Oil & Gas contractor and service companies following their clients into Renewables and decarbonization.

Some of the oil and gas majors have started to invest heavily in renewable energy for several reasons; shareholders, investors and the public are all starting to put pressure on decarbonizing their activities, but also renewable energy projects are becoming economical feasible. Danish Oil and Gas company DONG became a major wind developer and rebranded itself a few years ago as Orsted, in 2020 it reported a operating profit of €2.43bn. Last year BP embarked on a “net zero by 2050” program.  Other mainly European oil majors such as Shell, Total and ENI have set renewable investment and production targets of their own.

Oil companies use a large array of specialized contractor and service companies to help search, develop and run their oil and gas fields. The diversification to renewable energy of their clients leave these contractors and service companies scrambling for a new energy world order. Several offshore construction companies are a natural fit to support development of offshore wind projects. Subsea 7 is an offshore oil and gas infrastructure specialist and is now involved in several wind farms in the North Sea and more recently in the United States as well. Another example is Van Oord, they to have an Oil and Gas infrastructure division and have now a well-established offshore wind division. TechnipFMC was born out of a merger between Technip and subsea contractor FMC to become a integrated EPCI contractor for large Oil and Gas projects. TechnipFMC recently split into separate companies; TechnipFMC and Technip Energies with latter being focused on emerging renewable energy markets. Technip Energies is already involved in combining offshore wind and green hydrogen technologies. Another company in the same space is Aker Solutions based in Norway, Aker too has a dedicated Renewable Energy Solutions division.  

For service companies active in the oil and gas industry diversifying into renewable energies is more challenging. Companies such as Schlumberger and Baker Hughes operate specialized equipment often used to reach the hydrocarbons reservoirs hidden far below the surface or seabed. They have developed specialized techniques to map reservoirs and bring hydrocarbons safely to surface for further processing. The business model of service companies differs from construction and EPC companies in that they rent their specialized equipment and manpower to provide services to their clients. Technology includes well construction, pressure pumping to unlock shale reservoirs and reservoir analysis. Recently these service companies have started to venture into renewables too as well as embarked on more sustainable ways to operate their activities. Service companies Schlumberger, Halliburton and Baker Hughes positioning themselves to support Carbon Capture and Storage and geothermal projects. These companies have highly skilled work force backed up by R&D departments to adapt existing technologies to new energy applications. In 2020 Schlumberger has created a New Energy division to leverage its intellectual and business capital in emerging low-carbon and carbon-neutral energy technology’s which include hydrogen, lithium, carbon capture and geothermal power.

As oil and gas will be a significant part of the energy mix for decades to come decarbonizing upstream oil and gas operations will be another focus point. Extracting hydrocarbons from their reservoirs is an energy intensive activity in itself. Examples to tackle emissions are reducing or eliminating flaring, eliminating methane leaks and electrifying trucks, pump- and drilling equipment. The changes of the energy landscape present challenges and opportunities for both contractors and service providers.