Page 7 - DMEA Week 20 2021

DMEA COMMENTARY DMEA

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

Week 20 20•May•2021 www. NEWSBASE .com P7