POWER April 2021 - 25

SUSTAINABILITY
of those assets and skillsets, and development
services. "
Das agreed that hydrogen offers a
great opportunity for O&G companies,
but he doesn't expect anything to happen
overnight. He suggested it could
take until 2030 or later before hydrogen
technology is highly commercialized.
CCS. According to a paper written
2. This chart shows clean energy investment by oil and gas companies from 2015 through
2020. Investment decreased in 2020 due to the pandemic, but still remained well above the
five-year average. Courtesy: BloombergNEF
ing set by these players, " Linden said.
" I think with the European oil and gas
majors, one theme that's very clear is that
they see themselves as broader energy
providers, " Arindam Das, head of Consulting
with Westwood Global Energy Group,
told POWER. " Where they're focusing today
is really around becoming these broader
energy companies, that is, providing
different forms of energy to their customer
groups-whether that's oil and gas, that's
renewables in the traditional sense of solar
and wind, but also, more importantly, looking
at things like hydrogen, and also focusing
on areas like carbon capture. So, it's a
broader theme. "
Das added, " Most of the energy companies,
by and large, still see the oil and
gas businesses as being substantial and
actually driving, or generating the cash
flow that drives, the diversification into
renewables and other areas. "
Expanding Business
" When many people think of the integrated
majors, they tend to just think,
'Oh, they're oil producers,' but the other
thing that these companies do really, really
well is market and trade product, " said
Kyle Reid, a partner with Grant Thornton
LLP and leader of its Renewable Energy
advisory arm. " They not only refine their
own products, but also a number of
other products, and they trade, ship, and
deliver all these products. And so, I get
the impression these companies always
view themselves as trading and marketing
companies. They see themselves as
people that have a very good handle on
energy demands in different markets,
whether that's domestic or abroad, and
they're very global, obviously. "
Reid continued: " So, as they see the
transition, they fully recognize the world
is heading toward a net-zero emissions
environment by 2050. Many of these
companies are European based. They're
very much in line with the Paris accord
April 2021 | POWER
and they're all pursuing that. How do
they get there? Well, they have to shift to
where the growth is going to come from. "
Among technologies that O&G companies
seem particularly well-suited to
capitalize on are geothermal, offshore
wind, hydrogen, and CCS.
Geothermal. Many geothermal energy
advocates see the development of hot
dry rock geothermal systems as a gamechanger
for the power industry, but there
are significant challenges in drilling deep
enough, cheap enough. O&G companies
obviously have a long history of innovative
drilling advancements-perhaps the most
notable improvement being the development
of horizontal drilling techniques. Today,
work to improve deep and ultradeep
well-drilling technology continues. The experience
O&G companies possess could
be a difference-maker in bringing deep
dry rock geothermal systems to market,
although it could still be many years away.
Offshore Wind. O&G companies also
have a lot of experience with offshore
oil rigs, fixed platforms, and floating
systems. " These companies have obviously
worked extensively in offshore oil
and gas, so they have a lot of history
and background. They have taken a lot
of risk historically in developing deepwater
fields-complex geologies, geographies,
for instance-and there's a lot of
industry-wide learning that's come out of
that, " Das said. " I think that's probably an
area where these companies can actually
translate that experience into expediting
the development of some of those
new technologies from a renewables
perspective, because they can probably
bring some of those skills and also capital
to the table, and help develop those
technologies faster. "
Hydrogen. " Hydrogen is often spoken
about by all of these players, because it
fits really nicely with their core skillset of
what they've done in the past, " Linden
said. " It also allows them to reuse some
www.powermag.com
last year by Guloren Turan, general manager
for Advocacy and Communications
with the Global CCS Institute, the O&G
industry was one of the earliest adopters
of CCS technology, beginning back
in the 1970s. " The industry originally
developed and used many of the techniques
integral to CCS: separating CO2
from natural gas is required before it can
be transported by pipelines, and separated
CO2
is occasionally pumped back
into geological formations to reduce the
emissions intensity of operations or into
reservoirs to enhance oil production, "
she explained.
" Whether as a driver of growth and
business development or as a means of
lowering carbon footprint of operations
and products, CCS offers numerous synergies
to the oil and gas industry. It is a
versatile and well-understood tool in the
oil and gas companies' energy transition
toolkit, " Turan concluded.
Investment Increasing
BloombergNEF (BNEF) has been tracking
clean energy investment by 34 of the
world's largest O&G producers and refiners
for several years. It said investment,
including in specialist companies and lowcarbon
assets, declined by 12% year-onyear
to $12.7 billion in 2020. Shell, Total,
Repsol, and Lisbon, Portugal-based Galp
accounted for the bulk of those investments
(Figure 2).
Over the past five years, total investment
in renewables, storage, advanced
transport, digital technologies, hydrogen,
and CCS by O&G companies has been almost
$60 billion, with wind, solar, and battery
storage making up the majority. BNEF
reported that total oil sector capital expenditure
expense in 2020 was likely to be
more than $200 billion, meaning clean energy
investment would account for about
6% of the total, which it said was higher
than in previous years.
" These large companies that have
been traditionally carbon-based are going
to pivot and figure out how to do this as
well-their existence requires it. They're
not going to survive, if not, " Reid said. ■
-Aaron Larson is POWER's
executive editor.
25
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POWER April 2021

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