Oil and Gas industry: what are the key challenges and opportunities?

Thanks to Deborah Fowlis, Link Careers Consultant for the School of Chemistry and Chemical Engineering, for sharing the five key challenges facing the oil and gas industry as outlined by Chemical Engineering alumna, Aileen Jamieson.

Aileen has more than 24 years’ experience in the oil and gas industry and is Director of Natural Resources at Turner & Townsend. Her primary responsibility is generating business for Turner & Townsend’s Natural Resources sector across cost and commercial management, controls, performance, and procurement. She is the key client account manager for Shell and manages the global enterprise framework agreement across project and contract services.

Aileen outlines the 5 key challenges as follows:

1. How to reduce carbon footprint and transition from oil to green energy?

This is a crucial focus right now, with most oil and gas companies publishing their plans to be net zero by 2050 or before. There are three key ways to reduce carbon footprint and transition from oil to green energy, and these are (simplistically):

  • increasing energy efficiency
  • changing the energy mix from hydrocarbons to electrification (such as swapping from a petrol car to an electric car)
  • capturing/storing the carbon emissions when a switch from hydrocarbons is not possible.

Finding an economic way to achieve this is critical.

2. How to decommission sustainably?

Decommissioning in the North Sea is particularly important for the UK. According to OGUK, around 2500 wells need to be decommissioned in the next decade, plus an average of 12 topsides per year. Decommissioning is a high cost activity and does not provide any income.

How can we ensure that we do this sustainably?

3. How to maintain a viable business at low oil prices?

The breakeven cost of a barrel of crude has been significantly reduced since the last oil price crash to around 50-55USD/bbl. However, oil price in 2020 will likely remain under 40 dollars.

How can companies invest in new developments if there is a negative cash flow?

Similarly, how can they afford to invest in renewables (which typically have an even lower margin than hydrocarbons) if they are losing money?

Cost cutting is being seen all over the industry in 2020, with many companies slashing headcount by up to 10% globally, but this is vital for survival.

4. Consolidation of the market

Following on from the point above, we are seeing much more consolidation of the market, as mergers and acquisitions activity picks up. Many companies will not be able to survive, and with most of the majors looking to exit the North Sea, the arrival of private equity funded players like NEO Energy and Var Energy will change the market outlook and job opportunities in the future.

5. Negative perception by many

Finally, there is a strong growing negative perception of the O&G industry by many in 2020. Investors are pulling out of many exploration and production (E&P) companies and there will have to be some rebranding of the industry. We have seen the first signs of this with BP announcing their change from an IOC (international oil company) to an IEC (international energy company). Shell tweeted on 2nd Nov 2020 “What are you willing to change to help reduce emissions?” This backfired spectacularly as reported by the Guardian newspaper.

So, in light of all of that, what’s the future for a graduate wanting to work in Energy?

And that’s where we turn to the opportunities. To be part of the energy transition is new and exciting. There is a fast-growing need for new technologies to deliver what I’ve called the facilities of the future which will be net zero carbon. There will be a shift from E&P of O&G to wind, solar, CCUS (Carbon Capture, Utilisation & Storage) and hydrogen. Digital technology is imperative – how can we make working conditions safer by using drones and robots rather than sending people offshore in helicopters, asking them to work at height or in confined spaces? And finally, there will be a sense of pride from making a positive contribution to society. I hope you will be proud to be a part of this industry in future.

(Image credit: Clker-Free-Vector-Images on Pixabay)

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