A Roadmap to Sustainability

Bjorn Ewers, Managing Director & Senior Partner at Boston Consulting Group (BCG) and Jean-Christophe Bernardini, Partner & Associate Director at Boston Consulting Group (BCG), on how to accelerate digitalisation in the energy sector

0 1,115

The Oil & Gas (O&G) sector has been at the forefront of the technological curve at many points in time. O&G companies have always made use of technology, both physical and computational, to deliver production efficiently, remain cost resilient to navigate uncertainty, and reduce CO2 emissions to ensure operator’s sustainability and competitiveness. The digital maturity of Middle East oil companies has advanced across virtually all sectors despite the challenges brought by the pandemic. For O&G companies, solutions such as Artificial Intelligence (AI) and Machine Learning (ML) represent an advantageous opportunity for operations optimisation because these technologies can be leveraged across the entire value chain, including upstream, midstream, and downstream operations. And crucially, AI and ML can be implemented and utilised to address these issues and overcome related problems, whereas traditional physical business models and processes fail to generate actionable insights and sustainable solutions.

International Oil Companies’ decarbonisation programs are targeting approximately 15% – 20% of emissions reduction by 2025 and 30% – 50% by 2030. To reduce environmental impacts, O&G companies looking to take the next step in their decarbonisation efforts, optimise their operations in light of their abatement goals, and integrate digitally-enabled analytics into their DNA. Digital solutions such as AI and machine learning can help companies identify the sources and drivers of emissions (their own as well as those of suppliers and customers) to reduce energy consumption and optimise the energy efficiency across the overall value chain impacting Scope 1, Scope 2, and Scope 3 emissions.

Leveraging Low-Carbon Technologies

As societal pressure to address climate change continues to mount, O&G companies will face intensifying pressure from stakeholders—including investors, regulators, employees, and prospective employees—to decarbonise. Oil companies have large carbon footprints across the value chain where Low-Carbon Technologies are critical to reducing emissions. To support key investment decisions in technology, companies need to consider the key levers of scope emissions reductions across the energy value chain compared to their strategic objectives and ambitions, these are:

 

  • Set up a holistic overview of core low-carbon technologies to minimise environmental impacts.

 

  • Screen and benchmarks these technologies to identify the ones that will be adapted to the profiles of each asset to reach carbon-free emissions.

 

  • Perform investment decisions in technology considering current and future business environment scenarios and companies’ portfolio evolution.

How to unlock digitalisation for a successful business transformation

The O&G industry is not an easy place to go digital. Companies are project-focused and safety conscious, and they value execution excellence and predictability. And because the industry has used automation and data processing for decades, many believe they are already up to speed with digital technologies and almost consider themselves digital natives. Consequently, the sector has been slower than others, such as consumer goods and finance, to innovate with transformative data-driven solutions. But companies can achieve success if they treat digitisation like any other fundamental business transformation. By adopting all seven imperatives outlined below, they can surmount the challenges and capture the full value potential of digital.

There are 8 key steps for companies to address these challenges and leverage new opportunities from transitioning to a low carbon future.

 

  1. Set up accurate current emission baselines at an asset level
  2. Prioritise ideas with a clear assessment of economics and feasibility
  3. Set up robust business cases
  4. Establish accurate and specific asset’s abatement curves
  5. Build clear methodology and guidelines to set up a baseline, prioritise initiatives, build specific business cases, and monitor initiatives’ impacts
  6. Adopt an integrated approach to evaluate and monitor impacts on operating model across the value chain
  7. Create partnership and get access to external ideas to challenge/complement internal convictions
  8. Build robust approach and plans to convince regulators and partners supported by strong business cases

Many O&G companies have already made meaningful strides toward decarbonisation. But they will need to do much more going forward as stakeholder demands and expectations continue to rise. Over the past two years, the pace of decarbonisation announcements has been astonishing globally and most specifically in the region. Nevertheless, despite multiple ongoing initiatives, the readiness level of companies to decarbonise exploration & production (E&P) assets is still very diversified. The pace will need to accelerate to reach Middle East operators’ Net Zero ambitions.

 

Leave A Reply

Your email address will not be published.

Join our mailing list
Sign up here to get the latest news, updates and special offers delivered directly to your inbox.