Accenture—a diamond sponsor of this year’s World Petroleum Congress in Calgary—is working with oil and gas companies to help them in the transition to a low-carbon economy. Here, the firm’s Canada Energy Industry Lead Varun Bindal and Managing Director for Alberta Elizabeth Boright talk to Tom Young about how firms are addressing the challenges ahead.
How would you say the increasing focus on energy security over the past two years is affecting the pace of the energy transition?
Varun Bindal (VB): In the short term, it has definitely affected how companies are thinking about the sustainability agenda. I think in the medium term, many of the companies that we are working with see energy security and the energy transition as complementary. There is still investment happening in traditional oil and gas assets, but investment in the energy transition is also happening. A lot of firms have already announced net-zero targets, and many are already moving to diversify their energy mix and business models.
How are these priorities varying between different geographies?
VB: The right energy mix depends on factors including individual geographies, individual political landscapes and individual resource availability. If you look at Northeast Asian nations, for example, they don’t have much in the way of domestic energy resources. They want less carbon-intensive fuels than the natural gas they currently import but they don’t yet have many options.
The EU has led the way in the energy transition but when we look at individual industry players, North American firms are active in this space. In Canada, we are talking about CCUS, hydrogen, wind and solar. The impetus is there, and capital is starting to follow.
Around the world all the regulations, carrots and sticks, are starting to point in the same direction—towards a more low-carbon energy mix. At the same time, many nations have realised that over-dependence on specific sources of energy can be problematic, and so, many are looking to diversify.
Do companies see being a first mover on transition technologies as an advantage or a disadvantage?
VB: I think it depends on how much the technology needs to develop. With hydrogen, a fuel that has received a lot of interest over the past five years, there is some established production. Refineries have been handling hydrogen for years on end, so it’s not a big leap for them to produce more, and that quickly becomes a revenue opportunity.
Elizabeth Boright (EB): Leading companies see first-mover advantages. Amid the profound changes accelerating the energy transition in recent years, we researched how oil and gas companies are pursuing the energy transition and reinventing their organisations. Our research found that leaders in reinvention are pivoting to a balanced portfolio that prioritises carbon reduction while addressing near-term energy security challenges with hydrocarbons. Overall, leaders are more optimistic that their actions will improve their returns, ESG performance and free cash flow. They also expect digital connectivity will drive a 10% or greater improvement in carbon emissions, customer satisfaction and employee engagement over the next three years.
Are firms working more collaboratively now?
VB: Take hydrogen again. A hydrogen ecosystem is very complex. You’re effectively trying to recreate the oil and gas ecosystem, which took 100 years to create, and compress that development into a few years. Here in Alberta, you’ve got a number of players—suppliers, midstream companies, independent majors and demand-side sectors—coming together to pursue that accelerated development, and that will require huge amounts of collaboration.
But collaboration is not completely new to this ecosystem. Over the past 15 years in Alberta we’ve seen a number of initiatives such as ‘Cosia’ and ‘Energy Safety Canada’ where different competitors have come together to work with government and indigenous stakeholders to figure out solutions.
EB: The Pathways Alliance CCS carbon storage project is one of the best examples of how the industry can come together to create solutions.
What is the low-hanging fruit for the oil and gas sector in terms of its own operations?
VB: Cutting methane is a key factor when it comes to reducing greenhouse gas intensity. There are lots of digital technologies now that can tell you in advance where the leaks may happen, if they are still happening, and where to go and plug them. In the past, companies haven’t worried about this that much, but this is a huge area that can make a real impact on how you manage emissions. Reducing flaring, energy optimisation and energy management are also all easy wins. Interestingly enough, I think CCUS is a low-hanging fruit as well. The capabilities that are needed to execute it are straightforward. If there is a collaboration mechanism in place, things can advance quickly.
How can the oil and gas sector help reduce the emissions of other industrial sectors?
VB: Hydrogen and electrification value chains can progress much faster with the technological and project management expertise of the oil and gas sector, as well as the digital capabilities we have developed.
Separately, with a CCUS network the sector can effectively operate a CO₂ transport and storage system as a service. A lot of heavy industry is clustered together and would take advantage of such a network. So, industrial clusters have a major role to play in the energy transition. The World Economic Forum, with support from Accenture and the Electric Power Research Institute, notes they represent millions of metric tonnes of carbon emissions, millions of jobs and billions of dollars of annual gross domestic product.
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