By Pedro Carmo
A few weeks ago, a national court ruled that a major European oil and gas company must cut its CO2 emissions by 45% compared to 2019 levels. Across the Atlantic, home to traditionally more conservative oil and gas companies, a green activist group placed three administrators on the board of a major North American oil and gas.
That week could well be a turning point in the sector’s history.
With mounting consumer pressure, scientific evidence and support from influential governments (like the U.S. and European Union) to address climate change concerns, it is rapidly becoming apparent that for oil and gas companies around the world, there is no other road to take than the green road.
What lies ahead
Taking this green road will lead to a fundamental restructuring of the global energy mix. The future will see a more diverse energy mix, leaning heavily toward renewable energy sources, stronger community participation and consumer choice, and increasing levels of integration and competition.
The increase in renewables will bring to the forefront some, until now, ignored structural challenges, such as intermittence. Addressing them requires the use of a variety of different technologies and solutions to ensure balance between energy supply and demand.
From another perspective, while carbon-based energy sources will gradually reduce, they are unlikely to completely disappear in our lifetime. Many products (such as lubricants) used in our daily life are derived from crude oil. There are also the energy needs of developing economies where cheap oil will be difficult to replace.
Hydrogen, in particular, green and blue hydrogen seems to be the silver bullet that will accelerate decarbonization efforts and also revitalize oil and gas companies’ strong connection to consumers. By leveraging years of experience and know-how in logistics, distribution and B2C interactions, oil and gas companies can support a hydrogen future.
In addition, many oil and gas companies are starting to implement a mix of organic and inorganic growth plans to meet aggressive low carbon targets.
Technology is pivotal to transformation
Rising to these challenges and opportunities will require major transformations across the business and technology value chains. Throughout history, industry transformations leaps have only been possible through transformational policies and regulations as well as more intense and better use of technology. This one will be no different.
A lot is already happening and technology is at its core. At CGI, we are helping clients leverage new technologies and incorporate them into their business operations at pace and scale. For instance, with our Renewables Management System (RMS) solution, renewable energy companies such as EDPR and Generg are benefiting from real-time supervision and control of assets that significantly reduce downtime, and machine learning to support predictive maintenance and automatic failure root cause analysis to maximize production.
IT support for organic and inorganic growth will also be key, or in other words, how seamlessly can your organization incorporate new business acquisitions to avoid fragmented and complex business and IT landscapes
Unlocking the power of data
At the same time, it is becoming clear that open data-driven platforms will be central to the transformation, with data solutions built on top of these platforms to implement business use cases. The speed at which oil and gas companies will adopt these platforms will also play a significant role in determining the pace at which they will successfully achieve their ambitious, yet necessary targets.
As the role of utilities and oil and gas companies evolves, we’re helping clients adopt new business models, new approaches to data, and continue on their agility and digitization journeys to succeed in the green economy. Contact me to learn how we can support your successful journey.