The shorthand term for our civilization’s expected collective turn from fossil fuels to alternative resources is “the energy transition,” but “energy evolution” is a more apt description of how the world is moving toward a more heterogeneous energy mix, with oil and gas continuing to be a solid staple.
This was the main message shared by Nikki Martin, president and CEO of EnerGeo Alliance, during the recent International Meeting for Applied Geoscience and Energy.
Speaking in a panel discussion on energy diversification strategies, Martin said, “I think it is time that we educate very sincerely and transparently the realities of what we call the ‘energy evolution.’ We are transitioning away from emissions, but we are evolving the sources of energy that the world needs.”
Presently, the demand for petroleum and natural gas is reaching record levels – increasing by 2.4 million barrels of oil per day in 2023, Martin said. Both OPEC and the International Energy Agency predict the need for 108 million barrels a day through 2030.
“This is a huge change from just a few years ago when the IEA’s roadmap to net zero predicted peak oil demand in 2019 and then declining,” she said.
“We see nothing like that,” she added.
Martin, along with panelists Sunday Shepherd, general manager of corporate strategy at Chevron; Ali Habtar, director of upstream development strategy and reserves at Saudi Aramco; and Yu Zhang, senior technical adviser at BGP, agreed that oil and gas would remain a large part of the energy mix to come, but that the resources must become less carbon intensive. And the pathways to achieving lower carbon energy are proving prolific and diverse.
‘Unapologetic,’ Low-Carbon Upstream Growth
The United States’ growing reliance on natural gas instead of coal has enabled the country to reduce emissions by 22 percent since 2005 – more than any other country in the world, Martin said.
While oil is still significantly needed, exploration must shift toward lower carbon barrels, such as those that have long been produced from the Gulf of Mexico, she said. Energy-dense and low-emissions barrels are key, and government policies and regulatory frameworks should continue to support their exploration and production, she added.
This is where “sensible, scientific-based regulatory frameworks come into play to ensure those basins are meeting energy evolution goals and lower emissions goals and are not removed (from lease sales) because of a lack of understanding,” Martin said. “The U.S. government has just taken an action to remove 11 million acres (of the Gulf of Mexico basin) from future lease sales. We want to prevent an energy crisis from happening. We would rather explore now in smart, strategic ways and not in a catastrophic crisis.”
Recognizing that energy is a humanitarian need and that 10 percent of the world still has no access to electricity, operators such as Chevron are “unapologetically” growing upstream production, Shepherd said.
“Chevron has seen many energy transformations over its 140-plus-year history and technology breakthroughs and changes in the way the energy system works,” she said. “The future of energy is lower carbon, and there are lots of different solutions and types of energies that are needed.”
The operator’s current focus is on resources with lower carbon intensity in addition to lowering emissions from operations – with 2028 carbon intensity targets reflecting a 35-percent reduction from the 2016 baseline and having reduced methane intensity by 50 percent, she said.
As oil and gas operators move toward a lower-carbon future, they need to start from a point of high credibility by balancing energy security, economic prosperity and environmental protection when making decisions, Shepherd added.
Look first at viable solutions, she urged.
“The world needs more energy, and we need multiple solutions to support that demand. Renewable power is the fastest growing resource, yet oil and gas projects will remain integral in the future, providing approximately 50 percent of the world’s needs,” Shepherd said.
Next, look at scale, she said. The world’s need for energy is increasing, but it takes a long time to have a significant impact on a system that is so vast.
“It takes decades for an energy source to grow from 1 percent to 10 percent – if it ever reaches that,” she said. “Renewable power was at a 1-percent threshold in 2007 and it is at 3 percent today – and that’s with $4.5 trillion in investments since 2010. It took 40 years for oil and gas to go from 1 to 10 percent of the global energy mix.”
Once scale is achieved, the pace of the transition will vary based on geography and government policies around the world.
Shepherd emphasized the importance of unconventional partnerships. To build a circular fuel economy, Chevron is building partnerships with restaurants, farmers and CCUS projects to help engage with the public and show that the industry is part of the solution.
Carbon Lowering Innovations
Reiterating the growing need for fossil fuels for energy, Habtar said Saudi Aramco is planning to “double down” on production of some of the world’s lowest-carbon-intensity barrels of oil. The company expects to be producing 13 million barrels per day by 2027 and simultaneously reduce its upstream carbon intensity by 15 percent by 2035.
Furthermore, the company plans to double its natural gas production by 2030. “We have a captive market in Saudi Arabia in terms of power generation and petrochemical feedstock,” Habtar said.
Opening its market for blue hydrogen, Saudi Aramco shipped its first product to Japan in 2020 and its first commercial shipment to South Korea in 2022.
“We have plans to go up to 11 million tons of blue hydrogen production by 2030,” Habtar said.
The operator also has opened several research centers to focus on lowering emissions – including a center in Detroit that is looking into manufacturing low-emission engines.
“We are also looking at CCUS as a main tool for emissions reduction from oil and gas and other industries, such as the manufacturing of steel, petrochemicals and cement,” Habtar said. “When it comes to CO2, you have what you can do today and you have what you can do in five-, 10- and 20-years’ time,” he said. In terms of storing CO2 today, “we have all of the skillsets and the opportunities that allow us to capture and store that CO2 for millions of years. CCS will be with us over the long term.”
CCUS will likely take more time, as scientists work to develop how to use CO2 byproducts. Currently, Saudi Aramco is developing a cement manufacturing process that uses CO2 as part of that process.
“We are looking at many other technologies … that will allow CO2 to become part of the circular economy as opposed to a waste product,” Habtar said.
He also stressed the need to tackle emissions from methane by establishing a regulatory framework for drilling and completions projects. He urged that all operators have internal incentives to adhere to regulations so that problems are solved before they occur.
Also addressing methane, Shepherd commended businesses that convert organic waste in landfills into hydrogen-rich syngas (synthesis gas, a mixture of carbon monoxide and hydrogen) and urged for partnerships with them.
“It’s attacking two problems at once,” she said. “Use syngas as a lower-carbon fuel going forward, and we will continue to innovate and find creative, viable, scalable uses that work as new solutions going forward.”
As strategies and plans for a lower carbon future are being made and implemented by today’s geoscientists, the issue of carrying that role into the future comes into question as fewer students are choosing careers in geoscience and as investors are eyeing what they consider cleaner forms of energy.
“I’ve been in the industry for a quarter of a century, and I’m still passionate about the work,” Zhang said. “But leadership needs to encourage young professionals to advocate for the industry.”
He stressed that the full scope of the job – which includes exploring for existing oil and gas resources, lower-carbon resources and for new energy sources – should be presented as a lifelong career.
Public relations has never been a strong suit of the oil and gas industry.
“We are not doing enough, but we are doing some things,” Martin said. “You see a lot of companies that are prioritizing credibility – really making firm their stance and their view of what they see the world being in decades to come, which is increasingly more sources of energy.”
Today, the career of a geoscientist has as much staying power as ever, with new roles being added to solve the world’s energy needs, she added.
On campus, students need to be engaged in “real ways,” Shepherd stressed, by showing them that a career in the geosciences is very purposeful work. She also encouraged partnerships with universities to create programs, such as those that utilize artificial intelligence, that will be needed by the industry upon entry into the workforce.
“The work we are doing is just so incredibly motivating and challenging,” she said. “Who better to be able to solve these challenges than us?”
Martin added, “Geoscience is not only imperative to the discovery and delivery of energy but also ensuring that customers – the energy companies, the developers – are targeting the least emissions intensive and most high energy dense barrels in the world – regardless of your preferred source of energy in the energy evolution.”