PESGB November 2015
- Energy Efficiency: The Big Ten Demand a Future at 2 Degrees Celsius, Hamish Wilson, PESGB President 2015
- India’s Unconventional Activity: Highlights and Developments for the Future
- Egypt Gaining Ground in the Offshore Development Rally
Plus much more inside
The Big Ten Demand a Future at 2 Degrees Celsius
President, Hamish Wilson reflects on PESGB’s responsibility to climate change…
On 16 October, the CEOs of 10 of the world’s largest oil and gas companies – which together provide almost a fifth of all oil and gas production and supply nearly 10% of the world’s energy – declared their collective support for an effective climate change agreement. In their declaration, the CEOs said:
“Our shared ambition is for a 2°C future. It is a challenge for the whole of society. We are committed to playing our part. Over the coming years we will collectively strengthen our actions and investments to contribute to reducing the GHG (Green House Gas) intensity of the global energy mix. Our companies will collaborate in a number of areas, with the aim of going beyond the sum of our individual efforts.”
These oil companies exert a powerful influence on the business eco system of which PESGB members are a part. Therefore it behoves us to consider what the impact of such a declaration has on us and what we can do to contribute to support the initiative.
One could argue that the role of the oil industry is to supply hydrocarbons to the market as cheaply and efficiently as possible. We should also aim to get hydrocarbons from the subsurface to the market with minimal GHG emissions. These emissions are largely embodied in our F&D, production and transport costs, and therefore we should be looking for easy to produce oil, close to markets. Which, as it happens, is entirely aligned with most oil company strategies. The challenge will be to maintain such a focus as oil prices rise and to perhaps turn down expensive oil despite apparent margin.
I think it would be useful for the industry to develop a measure of GHG emission per bbl of oil produced and include such a measure in our exploration screening metrics. In time, I am sure the globe will adopt a form of carbon tax, thus understanding the embodied GHG in our production costs would form a useful metric. Using such metrics, Arctic Oil would be penalized due to high production costs.
The UK MER policy is also entirely aligned with producing reduced GHG emission hydrocarbons, despite our high production costs. The analogy being, from a GHG standpoint, you are much better off running an old car, despite its relative inefficiency, than buying a new one. Thus, keeping our old fields going for as long as possible is good for the planet.
However overall, I find it difficult for an industry to actively support measures that are designed to reduce demand for our product. We would wish to increase the market share of our product at the expense of coal in the energy mix.
Looking at the issue more broadly, I’d like to see the industry take a more pro-active stance in energy efficiency and take a stake in the end use of our product. We could maximize the miles driven, the warmth in our houses, and the product produced per unit energy. In other words, apply the ‘Circular Economy’ concept to our industry both to the whole value chain, but also to elements of the value chain – for example re-using production platforms. This links back to the comments above about reducing the GHG emissions per unit produced oil.
What can we do as a largely geoscience community? The obvious area in which we have a direct impact is CCS. Earlier this year the PESGB did invite interest in a CCS Special Interest Group to which the response to that was not overwhelming. Perhaps given the support of the leaders of our industry we should take another look at the idea.
I know this is a challenging topic and perhaps not of direct relevance to many of us fighting to preserve our jobs. We are in an industry with a long term future, and we have people entering our industry today who will finish their careers in a world with a completely different energy mix than today. It would help them if we could contribute to shaping that future. I’d be interested in views from the membership in how the PESGB might contribute to the oil company declaration.