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the low carbon question

you could divide oil and gas companies The status of natural gas in the
into two baskets. Some have chosen to energy mix has been strengthened by
diversify away from fossil fuels, and an increasingly competitive LNG
there could be different drivers for market, with burgeoning liquidity and
these, including the equity story, hedging securities available³. However,
investor appetites, available capital and last year, politicians, academics,
so forth. Others, like INEOS, believe we activists and others argued strongly and
are still serving society by providing a publicly against gas, citing excessive
critical resource in oil and gas products, flaring, leaks during transportation and
which will be important for decades to emissions from final consumption.
come… while striving to minimise our Efforts are being made to decarbonise
carbon footprint in all that we do.” gas – with biomethane and,
increasingly, hydrogen – which is tabled
Natural gas – friend or foe as a compelling long-term path for
of the energy transition? gas-powered heat and industry.
Gas is expected to overtake oil to Despite these signs of shifting
become the world’s largest energy sentiment, most sources still forecast a
source in the mid-2020s, and annual continuing increase in demand for gas.
gas-related capital expenditure is Longer-term demand is expected to be
expected to be similar in 2030 ($741 even more expansive. DNV GL’s
billion) to that in 2020 ($729 billion)¹. research asserts that companies
Figure 2 shows the top drivers for investing in efficiency and
investment in natural gas and/or LNG. decarbonisation are the most optimistic
Gas remains the quickest way for for the year ahead. 46 per cent) when asked if their company
major economies to displace coal and DNV GL’s Industry Outlook clearly would still achieve acceptable profits if
oil in energy-intensive industry, power demonstrates that within just 12 months the oil price were to average less than $50
generation, and heating. Moreover, until there is an even greater urgency to tackle per barrel. This is a significant
battery technology, hydrogen, and other the world’s climate problem. It also proportion, given that only one of the
energy storage solutions mature, shows a burgeoning realisation that a past 15 years (2016) saw annual average
fast-starting gas-fired power plants transition away from unabated use of prices under $50 a barrel.
remain the best way to secure baseload fossil fuels will involve a combination of Undeniably, oil and gas will be
electricity generation to complement various sources and measures. needed in the energy mix for decades to
intermittent wind and solar. “It will be a hybrid future,” said come. According to DNV GL’s 2019
The survey revealed that nearly Antony Green, IGEM President and Energy Transition Outlook, it is forecast
three-quarters (74 per cent) plan to Head of Engineering and Asset to account for 46 per cent of the world’s
invest in (or maintain spending on) gas Management at National Grid, in the energy mix in 2050 compared with 54
projects or portfolios in 2020, up from report. “It will not be a gas future, an per cent today. This assumption
66 per cent for 2019. While there has electric future, nor a question of just overshoots the 1.5°C target set out in
been a similar boost in the UK, there is insulating homes – we’ll need all of the Paris agreement in 2028.
less impetus in this area for the year these to deliver net zero targets.” In response to the climate crisis, it is
ahead (66 per cent). Asia Pacific encouraging to learn through our
respondents reported the sharpest rise research that more and more people are
in intent to invest in gas – jumping from In 2019, European consumers realising that we cannot sit and wait for
67 per cent to 81 per cent of enjoyed the lowest natural gas the perfect solution to catapult the
respondents, despite a challenging year. world to a completely decarbonised
In 2019, European consumers prices in 10 years, as Russia energy system.
enjoyed the lowest natural gas prices in and the US competed to sell In the meantime, the industry will emit
10 years, as Russia and the US new supplies to the region via too much CO₂. So, we have to start
competed to sell new supplies to the pipelines from the east and working together to decarbonise the oil
region via pipelines from the east and and gas sector with the technologies,
LNG from the west². LNG from the west skills and knowledge we already have and
In the report, Hans Coenen, Vice can build on, in order to meet national
President for Corporate Strategy and and international climate goals.
Business Development at Dutch gas Robust and resilient
network company Gasunie, said it had Drawing on hard-earned cost Download a complimentary copy of New
grown used to a “monopolistic situation”, efficiencies to make margins over the Directions, Complex Choices from: www.
rather than a challenging commercial past five years, oil and gas leaders are dnvgl.com/industryoutlook2020
business environment. “However, we are optimistic they will handle whatever
transforming now into an energy the economy has in store in the new
infrastructure company,” said Hans. “So, decade. While the UK sector’s growth References
we now want to develop carbon dioxide hangs in the balance for 2020, over half 1. Energy Transition Outlook 2019, DNV GL: https://
infrastructure, hydrogen infrastructure, (58 per cent) predict their organisations eto.dnvgl.com/2019
heat infrastructure – all of which are not will hit profit targets this year (largely 2. European gas prices fall to one-decade low, Oilprice.
in a regulated environment yet. We consistent with 56 per cent in 2019). com: http://bit.ly/2R4Xf23
need to gain the commercial skills to However, they are less optimistic than 3. The future is now for LNG as derivatives trading
takes off, Bloomberg: https://bloom.bg/3apfB5s
meet this challenge.” those globally (38 per cent, compared to

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