The oil and gas industry, which is facing pressure from investors and governments to reduce emissions, is banking on new technology and investments to reach targets, the chairman of the Oil and Gas Climate Initiative said.
The OGCI, an industry body representing some of the world’s top energy companies including BP, Chevron, ExxonMobil, Saudi Aramco, Shell and Total, are using a $1 billion fund to invest in technologies and business models that have the potential to significantly reduce greenhouse gas emissions.
One of the investments made is to detect and monitor natural gas leakage through infra-red monitors, the deployment of drones, aircraft and satellites.
“You can immediately shut off any leakages and this is going to change the game,” Bob Dudley, OGCI chair and former BP chief, said during a panel discussion at the Citizens Energy Congress on Wednesday. "OGCI has a satellite out there and sometimes we are calling countries and saying, '[do] you realise you have a leakage out there?', which helps."
Publicly-listed oil majors around the world have come under increasing pressure from activist investors, governments, courts and large institutional investors that promote ESG standards to reduce their carbon footprint and transition to clean energy.
ExxonMobil recently lost three of its board seats to a small activist investor Engine No. 1, which had been pressing the company to cut emissions.
Royal Dutch Shell was ordered by a Netherlands court during the same week to slash its emissions harder and faster than planned, dealing a blow to the oil company and a move that could have far-reaching consequences for the rest of the industry. However, many of the industry's major players have already taken big strides towards reducing their own carbon footprints.
“New technologies are coming all the time and there are lots of them,” Mr Dudley said.
One thing that can transform the energy industry "apart from renewables is hydrogen", he said.
"It’s a sort of colourful wonder fuel ... Hydrogen burns very, very efficiently with no emissions.”
Globally, the size of the hydrogen industry is expected to hit $183bn by 2023, up from $129bn in 2017, according to Fitch Solutions.
French investment bank Natixis estimates that investment in hydrogen will exceed $300bn by 2030.
The UAE and other countries around the region are drawing up plans to produce hydrogen and tap into the clean fuel’s potential.
OGCI is also investing in carbon capture, utilisation and storage technology to reduce emissions.
“One of the 20 investments it invested is in a cement company. Cement gives us very large amounts of carbon dioxide – as much as 11 per cent of industrial carbon dioxide comes from cement. We invested in a company where you put the carbon diioxide around it and it pulls it in and sequesters it,” he said.
The industry is, however, facing a tougher environment through which to make investments. Oil and gas companies have had to write off billion of dollars worth of assets during the pandemic, Mr Dudley said.