Page 13 - FSUOGM Annual Review 2021

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shrink from a peak of 4.3 trillion cubic metres to Minimising emissions from oil and gas oper-
3.7 tcm in 2030 and 1.75 tcm in 2050, or 55% less ations should be a “first-order priority” for the
than the level in 2020. industry, with a 75% drop in methane emissions
“No new natural gas fields are needed in the envisaged over the next 10 years, as well as an
NZE beyond those already under development,” elimination of flaring. Companies should also
the IEA states. “Also not needed are many of the electrify their operations where possible.
LNG liquefaction facilities currently under con- “Some oil and gas companies may choose
struction or at the planning stage.” to become ‘energy companies’ focused on low‐
The decline in gas trade is shared fairly evenly emissions technologies and fuels, including
between LNG and piped supplies, which will renewable electricity, electricity distribution, EV
contract by 60% and 65% respectively. Demand charging and batteries,” the IEA said.
will fall by 5% per year on average during the Ultimately, the IEA report offers only a
2030s, which may mean some fields are closed roadmap. It is very unlikely that any notable
prematurely or shut in temporarily, the IEA oil and gas producing states will follow its rec-
notes. By 2050, half of the remaining gas con- ommendation about ending upstream invest-
sumed will be used to produce hydrogen. ment now. France, Ireland, Denmark and now
Spain have banned the issue of new exploration
Risks and rewards licences, but only Denmark and Ireland produce
Were the IEA’s predictions to come true, it would meaningful amounts of hydrocarbons, and are
entail millions of job losses across the fossil fuel continuing to develop new production projects.
industry in the years to come, and many billions Nevertheless, the report may influence deci-
of dollars of lost investment. Shrinking demand sion-making by countries looking to impose
over the coming years would mean weak prices, tighter restrictions on upstream development
squeezing out all but the lowest-cost producers ahead of the UN Climate Change Conference in
such as Saudi Arabia. No surprise, then, that the Glasgow in November.
IEA envisages OPEC accounting for at least half There are also considerable difficulties in
of the world’s oil production in 2050. forecasting the outlook for some clean energy
The energy transition presents significant solutions. Neither CCUS nor green hydrogen
risks to the hydrocarbon industry, the report have yet proved to be feasible at an acceptable
concludes, but there are also certain opportu- cost. Yet the report forecasts a growth in annual
nities. Coal-mining operators can shift towards CO2 capture to 7.6 Gt by 2050, and a rise in
the extraction of minerals needed for clean hydrogen consumption from 90mn tonnes in
energy technologies, for instance. The oil and 2020 to 530mn tonnes by 2050. The report also
gas industry is meanwhile well-positioned to calls for a quadrupling of wind and solar capac-
develop carbon capture utilisation and storage ity additions by 2030, but the issue of finding an
(CCUS), low-carbon hydrogen, biofuels and adequate means of storing such large amounts
offshore wind. of intermittent renewable energy is yet to be
“Scaling up these technologies and bringing resolved.
down their costs will rely on large-scale engi- Faced with these uncertainties, many govern-
neering and project management capabilities, ments will conclude that continued investment
qualities that are a good match to those of large in some oil and gas production is necessary to
oil and gas companies,” the IEA explains. ensure future energy security. ™

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