I cannot believe that a year has passed since I was inaugurated as SPE president in Dallas last September. My term has passed at the speed of light as I have traveled all over the world meeting our members and representing SPE at conferences and other events. I believe what I enjoyed the most was visiting with our student members in university chapters, engaging with our industry’s future leaders. I saw the pride and hope in their eyes. Our industry, and our world, face some significant challenges in the decades ahead. I saw in their faces the willingness to embrace and solve those challenges. Many are ready to call themselves Citizen Engineers, and bring best-in-class environmental and social practices to bear, even as they strive to meet growing world energy demand.
According to the latest BP Energy Outlook, over the next 20 years, world reliance on oil and gas in the overall energy mix will decline only slightly in percentage terms, and will actually rise in total volume supplied. By 2040, meeting projections for world energy demand will require a 6% increase in oil production and a 33% increase in natural gas production. In both cases, this increase is after compensating for natural declines of 3–5% per year in conventional fields and much higher declines in unconventional resources. Being able to find, develop, produce, and deliver that level of resources to power world economies will be a significant undertaking.
That challenge is coupled with the growing environmental and social challenges of our planet. World population will increase by 1.7 billion in the next 20 years, with almost half that growth in Africa, which currently has the highest levels of energy poverty. According to the Energy Outlook, the world will need to double current gross domestic product by 2040 to support these new inhabitants. The biggest environmental challenge is rising CO2 emissions. World opinion holds fossil fuels responsible, and that is putting increasing pressure on our license to operate. We must respond—not by denying or debating our role, but by demonstrating leadership in addressing the problem. I am encouraged by the efforts I see happening across our industry to address CO2 emissions, with substantial investments, initiatives, and solid plans being made.
During my talks around the world, I highlighted 10 game changers where our industry can help to arrest the CO2 emission increase.
Reducing gas flaring. Our industry has successfully reduced the amount of flared gas by 15% while oil production increased by 33%. Flared gas has value—capturing the associated natural gas and diverting it to power generation or petrochemicals acquires that value as well as significantly reducing methane and CO2 emissions. I see huge opportunities for more investment in countries currently flaring their associated gas so they can generate electric power for their citizens and industries.
Increasing gas use for power generation. Where gas can replace coal for power generation, significant reduction of CO2 emissions result. Innovative technologies throughout our industry have enabled us to develop shale gas and find more gas resources globally—gas that can displace coal, diesel, and other higher-emission sources. According to the International Association of Oil & Gas Producers (IOGP), 95 million metric tons of CO2 did not enter the atmosphere during 2018 due to replacing coal with gas in the power sector. For countries that lack ready access to natural gas for power generation, investments in pipelines and LNG are needed.
Investing more in renewables for power generation. Yes, renewables. Many of the large oil and gas companies are already investing in renewables. The International Energy Agency (IEA) predicts that by 2040, 30% of global power generation will come from renewables. Saudi Arabia has announced an ambitious plan to generate more than 200 gigawatts from renewables by 2030—three times its current power needs. The excess will be exported to nearby countries that lack adequate power.
Expanding crude-to-chemicals. Currently 15% of the oil barrel is put into noncombusted uses such as lubricants. Our industry is investing billions of dollars to increase this to 40% by 2040. Saudi Aramco and SABIC (the largest Saudi petrochemical company) have set a target to convert 50% of the barrel to noncombustion uses by 2030. This expansion can create hundreds of thousands of jobs and generate more advanced chemicals that support increased prosperity and enhanced lifestyles for people globally.
Growing carbon capture, storage, and sequestration (CCS). Our industry was the first to use this technology almost half a century ago, and is responsible for the majority of active projects today. CO2 flooding for enhanced oil recovery (EOR) holds the potential for removing CO2 and increasing production enough to cover the investment in CCS. Currently 43 large-scale projects inject more than 50 million tons of CO2 per year. This is equivalent to the annual emissions from more than 7.1 million passenger vehicles. Is it enough? No. We need to see more CCS projects in the near future. Saudi Aramco started a pilot project injecting more than 800,000 tons of CO2 per year for EOR purposes in less than 1% of Ghawar (the largest oil field in the world), with very promising results. I can only imagine how much CO2 could be removed to put the entire Ghawar field on CO2 injection. SPE has developed guidance for calculating volumes of carbon stored in porous media (go.spe.org/srms).
Decreasing carbon intensity of upstream and downstream operations. Many technologies have been deployed across upstream operations that reduce the amount of energy needed to develop and lift the oil and hence, decrease carbon intensity. In the downstream, energy management systems and co-generation likewise decrease carbon requirements.
Increasing energy efficiency. The world has improved its energy efficiency significantly in the past few decades. The IEA has reported that increasing energy efficiency alone could reduce up to 40% of today’s CO2 emissions. While much of this comes from machinery and industrial uses, our industry can also contribute reductions through deployment of more energy efficient technologies and practices.
Advance carbon conversion. Today carbon can be captured and used to strengthen or improve the performance of other materials such as steel, cement, asphalt, and more. Several startups are piloting new technologies that capture carbon and convert it into other products. Our industry can support these startups, looking from both an environmental and business perspective toward the advancement of these technologies.
Investing in decarbonization technologies. Thirteen national and international oil and gas companies voluntarily launched the Oil & Gas Climate Initiative (OGCI). OGCI plans to invest $1 billion over the next 10 years to develop new technologies to further decarbonize our industry.
Promoting recycling. As big producers and consumers of water, our industry must continue to find better ways to treat, recycle, and reuse water across our operations. Reinjection for reservoir pressure maintenance is only one possible use. Replacing fresh water for fracturing is another. Where the produced-water quality is adequate and regulations allow, sharing it with farmers or others in need of water can also reduce freshwater demands and the emissions that might result. Plastics and other consumables end up polluting land and sea. Our operations should plan in advance for the recycling of as much of the materials we use as possible, reducing our contribution to the growing piles of waste and ensuring that the resources that went into their production are reused until no more value can be obtained from them. Doing so will help the global environment and economy.
As I began talking about sustainability last year, not everyone across our industry was receptive. But over the past year I have begun to see a profound shift. I believe that thinking about our contributions to sustainability and how we can operate more sustainably ourselves is here to stay—both in SPE and throughout our industry. SPE’s Sustainable Development Technical Section has grown and has an ambitious work plan established. I am a strong believer in the power of technology to address the challenges ahead, not only in energy supply and demand, but also in the social and environmental arenas.
We have begun working with other organizations such as IPIECA, IOGP, IEA, and academic institutions to promote sustainability. Many universities are launching research consortia aimed at aspects of the sustainability challenges facing our world, including how to quantify efforts consistently—something I think will be crucial for measuring our impact.
In late June, SPE held the Gaia Summit, bringing together more than 50 individuals representing operators, service companies, academia, policymakers, associations, civil society, activists, startups, and investors. The aim of this event was mobilizing members across our industry to enhance our engagement and begin to aggregate our individual efforts. The participants challenged each other to see if we, as an industry, are doing enough, fast enough, to play our role in meeting the UN Sustainable Development Goals. The group identified actions to magnify our industry’s progress.
I have been pleased to see how the concept of Citizen Engineer—considering the environmental and societal impacts of engineering decisions we make—is being embedded in the petroleum engineering curriculum. Accordingly, I am certain that the next generation of petroleum engineers will embrace the challenges of sustainability. These future leaders will ensure our companies supply reliable, efficient, and clean sources of energy (including oil, gas, and renewables) to support the growing global economy, increase global social development, eliminate energy poverty, enhance human lifestyle and prosperity, and finally, protect our planet Earth.
As this is my last JPT column, I would like to close on a personal note. I have greatly enjoyed the journey of representing you and our society. I will cherish the many memories of meeting individual members throughout my travels. I wish you all great career success and personal happiness.
