What’s the difference in focus between IOCs and NOCs in terms of sustainability/energy transition? What are the reasons for their different approaches?
The differentiated responses to the energy transition is determined by a number of factors including shareholder requirements, investor preferences, reserves to production ratio and corporate strategy. While all companies aim to decarbonize operations and promote a low emission economy, there are two approaches that we observe. First, there are those that are aiming to accelerate a transition to renewable energy and evolving their portfolio. Secondly, others aim to sustain and prolong the sustainable and low emission use of oil and gas leveraging technologies such as carbon capture, hydrogen and crude to chemicals. Ultimately, the difference in approach is driven more by corporate priorities than whether the company is an IOC or NOC.
What are the key technologies we’re seeing in the region contributing towards a cleaner energy industry? What is missing?
There is no one formula that is being pursued. We see companies in the region expanding into solar and wind while others building crude to chemical plants that significantly reduce emissions from petrochemical production and oil use. We note large scale interest in CO2 capture with some flagship projects recently announced. The region is also active in reducing the amount of flaring and consequently emissions. Energy efficiency remains a key driver as well for a cleaner energy industry.
The missing link is less on the technology side but more on bringing these technologies to scale and costs, leveraging existing infrastructure and supply chains without major operational disruptions.
What are the next steps for NOCs in the move towards a cleaner energy mix?
The steps that energy companies take toward a cleaner energy mix must be coordinated, aligned with shareholder priorities and supported by adequate investment allocation. Regional energy companies are making firm commitments. As an example, Dr. Sultan Al Jaber, ADNOC’s CEO, committed to a reduction in carbon intensity by 25% by 2030. Firstly, must accelerate the adoption of advanced technologies to optimize the return on investments in existing monitoring technology and data sets. As an exemplar, Saudi Aramco is scaling use of AI to optimize carbon sequestration. Digital maturity is accelerating the transition by bringing together larger data sets with AI and machine learning.
Secondly, they can promote and pursue cleaner uses of hydrocarbons. Beyond the structural advantage of housing the world’s lowest carbon assets, there are new processes, products and solutions that will fundamentally transform and lower the emission from the sector. Cleaner use of hydrocarbons is demonstrated in the leverage of crude to chemical technologies, blue hydrogen production and other proven methodologies.
Furthermore, driving innovation through collaboration also represents a step towards a cleaner energy mix. National and industry transformation programs can be leveraged to implement new technologies outside of their areas of expertise and achieve success in this direction. One such collaboration is the agreement between Air Products, ACWA power and NEOM who are collaborating to develop a five billion USD production facility in NEOM that will be powered by renewable energy for production and export of green hydrogen to global markets.Â
Tell me about the potential for Direct Air Capture in the region and internationally.
The invaluable potential of Direct Air Capture (DAC) that could have a transformative impact regionally and internationally is already being demonstrated. As a technology that captures CO2 from the atmosphere, the C02 can be used, among other things, for the production of fuels. CO2 levels are increasing rapidly around the globe and the need to bring them under control and mitigate the adverse effects of climate change is becoming ever more imperative.
From a regional standpoint, multiple innovative efforts are underway to utilize DAC to reimagine the internal combustion engine of tomorrow. Given population increase projections across the region, coupled with the effects of vehicles on the environment, DAC could have a central role in sustainability agendas. Already, DAC can capture 25 percent of the CO2 emitted in a vehicle’s exhausts and the goal is to raise that capability to 50%. Besides captured CO2 being stored onboard vehicles for later collection and used in a variety of industrial and commercial applications, it could also power tomorrow’s heavy-duty vehicles and freight transport.
At present, the technology has been successfully demonstrated in two prototypes – a pickup truck and a midsize passenger vehicle – and could have a revolutionary impact in terms of innovation and sustainability in the years ahead.
We’ve been hearing about crude to chemicals for some time—tell me about the real scope of this technology and its potential impact. What are the challenges?
The conversation surrounding crude to chemicals continues to gain traction and become more frequent due the potential contributions to clean energy and sustainability. Because crude oil-to-chemicals eliminates several energy-intensive processes, creates high-value product streams, and generates fewer emissions, the scope of this technology is one of massive potential. It is also important to point out the abundance of low-cost hydrocarbon assets in the region, which can be pursued using crude oil-to-chemicals. Crude to chemical has the potential to significantly increase efficiency and yield of production, transforming more than 50% of a crude barrel into chemicals products.
