Environmental concerns amass and foretell the demise of the fossil giant. Activists and politicians demand the modernization of energy production, supply, and consumption.
Sustainability is the new business benchmark. The clear focus is on reducing greenhouse gas (GHG) emissions and tackling climate change.
In the meantime, alternative sources of energy, such as solar and wind, are surging. In the US, they grew at a rate of 100 percent from 2000 to 2018. Figures there and elsewhere suggest they are the fastest-growing energy option on the globe.
But, the oil and gas sector has a few aces up its sleeve. Digital transformation is one of those trends giving the veteran a new lease of life.
The Green Revolution
Renewable technology is gaining ground left and right.
Public support and private funding are on the path of steady rise. Sustainable technology is getting cheaper as time rolls by. In a few years’ time, it may be on equal footing with gas in terms of competitiveness.
Thus, it’s safe to say disruption is real. In fact, it has already started to reshape the energy landscape.
Optimists argue the trajectory is set: a greener world.
There’s no going back.
However, the road to there will be thorny and there are two main reasons behind this. Renewable energy still isn’t readily available in abundance. It’s also not as scalable as fossil fuels.
This is to say it can’t supplement the energy needs of the world in the near future. For instance, it’s hard to imagine a viable alternative to fossil-fuel-based transportation right now. They will continue to propel global travel and commerce.
Notice that many world nations are heavily dependent on oil revenue as well.
Still Keeping the Lights On
The industry will harness the power of growth catalysts to stay ahead of the curve.
First of all, there are still untapped and undiscovered reserves out there. Developing economies are yet to reach their full appetite for fossil fuels. Rapidly-growing Asian economies need them to support their population and production boom.
Taking this into account, the energy consumption patterns will shift slowly and demand will fall gradually. We’re probably talking about a decline of several percentages in a matter of two decades.
What is more, the adoption of new technologies will facilitate oil and gas operations. They will make exploration, drilling, and other processes quicker and way more efficient. Even offshore drilling hasn’t delivered on its potential yet.
Technology also gives the oil and gas industry a chance to wash its face. It could contribute to climate change goals or at least stop acting as a green boogeyman. For this to happen, we’ll have to see more decisive emission-reduction plans.
The goal is to reduce the emissions by at least 3.4 gigatons of carbon dioxide equivalent and to it by 2050. This is a vital aspiration, but it doesn’t change one fact. The more distant future probably belongs to clean forms of energy.
The New Fossil Order Rises
As we’ve indicated, fossil fuel demand is showing no signs of slowing down.
The real problem is on the other side of the spectrum— supply. Experts predict there will be a severe supply gap in the future. It will be the result of the depletion of existing (known) fields and production.
Of course, it should be said the countries of the world won’t just sit idle. Despite major turbulences (like the one of 2014), OPEC has successfully managed the supply/demand in the past. The organization kept the prices from fluctuating too wildly.
The US is poised to chip away at the influence of these old fossil fuel goliaths. This is largely thanks to its tech-driven “Shale Revolution”, which brought forth a production burst. The geopolitics of fossil oil will look much different.
In other words, fossil fuel-funded countries will lose much of their leverage.
The US also established itself as a major exporter and a leader in liquefied natural gas (LNG). This form of gas is 600 times smaller than the natural gas in its original (gaseous) form. Hence, LNG is bound to revolutionize fuel shipping and storage.
These exciting changes bring us to the next key point.
The Bleeding Edge
We should never underestimate the potential for technological innovation.
Industry leaders will make sure to champion digital transformation and increase upstream capital investments. They will embrace cutting-edge digital platforms and cloud-connected tools. Adoption will take operational efficiency to the next level and across the entire lifecycle.
Companies will have to become more agile, automated, and data-driven in order to survive. Machines will take over many repetitive, tedious, and dangerous tasks. They will render manual processes a relic of the past.
Big data, for example, should work wonders for risk monitoring and prediction. Internet of Things (IoT) sensors and drones will enable remote monitoring of operations. Control of work will optimize management systems and help organizations overcome operational hiccups.
To find out more about this practice promoting safety and mitigating hazards, read on here.
All in all, expect to see software platforms and industrial robots to proliferate. These are the harbingers of the new dawn for the fossil fuel sector. Hopefully, they will make production safer and environmentally-friendly too.
Investors will certainly look to this frontier of innovation to find companies with profit potential. “Business as usual” can’t continue, not with the risks and uncertainties lurking around.
The Future of Oil and Gas Industry is Now
Fossil industries aren’t going to go down, at least not without a fight.
They span the globe and power the modern infrastructure of travel and commerce. The growing popularity of renewable sources is going to take a while to yield radical change.
Besides, there are ways to make oil and gas businesses future-proof. Namely, the word of tomorrow will be digital-first and automated. Countries like the US will spearhead the new wave of technological advancement.
Changes will revamp everything from exploration to filed abandonment Brands will have to become more operationally intelligent or risk going under. They will have to learn to swim in restless water of shifting supply and demand patterns.
So, we can conclude that the near future of oil and gas industry is fairly bright. It’s the long-term horizon that looks a bit bleak.
Check out our treasury of insights to educate yourself some more. Stay in-the-know!