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Keep fossil fuels in the Ground now!

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Paul Hobcraft's picture
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I work as a transition advocate for innovation, ecosystems, within IIoT, and the energy system as my points of focus. I relate content to context to give greater knowledge and build the...

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  • Aug 9, 2021 10:15 am GMT
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There was a set of questions raised in the Energy & Sustainability Network under the Oil & Gas Group by someone who has chosen to remain anonymous, I thought I’d attempt to answer this from my personal opinion in a post as they are fairly complex to address in a thoughtful way, my way.

Here is the link to the questions asked which I also show below

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Knowing that we are moving towards a decarbonized ecosystem where petroleum products will still exist, but their role in energy generation is going to be substantially less, what are the best areas for oil & gas R&D investments?  Which company(ies) have the best energy transition strategies?  Which companies are truly embracing this transformation and truly being sincere about their commitment to meeting climate change and decarbonization goals?  If you could tell the oil & gas companies anything about what they should be focusing on, what would that be?

I have to start at exactly the same place as Andrew Blakers did, this is a real Industry-wide Kodak moment. Andrew is the Professor of Engineering, Australian National university and answered

I suspect that most of the oil, gas and coal companies will have Kodak moments. Its rare that a company firmly entrenched in an industry survives a wholesale transition of that industry to new technology - especially when it is fast and complete as the solar/wind revolution will be by 2040.

What is or was a Kodak moment?

New Word Suggestion a  phrase used when taking a picture of someone at a particular moment that will never be forgotten.

“The Kodak moment” both Andrew and I are thinking about is the day Kodak collapsed and the reference to the Eastman Kodak Company's decline when cameras and film were overtaken by smartphones and digital technologies. The situation was the business failed to foresee the absolute shift within its industry and drops from a market-dominant one to become more of a minor player and even is forced into Bankruptcy.

Oil, Coal and Gas  as fossil fuels, being the major contributor to our growing Carbon levels and the companies extracting these will all need to face their “Kodak moments” in the coming years, in my view ALL within this current decade. The shift away from "extraction" needs to rapidly accelerate

What and where should R&D investment be directed?

The debate presently is “why should fossil fuels still even be used?” Not just in 2050 but leading up to this period. Most of the current scenarios have fossil fuels as still prominent within any energy mix over the next thirty or more years. We do need to simply ask why?

Will the oil and gas majors have a role to play, yes it can be prominent IF, I mean IF, they shift their thinking from “fossil fuels” to all “energy fuels” while they have the cash flow, balance sheets and dominance of today and put that into a total energy transition over the coming decade or two.

Within R&D I would shift the vast majority of my research and development into alternative renewable energy solutions. I would direct my M&A activity totally away from oil and gas into these solutions. The oil and gas companies need the same seismic shift in their business as we all do in the Energy transition.

What replaces fossil fuels? I still believe Nuclear Energy in smaller modular design solutions will become increasingly needed and deployed. We can all get into the debate of “fallouts” from a leak but the BIGGER fallout from a rapidly warming planet that will relentlessly alter what we know and how we function is the real debating point. Nuclear is proven, it has regulation, recognition, governance etc., etc to radically ramp up solutions that are safer, more manageable and distributed. Will one or two of the Oil and Gas majors shift to this alternative energy source?

I am not convinced that Carbon Capture and Storage is a sustainable alternative solution. I believe this is no more than a sticking plaster to cover up the determination to extend the investments into fossil fuels. It can be wrapped up as an "interim" solution but the ROI cannot be measured in 20 years and then extended but in 10 maximum and high financial penalties applied if it is longer.

We need R&D that takes away all the need for fossil fuels and the Oil and Gas companies have the chance to be in the drivers seat of this change. Without doubt, the driving of this will be fraught with challenges that will need a highly agile, focused and determined approach that has speed and impact of change as central to force a significant part of the transformation into this decade. It will require some brave and bold CEO leadership in Oil & Gas majors

We are seeing a debate playing out between European versus American oil and gas majors on how, when and where they make their diversification away from Oil and Gas or double down and extract the maximum for as long as there is runway to do this. Investors are putting pressure on boards, regulators are putting pressure, the society is beginning to make the move. This is not a great positioning for a rapidly warming world. Is this denial or stubborn determination to hold onto what you have got.

I believe the CEO’s in these majors should be directing all their future developments spends into renewables and backing a safer, modularized Nuclear set of solutions as investments that offer sustaining returns.

Lastly can we "pluck" existing build ups of carbon out of our air?  Can solutions be found. Could part of the R&D of oil and gas companies be directed at cracking this atmospheric question then we might have a different "ball game"

Which company(ies) have the best energy transition strategies?  

My initial reaction here is NONE. When you can’t let go you can’t really accelerate and move forward in any new direction. Of course we throw the word “transition” into this but there is a point of not debating and dragging your feet, you throw all your energies into a total transformation. The question might be “who of the majors will break first and make that totally transforming move?”

If your shareholders, especially all the large institutions finally have their “Kodak moment” in their Oil & Gas investments then perhaps. The debate of how and when this might happen and the financial penalties on how they will be distributed becomes a real barrier to making any sysmic change. Decisions are partly caught up in the massive investments in pension fund contribution for the attractive dividend returns offered by Oil & Gas. When will the financial coffers get drained that dividends can’t be paid, will that make the move? When will institutions recognize this dividend or investment is unhealthy and prolonging the carbon emissions we need to stop? 

I would again argue here, invest heavily in alternative fuel now and secure the future dividend that maintains shareholder commitment and belief.

Today that transition is being handled better by Total, BP, Enel and Shell it seems. They are sensing this growing, perhaps unrelenting pressure to transform and are moving towards the adjustment. The “adjustment” is simply not fast enough, bold enough or attractive enough and I think that is simply NOT TRUE. To avoid that Kodak moment you have to be the usurper like Apple that wraps up a solution into a Smart Phone.

The oil and gas companies have THAT CHANCE to become the “Smart Energy Solution” providers that has renewables, digital and smart infrastructure as their operating core. My money is on BP, Enel & Total. It will be a European “win” on present indicators but how Saudi, Russia and China reacts depends on how they can transform their “State” companies into fully privatised entities. ARAMCO is the leader in this pack but the history of oil and gas runs even deeper in Saudi Arabia to ask if they ever can let go? ARAMCO are arguably the best at providing the highest quality of oil, but when you are the best, why change?

What do I tell the Oil and Gas companies?

 I would never “tell” but I would council and convince them that the tide is going against them and the undercurrent is really treacherous, dangerous and full of peril. The full force in years away not decades away. Fossil fuel must and should stay in the ground .

Working on carbon capture and storage is great but it is a interim solution, It enables time for a orderly transition if it is decoupled from traditional payback returns. We are heading towards stranded assets, bankruptcies and forced mergers as the world continues to recognize it is totally unsustainable with any fuel that omits carbon or other greenhouse gases.

We don’t need to “tell them”, they know that time is running out. Our job is to encourage them to make the transition within their business core as fast as they can and that is not decades but a few years of massive, disruption transformation. There are many examples of industry transformation, or even societal transformation to draw down from. Will they recognize it is in their hands or suddenly taken out of their hands?

What we do need to do, is inform the wider community concerned with the shifts taking place on our planet on global warming. We need to get across this does need to be the start of a new era of progress on climate change, moving away from fossil fuels as quickly as possible, and provide sustained evidence of a tired, ineffectual system of shareholder rights that governs Oil and gas companies but separating Oil and Money is really hard. 

Net Zero pledges still do lack tangible plans to achieve them. Mandating a shift from 2050 to 2040 or even 2035 globally seems so unlikely in this current global environment where trust is eroding but we should be looking towards responsible leadership at global, government and company level to face up to global warming and the total shift to sustainable, clean energy.

Thanks for the questions, it stirs up a lot.

I continue to debate, read, research and see a shift of this magnitude as the one big event of the century. This decade we are in will be the defining one. We have had four industrial revolutions, this is the energy revolution, bigger and more necessary than all those others as there is more at stake; our health, food supply, environment, nature, the ability to function as we know it as humans on this planet. The planet as we know it and all it offers, is at risk, arguably in peril.

Oil and Gas, politics, the lobbying and continued fossil fuel investment will all be or should be on the wrong side of the energy revolution we really do need into clean, sustainable sources of energy, unless they cross over, now! Oil and Gas companies are facing their "defining" moment in these next few, short years. Can they avoid their Kodak moments as THIS particular moment that will never be forgotten

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Matt Chester's picture
Matt Chester on Aug 9, 2021

Which company(ies) have the best energy transition strategies?  

My initial reaction here is NONE. When you can’t let go you can’t really accelerate and move forward in any new direction. Of course we throw the word “transition” into this but there is a point of not debating and dragging your feet, you throw all your energies into a total transformation. The question might be “who of the majors will break first and make that totally transforming move?”

Agree with you here Paul-- there's a jockeying of who's putting out the 'best' PR related to their moves, but when you really look at what they're doing and accomplishing and putting out in the world today, it appears to be a slap fight among people who aren't yet doing much at all!

Jim Stack's picture
Jim Stack on Aug 9, 2021

Paul, great example using Kodak who missed the change in their industry and fell behind. Digital photos are the standard.

   Yet I think you maybe missing the energy change but liking small Nuclear. Do you know where the very limited uranium will come from? Do you know how expensive Nuclear power is and the biggest subsidies theycrewuire? Do you know the amount of water they require to keep cool? 

   While Solar PV and Wind are the lowest cost and least polluting of any energy.  The storage batteries make this power 24/7 and still the lowest cost right now. The storage costs have been falling almost as fast as Moores law for computer chips. 

    

    

Paul Hobcraft's picture
Paul Hobcraft on Aug 9, 2021

I know Jim  Nuclear has constraints but l just do not see Wind, Solar and Energy Storage stand alone for all our energy needs

Also what about the essential materials and minerals for solar, wind and,storage? Limited and very restricted resource sources.

Can hydrogen fill the (massive) gap  When? Do we have time? 

We need proven alternative solutions now

Jim Stack's picture
Jim Stack on Aug 19, 2021

We have proven Solar, Wind, geo-thermal and hydro. 

Rick Engebretson's picture
Rick Engebretson on Aug 9, 2021

I try hard to be civil, so if I hedge my difficulties here and sound too passive forgive me.

First, I saw the real "Kodak moment" here in Minnesota salvaging the large U of MN. lab of the inventor of digital electronics, Otto Schmitt (Schmitt trigger), in about 1982. He was being displaced by a big "super-computer" building promising hulking tanks were the next computer rage. Having taken advanced modern courses in everything from biochemistry to solid state physics, I was no political match for the WWII crowd with their bachelors degrees. I'm more proud than ever starting "Lightronics, Inc." pushing light weight and fiber optic connected networking. It seems funny today.

So I strongly suggest today's ignorant climate activists invest heavily in graduate school training of real scientists before it's too late. You might learn how stupid it looks California burning renewable fuel and destroying itself while sitting on yet another trillion dollar federal cash out. If you ever want to learn the photo-chemistry of fire, copy it, use it to directly store solar energy in biomass creating "solar biofuel", then try find a young Biophysical Chemistry graduate student and hire them. Blaming the oil companies is a non-starter.

Roger Arnold's picture
Roger Arnold on Aug 10, 2021

Paul, you write:

I am not convinced that Carbon Capture and Storage is a sustainable alternative solution. I believe this is no more than a sticking plaster to cover up the determination to extend the investments into fossil fuels. It can be wrapped up as an "interim" solution but the ROI cannot be measured in 20 years and then extended but in 10 maximum and high financial penalties applied if it is longer.

Well of course it's not sustainable! If nothing else, the fossil fuel supply is finite, and would run out. Long before that happens, extraction will cease to be cost-effective. Fossil fuels will be eclipsed by some combination of existing and emerging alternatives. Whether it be wind and solar + storage as we know them now, or something less land and resource intensive (StratoSolar, advanced nuclear, enhanced geothermal, fusion, or some complete wildcard), the end result will be the same: we'll move away from fossil fuels, and the bulk of what's remaining in the earth will be left there. Extraction is a dead-end game, and players engaged in it had best be working on exit strategies. Can anybody doubt that? 

That doesn't mean we shouldn't be supporting CCUS! We're in deep trouble with climate change and the damage we've already done. We urgently need to move toward sustainability. But we can't snap our fingers and be there. No magic "Presto, change-o!" and done. We'll be replacing institutions and infrastructure that have developed over the course of centuries. We need transition strategies. Transition strategies aren't supposed to be sustainable. They're supposed to be effective.

We need to slash emissions of carbon to the atmosphere as quickly as possible. How do we accomplish that? Well, first observation: there are a number of major applications whose waste streams are nearly pure CO2. Examples include fermentation processes to produce ethanol, calcining of limestone for cement, production of hydrogen for making ammonia when there's a known market for CO2, and "polishing" of raw natural gas and other gases where removal of CO2 is an inherent product requirement. Also oxy-fuel combustion of any carbon-rich fuel for any purpose, when there happens to be a handy nearby source of pure oxygen. Which there is in any water electrolysis facility for production of hydrogen. In all these cases, there's very little cost to capture the carbon waste streams rather than venting them to the atmosphere.

Second observation: there are a lot of mature oil and gas fields where secondary recovery methods are being used to boost recovery. Water injection is probably the most common form of secondary recovery, but nitrogen injection and natural gas re-injection are also common. Injection of CO2, if it's available, is more effective than any of these. Oil field operators will pay to acquire CO2 that they can inject to boost their production. They can't afford to pay very much, especially when oil prices are low. But offer it for free, and you'll hear "deal!" quick enough to make your head spin. (Of course, you have to be able to supply enough of it to make the EOR operation worth setting up.)

But wouldn't using CO2 for EOR just lead to more oil and gas consumption? The answer is no. It would lead to less. EOR would allow more of the existing demand to be met from existing oil and gas fields. It would obviate the need for exploration and development of new fields. In the process, it would bring about a prompt 5 to 10% reduction in fossil fuel consumption. That's the estimate for the average amount of fossil energy consumed by E&D activities to bring production from a new field online, compared to total production from the field [q.v.].

This type of CCUS delivers a double benefit: sequestration of carbon that would otherwise be vented to the atmosphere, and reduced consumption of fossil fuels, all for very low capital investment. In the case where the application whose carbon waste stream is being captured is production of hydrogen by reforming, there's a third benefit: flexible zero-carbon power generation ideal for long duration backup of variable renewables. It makes it economically feasible to integrate higher levels of variable renewables into the grid. That, in turn, compounds the reduction in fossil fuel consumption for electricity. What's not to like?

  

 

Paul Hobcraft's picture
Paul Hobcraft on Aug 12, 2021

Roger,

Thanks for your comments and points. Do not get me wrong I am all for CCUS if it can scale and do the effective job of taking out the carbon, no leaks or fudges of a "certain percentage"

It is simply I am not convinced.

Of course we need EVERY weapon in our toolbox to get Co2 down and fast.  There is decades of fossil fuels in the ground, I mean decades. Your "fossil fuel is finite" is correct but we are more "finite" in my view than fossil fuels, in how we can survive, manage and exist. Seriously leave it in the gorund- now, do not support capture unless the pressures and penalties become so big to keep omitting carbon through the use of fossil fuels. The old "polluters pay" should come back in real force and real teeth to bite hard!

How we get there, when we get there and with what approaches. We all have views but until all these concepts like CCUS, even Hydrogen is commercially scalable we chase our tails.

If, according to the IPCC we will get to 1.5C by early to mid 2030's then we will have spent so much on dealing with disasters and chronic economic growth and stimulating we will have wasted these precious investment years of makiing everything in NEW investment green renewable only.

Dealing with the past in the present I can relate to your interim solutions but I just have this feeling you open the door enough and fossil fuel is through and out the other side!

Paul Hobcraft's picture
Paul Hobcraft on Aug 13, 2021

For Roger Arnold, in further reply, the next Post comment is made

Paul Hobcraft's picture
Paul Hobcraft on Aug 13, 2021

For Roger Arnold, in further reply

Coming back to CCS. I do not know if you are aware of Tyndall Centre, Manchester UK but they have been working and collaborating around CCS. In a recent extended report and also a summary by the Friends of the Earth Scotland they were commenting about CCS, specifically from the UK view but they took a global perspective in this report

The research outlines barriers and challenges for fossil fuel-based CCS to deliver emissions reductions over the next decade, including the costs, timescales and residual emissions.

The conclusions

- On the basis of this research, Friends of the Earth Scotland and Global Witness believe the promotion of CCS in energy is a distraction from the rapid growth of renewable energy and energy efficiency required.

- The technical feasibility of CCS was demonstrated in 1996, however, deployment has been slow and sites under development have consistently failed to materialise. According to the Global CCS Institute, less than a fifth of CCS capacity under development in 2010 was operational by 2019. Despite this, CCS features prominently in many future energy pathways with a stark contrast between projections and the current capacity globally of just 39MtCO2 a year across 26 plants.

-  Firstly, the costs involved are prohibitive, with CCS often required to be built onto existing infrastructure.

-  The research reveals that to date, 81% of carbon captured has been used for Enhanced Oil Recovery (EOR). This process sees captured carbon pumped underground to push previously unreachable fossil fuels up for extraction, extending the life of oil fields

- There is also significant deployment time to consider with a period of 6-10 years assumed in some analysis for prospective UK projects

-  Even if CCS for mitigation can be proven economically and technically viable at scale, there will continue to be carbon dioxide, as well as methane emissions, from CCS fossil fuel energy that cannot be captured. This is the case for both fossil fuel hydrogen and gas power stations fitted with CCS

- Current projects usually target 90% capture at peak capacity

- The KEY passage : Reliance on CCS is not a solution to the climate emergency
The fossil fuel industry has been pushing for CCS, and hydrogen made from fossil gas, to be a big part of proposals for delivering on the Paris Agreement goals. However, this research shows that we cannot rely on fossil fuel CCS to deliver significantly in the next decade. The technology still faces many barriers, would only start to deliver too late, would have to be deployed on a massive scale at a scarcely credible rate and has a history of over-promising and under-delivering

So it does seem what we want to like has many issues to not give us the "what not to like"

-

Roger Arnold's picture
Roger Arnold on Aug 15, 2021

Thanks for the tip, Paul, and for the summary.

I don't think I agree with Friends of Earth Scotland and Global Witness regarding the promotion of CCS in energy. I don't see it as a distraction at all. More the opposite. I see it as a way to steal a march, and get a head start on cutting carbon emissions and building the critical infrastructure needed for a long-term sustainable solution. It's an aid and a shortcut. It will speed us along the way to where we need to go.

Admittedly, this all depends on how one understands "promotion of CCS in energy". If one's understanding is an unqualified "Hurray! Clean coal forever!", then I agree, that would be an unfortunate distraction. My interpretation of "promotion of CCS in energy" is much more constrained. I pretty much care about just two things. One is efficient production of blue hydrogen. The other is supplying captured CO2 for EOR. 

Why EOR? Because it will allow remaining oil demand to be met from existing fields, and thereby undercut incentives for further E&D (exploration and development). It's a quick way to reduce energy consumption. E&D activity, by some estimates, accounts for roughly 10% of world primary energy production.

If carbon capture is limited to production of blue hydrogen and capture of nearly pure CO2 streams from applications like fermentation of grains, the capital investment required is almost trivial. And sequestration of CO2 in producing oil fields has a negative cost. So there's no hinderance to investment in other RE resources. On the contrary, it removes barriers.

Paul Hobcraft's picture
Paul Hobcraft on Aug 17, 2021

Hi Roger

Just saw this the other day. To quote

"New research paper on Blue Hydrogen likely to send shockwaves as hydrogen investment steps up globally

The use of blue hydrogen appears difficult to justify on climate grounds as its greenhouse gas footprint is more than 20% greater than burning natural gas or coal for heat and some 60% greater than burning diesel oil for heat, according to a new How green is blue hydrogen? research paper.

The best-case scenario for producing blue hydrogen, using renewable electricity instead of natural gas to power the processes, suggests to us that there really is no role for blue hydrogen in a carbon-free future, the report adds.

"Greenhouse gas emissions remain high, and there would also be a substantial consumption of renewable electricity, which represents an opportunity cost. We believe the renewable electricity could be better used by society in other ways, replacing the use of fossil fuels," it states. "Similarly, we see no advantage in using blue hydrogen powered by natural gas compared with simply using the natural gas directly for heat."

This is the link to get at the paper

 

Roger Arnold's picture
Roger Arnold on Aug 18, 2021

Yes, I'm familiar with that study by Robert Howarth and Mark Z. Jacobson. And with the extensive reporting it has been receiving. It would be unprofessional to call it "utter garbage", so I'll just say that it's deeply flawed. I'll be posting a detailed dissection in the near future.

Edward Reid, Jr.'s picture
Edward Reid, Jr. on Aug 13, 2021

Fossil fuels are required to fabricate and install the millions of solar panels, wind turbines and storage batteries which would be necessary to replace them. Fossil fuels cannot be left in the ground before the replacement renewable energy sources and storage systems are installed and operational. The fossil fuels must be consumed in the US to satisfy President Biden's promise of high paying union jobs in the renewables transition. Leakage of CO2 emissions to China, India and other developing nations accomplishes nothing positive for the earth's single, global atmosphere.

 

Paul Hobcraft's picture
Paul Hobcraft on Aug 14, 2021

Thanks Edward, all good valid points. How to crack the iron and steel requirements of high energy intensity

We are caught always in chasing our own tail it seems to me

How to electrify far more

Earths single global atmosphere- yes leakage or simply plain old simple emissions.

Where to start? Methane leakage, carbon emissions from heavy industry and oil and gas producing, really go in hard on financial penalties. I just wish I believed in carbon capture more

Jim Stack's picture
Jim Stack on Aug 19, 2021

I am sure renewable energy can meet all the energy needs. 

Edward Reid, Jr.'s picture
Edward Reid, Jr. on Aug 20, 2021

...but a lot of fossil energy would ave to be consumed in the process of constructing and installing the necessary renewable energy infrastructure, which currently does not exist.

Matt Chester's picture
Matt Chester on Aug 20, 2021

The same can (and should) be said of fossil fuel generating stations as well-- so as we look to find new ways to meet rising demand (after doing necessary work on efficiency, T&D, load management, and other 'non-energy' improvements), new generation will inevitably have to be built and there will of course be embedded carbon. That needs to be factored into any lifetime carbon footprint analysis-- renewable included-- but the generators that then go on to burn fuels rather than non-carbon sources (solar, wind, nuclear, geothermal) will have a steeper hill to climb towards justification. 

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