Oil and gas is not a sunset industry, and low oil prices are not such bad news at all, BP’s chief of upstream operations, Bernard Looney, said recently. Although Looney acknowledged that the price drop was a challenge, he noted that this challenge opened up opportunities for oil and gas companies to address issues such as waste and inflation.
This is the latest such acknowledgement as the industry continues to recover from the blows it suffered since prices started falling in 2014. But Looney didn’t stop there. He also said that oil and gas still have careers to offer to young people, not least as part of their expansion into renewables, but also in their principal business, as oil and gas will continue to satisfy around 40 percent of the world’s energy needs two decades from now.
It’s a rosy outlook for an industry that many are eager to start singing dirges to, but it is not unreasonably rosy. The main factor that will ensure oil and gas’ sustainability is, unsurprisingly, technology.
“I think we need to realise the full potential of technology to support safety. We can reduce a lot of risks to people by using drones, crawlers and robots,” Looney said. “The combined impact of supercomputing and artificial intelligence is helping us see our world through new eyes. We can uncover resources. We can compare wells instantly. We can pinpoint corrosion risks by applying machine learning to 40 years’ worth of data. Who would have thought 10 years ago that Upstream folks would come to conferences like this to compare algorithms and petaflops?”
Again, the alarm clock that woke the industry up to the potential of digital technology was the 2014 price crash. It also prompted the supermajors to rein in spending and rearrange their priorities, which is already paying off, with most of the supermajors posting financial results for 2017 that beat analyst expectations.
No wonder, then, that technology has become a favorite topic of discussion in the industry, and Looney’s comments are no exception. Digital tech will not only help the oil and gas industry to transform in line with a changing world; it will also help it to remain attractive for the next generations of professionals, as it will create demand for new skills in areas such as artificial intelligence, materials, and even bioscience.
BP’s latest Energy Outlook also features technology as an important driver behind the industry’s development in the next 22 years, as well as the trends in supply and demand. The outlook also highlights the growing diversification in energy sources, noting that by 2040, the global energy mix will be more diverse than ever before, as renewables adoption grows at an unprecedented rate.
Now, this growth in renewables is a challenge for the fossil fuels industry, and BP’s upstream chief is not hiding it. The move away from all-fossil fuels, he said, will be a challenge, but “the big picture is a sustainable environment. A positive outcome for humanity. This is something for everyone to support.”
In other words, Big Oil is happy to get on the renewables bandwagon and enjoy the ride now that it has gotten its costs under control and has become more selective when strategizing for the future, moving on from the growth-at-all-costs mindset.
By Irina Slav for Oilprice.com