Oil and gas operators, contractors, and vendors have been promoting investment strategies and new technologies to facilitate the transition to a low-carbon energy industry. But with so much at stake for the companies, it can be difficult to distinguish between public rhetoric and real sentiment.
One element that is clear from listening to presentations and speaking with companies at the recent Offshore Technology Conference in Houston, is that investment strategies vary greatly by company type and geographic domain. But all agree that the future of energy is low carbon.
The major international operators at OTC talked about optimizing existing oil and gas assets while investing in offshore renewable development, primarily wind, where corporate synergies and relevant value chains exist. Shell and Equinor were early movers in this space in the US; and now BP, Chevron, and TotalEnergies are seeking a foothold.
BP has been advancing projects through a strategic partnership with Equinor; TotalEnergies just scored a lease off North Carolina; and Chevron’s eye is on opportunities offshore California, along the US Gulf Coast, and offshore Japan, where it can complement its existing value chain.
The outlook for offshore wind development in the US is promising, with BOEM planning to hold six lease sales and to review 15 construction and operations plans by 2025. The US administration’s goal is for 30 GW by 2030, which will require an estimated 2,100 turbines and foundations and 6,800 miles of cable.
Another big topic of discussion at OTC was offshore hydrogen development (see page 34 for Jeremy Beckman’s report on the hydrogen market in the UK). Redundant oil and gas infrastructure could be repurposed for hydrogen development, but wind will need to scale up first to unlock this energy source.
The one decarbonization approach that seems to be resonating among major and independent operators alike, is carbon, capture, utilization, and storage (CCUS). While business models for CCUS are still uncertain, companies believe growth in this area is required to meet climate objectives. Talos Energy President and CEO Tim Duncan attributes his company’s expertise in conventional geology and geophysics as a key enabler for investing in CCUS. Other companies have transferrable experience from years of injecting CO2 in reservoirs for EOR.
Meanwhile, Brazilian authorities used OTC to promote the region’s decarbonization efforts and oil and gas concessions for foreign investment. Brazil’s trade and investment promotion agency expects 149 state and federal auctions and concessions to be available this year to foreign investors, which represent more than $47 billion in potential value.
Brazilian operator Petrobras announced plans to spend $16 billion to renovate its assets in the Campos basin offshore Brazil. This is part of its 2022-2026 strategic plan, which calls for adding 20 Bboe to its reserves by 2030, with about 5 Bboe of the new additions to come from the Campos basin.
The operator’s decarbonization strategy includes adding electric power generation on its platforms to cut greenhouse gas emissions by up to 20% compared to a traditional platform. Its FPSO Maria Quitéria, slated for installation at the Jubarte field in the Parque das Baleias, will be equipped with combined-cycle power generation to reduce fuel consumption. This will be its first platform designed with this type of power generation to reduce emissions.
Petrobas is also testing its patented HISEP technology, which separates CO2-rich gas from oil produced from the reservoir for partial reinjection through equipment installed on the seabed. This avoids having to process the gas on the platform, which reduces CO2 emissions. Last year, the operator reinjected 8.7 million metric tons of CO2 into its presalt fields off Brazil.
See inside this issue for more coverage of OTC and energy transition strategies.
