Oil and gas companies put their own survival at risk if they fail to adapt to providing clean-energy solutions to the world, the International Energy Agency said in a report Monday.
Source: Houston Chronicle
The Paris-based IEA said the largest oil and gas companies spend less than 1 percent of their total capital dollars on renewable energy and clean-energy projects. That trend must change quickly, the agency said in its new report on energy transitions.
“No energy company will be unaffected by clean energy transitions,” said Fatih Birol, IEA executive director. “Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.”
The biggest and easiest adjustment that oil and gas firms can make is cut down on their methane emissions, which is a big problem in areas such as West Texas’ booming Permian Basin. Methane, the primary component of natural gas, is a potent greenhouse gas that’s often released into the atmosphere – intentionally or not – while producing the more valuable crude oil from wells.
“Around 15 percent of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers,” Birol said. “A large part of these emissions can be brought down relatively quickly and easily.”
Reducing methane leaks is the single most important and cost-efficient way for energy companies to reduce emissions, the report said.
The oil and gas industry also has the technical know-how to advance renewable energy worldwide, especially when it comes to areas like offshore wind where energy firms have to most experience operating in deeper waters. Norway-based Equinor, a major oil and gas firm, for instance has become a leader in offshore wind development.
Energy companies also must invest much more in cleaner fuels, such as hydrogen, advanced biofuels and biomethane. Within 10 years, alternative fuel spending must account for at least 15 percent of total investments in the fuel supply to help combat the growing threat of climate change, the report said.
Apart from the biggest U.S. energy firms such as Exxon Mobil and Chevron, national oil companies like Saudi Aramco and others play critical roles in the energy transition as well, the report noted.
“The scale of the climate challenge requires a broad coalition encompassing governments, investors, companies and everyone else who is genuinely committed to reducing emissions,” Birol added. “That effort requires the oil and gas industry to be firmly and fully on board.”
