Oil and gas companies are faced with the ongoing challenge to become more efficient and reduce costs amid volatile global prices. Energy Transition and the call for more renewable energy sources are also affecting the industry’s medium- to long-term prospects.
To discuss how the oil and gas industry can manoeuvre through these challenges, we invited NOV Chief Technology Officer and Chief Marketing Officer David Reid. Here, he answered questions on how oil and gas companies can adjust their core business strategy to make themselves more resilient. He also discussed some key technological opportunities for the oil and gas industry in light of the global Energy Transition journey.
David develops the global technology and marketing strategy engine NOV, a worldwide provider of equipment and components used in the oil and gas industry. He is also a founding member of the SPE Drilling Systems Technical Section and the IADC Advanced Rig Technology Committee, and regularly serves many organizations and societies as a public speaker and panellist about business, technology, and leadership. He serves on a number of boards including the NOV and Schlumberger IntelliServ joint venture; Society of Petroleum Engineers; and, in his own time, Redeemed, a program for survivors of sex trafficking.
Read his insights below.
What are the changes in core business strategy that the oil and gas sector has to carry out to make its business more resilient in light of the accelerated journey towards Energy Transition?
I think it's a natural transition that we are involved in already. I had a lot of conversations with oil and gas industry players on their journey into renewables, and I walked them through three aspects that they need to consider.
First, looking at rejuvenating existing oil and gas systems and practices to reduce their carbon footprint. There’s a lot of work that needs to be done there. We have a lot of efficiency systems and methods to eliminate the carbon footprint of producing oil and gas as well as what we do once we have it.
Second is taking core technology and ability that we already have and applying it to renewables. So, we already see that when we use the same drilling technologies for oil and gas in the installation works for wind offshore. Also, in our gas processing, we are very close to carbon capture of 5%—more than we are already doing. And in hydrogen production, we have methods that convert seawater to clean water. Furthermore, we are looking at offshore wind floaters (Semi-submersible floating vessels) that take technologies we have for drilling and make wind turbines operational in the most extreme weather conditions in deeper waters offshore.
Third and last is taking our inventive and creative efforts from the oil and gas industry into renewable energy. The things we learned pioneering new technologies and techniques, such as going 10,000 feet in the water or drilling accurately vertically and then horizontally over 40,000 feet into the earth. Those skills of scale and technical agility are also useful and can be applied to, let’s say, geothermal. At NOV, we are also applying technologies such as making solar panels easier and cheaper to get installed in solar farms, much more stable tower-erecting crane systems for land that can be used for wind farms, or in-field manufacturing solutions that allow the building of towers themselves onsite without transporting large structures. It is not necessarily transferring skills and capabilities directly from oil and gas to renewable energy, but using the same engineering prowess to invent something new or lower cost.
Where do you think technology and innovation can play a huge role in building a more resilient core business for oil and gas companies?
There are low cost and simple ideas we can easily apply that result in cost savings and carbon footprint reduction. For instance, the simplest thing we have done is adding hydrogen to the airline of a diesel engine, allowing the combustion process to be efficient, and immediately, we realised a 30-percent decrease in fuel usage.
Also, we do have systems that capture the energy like what a hybrid car does. We capture breaking energy and reuse it in the process. Another example that reduces energy consumption and lowers cost is how our software, which balances out and interacts with our control systems, connects engine output to the work being done, and starts managing engine use and optimization matching output with what is needed, turning off excess engines if possible and eliminating waste energy production.
Another technology we are working on is storing oil and gas subsea, which is a perfect system for ammonia and hydrogen storage utilizing the hydrostatic pressure and low temperatures to eliminate energy production required for storage. The same system could also contain energy by pumping air and storing it in a pressurized state subsea. This is particularly relevant in creating offshore ammonia stations to fuel up ships in the future, also allowing a reuse or repurposing of offshore platforms. Cost of removal for these offshore assets is high, hence this technology is a welcome development for the oil and gas industry.
One last example is a water purifying system that sits on the seabed and also uses the pressure of the seawater to run the system. This system is used to pressure up a reservoir in oil and gas to get more hydrocarbons produced when the natural pressure no longer pushes the hydrocarbons out, but also offers other uses to produce filtered water without using power. This could solve clean water problems in some parts of the world.
What specific technology domains would be most relevant to oil and gas companies in terms of decarbonising operations and value chains, and/or recalibrating core businesses?
The one that is easy for oil and gas companies and something that the United States has already seen some breakthrough in is geothermal and its drilling technologies. These are core technology transfers that are natural where oil and gas can add their technology agility and drive to a traditional low investment arena. We have seen drill bit technology evolve for higher temperatures and recently blowing particles through bits in hard rock drilling often found in geothermal. The cost reduction impact is significant as the bits last longer and drill faster. Also the use of fiberglass in liner hangers has helped the use and survival of tubular goods.
Just as we have been finding a way to drill shales all over the world at lower costs and significantly shortening the time to execute in high temperature rock, another technology and solution is evolving. The temperatures in shale arenas are not volcanic, but we have been dealing with high temperature challenges as well as vibrations that position our investments well for traditional geothermal but also offer new potential solutions in energy production. Many from oil and gas are looking at a range of solutions pumping water into a well and bringing back heat. Here, oil and gas experienced companies could really do well and scale up these solutions if successful all over the world.
Carbon capture and storage is also very natural for oil and gas companies. We understand the structures in the earth, we understand how to capture carbon from flue gas. So, we can take it out right from the source and put it back in the earth. These are technologies that are already widely used in the oil and gas industry. There are R&D efforts to make this more economical, but it is very doable as it is currently.
And lastly, hydrogen production. This is something that we also already do in the oil and gas industry. There’s room for cost reduction, and we are already working on that. But overall, it would be an easy transition for the industry, especially from blue to green hydrogen.
Which technology domains should innovators develop further to be more responsive to the needs of the oil and gas sector in the medium- and long-term?
It’s all cost based. If we can find any technology that can remove cost, which is the challenge and opportunity with hydrogen and carbon capture.
If you look at hydrogen transmission, it is not easy to move hydrogen around and to store it because of the characteristics of the molecule and the impact it can have on steel product. With gas, it was easy for us to store it in the earth sometimes, something that is harder for hydrogen. Hydrogen is hard to contain and hard to transport, often we blend it with gas but it is transported today in pure form, but solving the lower cost hydrogen production and transmission could be a significant win for abundant transportable energy sources.
The journey towards Energy Transition differs across countries, and it is highly anchored on the social, economic and ecological priorities of their respective governments and constituents. To further explain the developing countries’ journey to Energy Transition, we invited Atty. Monalisa Dimalanta, a renewable energy expert and former chairperson of Philippine government advisory body National Renewable Energy Board (NREB).
To give us insights on the innovation culture in huge energy companies, we invited Jaco Fok, an innovation and digitalisation expert, for an interview. Here, he discussed extensively how large companies change/improve/maintain certain aspects of company culture to welcome innovation and successfully embed it in their organisation. He also noted key opportunities for oil and gas companies that are at the intersection of Energy Transition.
What can other industry sectors do - individually and collectively – to accelerate their action to achieve net zero carbon emissions? We invited energy and resources industry expert Miranda Taylor to give her insights into this ‘economy wide’ approach and how the different sectors are influencing each other to act.
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