Oil and gas and the energy transition

 What role can the oil and gas industry play in the sustainable energy transition? David Branson, senior executive advisor at PwC who has spent thirty years in the industry, says it could take time to work out.  “With the best will in the world, it is going to take a number of years – decades – before the energy system moves on.”

And, he points out, they still have a key part to play in their current form. “The economy will not transform to where we want it to be without having a reliable and affordable source of energy,” he says. “As much as we feel as a society that we need renewables, that can only take place if oil and gas companies are able to carry on doing what they do best. I don’t think the world will be well served by having oil companies staring off into the green future and not meeting the demands of today.”

Big questions

Exactly what, he asks, are we expecting oil and gas companies to become? Can they and should they be the renewable, sustainable and green energy companies of the future? While some are aiming to become leaders in renewables, such as big companies like Shell, others aren’t so enthusiastic.

Smaller companies, he says, are generally not transitioning in any meaningful form thus far. Why? “Their shareholders don’t want it. It doesn’t make as much money and it’s outside their area of capabilities. The fundamental problem is that companies are having to move from something that is in their core DNA and in line with their capabilities and makes money to something that is new, requires a new capability set, and does not and possibly will never make as much money.”

A clear destination

But it’s vital, he says, to have a clear idea about what this new energy world might look like. “Before you talk about moving faster, you have to have a clear idea of where you’re moving to. For example, there’s a lot of discussion around the hydrogen economy. A year ago, we weren’t talking about it – now everybody is. Are companies taking options on this and thinking about what it might mean for them? Absolutely.

“But it’s necessarily a move in a stepwise fashion. Think of the technical and commercial uncertainties, the range of possible outcomes that you have out there which are all highly uncertain.”

New image

Skills are, of course, a vital component in transforming the oil and gas industry, and Branson is concerned that the industry’s negative image has implications for talent recruitment and retention while the sustainable energy transition happens – whatever that transition becomes. “The industry needs to make a concerted effort to make people aware of the role that the oil and gas has played and continues to play in supporting the lifestyles that we’re all used to, and making sure there is a clear reflection that we’re moving to somewhere else. And that we as oil and gas are part of the solution, not just the problem.”

Could innovation be the answer to the oil industry’s transformation? It already has a proud history of innovation: the technology behind deep water production, for example, has been compared to the equivalent of putting a man on the moon in terms of the physical problems that must be overcome.

But these innovations, Branson points out, are rarely disruptive: they are about extracting and refining gas and oil in the most efficient and safe way possible. “I think they are going to be more takers of innovation, through partnerships, as they recognise that they are not the most agile.”

Open door

Whatever the future holds for the oil and gas industry, and its role in the energy transition, Branson says that being more transparent and open can only be a good thing. “Events like TBB are a good venue to have a meaningful discussion about the role of oil and gas during this transition which goes beyond ‘oil bad, stop as soon as possible’. That doesn’t help anybody.

“I think the industry can benefit by making its voice heard and understanding the spectrum of views which are out there. It can then start to think about in a more joined up way about how oil and gas fits into this picture.”

This topic will be discussed further during The Business Booster event where David Branson and many other experts will be discussing the topic in greater detail during the Parallel session, learn more by checking out the agenda page. In the meantime, be sure to follow #TBB2019 over on social media to make sure you don’t miss our updates, and find out more about the event here.