Oil companies push for natural gas to curb carbon emissions

International Oil Companies (IOCs) are pushing for deeper investments in natural gas as a cleaner energy alternative to reduce carbon emissions.

As world population continues to grow and energy needs becomes increasingly higher coupled with the high cost of renewable energy infrastructure, oil companies like Royal Dutch Shell and Total among others are now pushing for more use of natural gas.

“Renewable energy will take a long time to reach the scale needed and it can only do so much. Solar and wind energy produce electricity, which accounts for less than one-fifth of all energy consumed worldwide,” said Ben van Beurden, chief executive of Royal Dutch Shell at a recent industry conference in Abu Dhabi.

He also added, “Wider electrification of the energy system is needed, including in transport and other major industrial sectors, for renewables to realise more of their potential.”

According to the Total, the world population is increasing and energy needs are growing all the time. To meet them, abundant, accessible energy are required.

“This reality is complicated by the need to reduce greenhouse gas emissions, which we have committed to over the last ten years. We are meeting this challenge by boosting the development of natural gas in particular, the cleanest fossil fuel,” the company said in a statement posted on its website.

In 2015, Total produced almost as much gas (47%) as oil (53%). The company says it is working to achieve a higher than 60% hydrocarbon mix in 20 years.

When burnt for power, natural gas produces less carbon dioxide and less local air pollution than other hydrocarbons. Much of the gas found in the Nigeria is of a type that does not require much processing.

Royal Dutch Shell, used the opportunity presented by the recently concluded Abu Dhabi International Petroleum Exhibition and Conference (Adipec 2016) to urge countries to cut carbon emissions in their domain by increasing investments in gas as source for cleaner energy.

Meanwhile a recent Wood Mackenzie’s study titled “Fossil fuels to low-carbon: The Majors’ energy transition” shows that oil majors will not have a choice to switch to natural gas in no distant time.

The study states that only 13% of global emissions are currently covered by a price on carbon. The vast majority of oil majors’ upstream operations are not yet directly impacted, with most policies primarily focused on the power and industrial sectors.

“Green financing could also mean higher cost of capital for more carbon-intensive oil assets such as oil sands, as investors shift to alternative fuels and lower-carbon technologies,” said Paul McConnell, research director of global trends for Wood Mackenzie.

Up to 50% of Majors’ production could be hit with carbon costs over the next decade – but only if the countries and regions that currently price carbon extend their policies to the extractives sectors. These are commonly outside the scope of emissions-limiting schemes.

“While all the major oil companies put a price on carbon in their long-term planning, the big question is how much risk each has taken into account,” says McConnell.

ISAAC ANYAOGU