology originally developed to train astronauts bound for the International Space Station. Neptune is now using the technology to allow workers to ‘visit’ and familiarise themselves with the Gjøa platform in the North Sea via interaction with a 3D model. VR will also be used to obtain a clearer idea of the effect of any modifications to the platform, before they have actually been implemented. Perhaps it’s the millennial in me coming to the fore, but I enjoyed the element of gamification in this story.
I hope you enjoy reading this issue. If you have any feedback you’d like to share, please do not hesitate to email me at email@example.com
Reference: 1CROOKS, E., Wood Mackenzie, ‘Big Oil’s watershed moment: five things you need to know,’ (11 June 2021).