We hope that you enjoyed Day 1 of this year’s UTC. We had more than 800 participants today and we look forward to seeing you all again tomorrow, when we will have another sterling set of speakers for you. They will go into more depth on our conference theme, UTC – proud enabler for a low-carbon future, both through our keynote sessions as well as our parallel technical sessions. You have something to look forward to on Day 2!
Meanwhile, here is it a bit of a recap of some of the themes we have heard about today. Don’t worry, if you missed any sessions, you can still watch them on-demand for another 20 days.
The Norwegian Continental Shelf in the Energy Transition
Activity on the Norwegian Continental Shelf (NCS) is going to be high in the next few years, but how will the longer-term future look at global targets towards climate change ramp up?
These were some of the key themes that we touched on in this year’s UTC Day 1 Plenary session. We heard from operators like Lundin, which sees a future for NCS production out to at least 2070 and is aiming to be carbon neutral by 2025, through to the International Energy Agency (IEA), whose Net Zero 2050 scenario has sparked debate about halting future exploration and license rounds.
“Providing energy to a growing global population without increasing emissions is the equation we need to solve,” Norway’s Minister of Petroleum and Energy Tina Bru told UTC. In the short-term, the Norwegian industry has been given a shot in the arm and expects higher activity over the next few years, thanks to a support package from the government in June last year, in response to the crisis caused by the Covid pandemic. But further ahead is harder to see, she said, while a monumental need for growth in lower carbon energies is also needed.
Change is coming. Jarand Rystad, CEO at Rystad, said there have been shocks in the energy market and that all previous models and scenarios need to be rejected. Solar and batteries have hugely dropped in cost, electric cars are offering higher performance and lower cost than traditional cars, and governments globally have set net zero by 2050 climate targets covering 70% of global emissions. “We have to make a completely new model of the energy model going forward,” he says.
Tim Gould, Head of Division, Energy Supply and Investment Outlooks, IEA, said there’s a lot of rhetoric about climate change, but that clean energy is not yet being put at the heart of energy strategies. “The global data doesn’t yet match the rhetoric,” he said.
Kristin Færøvik, Managing Director at Lundin Energy Norway AS, also said that oil and gas will still be needed for some time and so continuing investment in the NCS is still important. Johan Sverdrup is expected to produce until 2070, but following Phase 2, NCS production is expected to decline. To slow that decline in production, investment is needed to maintain current resources and find more.
Drill or drop for a net zero 2050?
The International Energy Agency’s Net Zero by 2050 analysis sparked a strong debate in the panel debate. For some, it pointed to a need to stop future exploration for oil and gas. It’s a question climate activist Marius Holm, Managing Director of ZERO and the session’s moderator, put to Norwegian Minister of Petroleum and Energy Tina Bru.
She said that current policy is to maintain activity on the NCS, but also that there is a need for monumental growth in renewables. “It’s going to be the market that decides when we’re going to stop activity on the NCS,” she said, whilst also reducing emissions by 50% by 2030.
Tim Gould said that the IEA Net Zero by 2050 analysis is a scenario – one of many – and it was sparked by a “proliferation” of pledges by governments to reach net zero by 2050, which effectively covers about 70% of global emissions. “But these commitments are not enough to get there and they’re not backed up by domestic legislation or policies that would deliver them on time,” he said.
Jarand Rystad questioned the Net Zero by 2050 analysis, including an assumption that oil consumption could fall to 71 mmb/d by 2030. “Even if massive behavioral changes around transportation and also consumer goods” this was something “we cannot get to add up”, he said.
A race to the lowest emission barrel?
Whatever the scenario, companies are both investing in clean energies, up from 1% of their share to 4.5%, says Tim Gould, as well as positioning themselves to bring the lowest emission barrels to market. Market competition, certification and provenance of those barrels will help, says Arne Sigve Nylund, EVP for Technology, Projects and Drilling at Equinor, and Lundin Energy Norway’s Managing Director Kristin Færøvik.
Nylund says that by 2030 Equinor aims to have carbon neutral operations, largely by using electrification and energy efficiency. Several fields are already electrified, such as Johan Sverdrup, Troll A, and soon also Martin Linge. “That’s also why we suggest electric for Wisting in the Barents Sea.”
Lundin Energy Norway has an aim to be carbon neutral by 2025. “We will remove emissions activities wherever possible and for the remaining emissions we will compensate by natural carbon capture,” says Færøvik. “The electrification of Johan Sverdrup and Edvard Grieg were important steps.” In addition, the company is starting to certify its oil as carbon neutral – it claimed the first carbon neutral certified (Scope 1 and 2) cargo of oil earlier this year. But Færøvik wants the market to go further. “We hope the market will develop where the provenance of every barrel is accounted for,” she says.
Internationally, Equinor and its partners are looking to use combined cycle gas turbines at Bacalhau in Brazil, to increase efficiency and lower emissions there. This will result in less than 9 kgs of CO2/barrel, he says – close to half the global average. Equinor is also investing in CCS, floating offshore wind and solar, including floating solar. “We aim to grow and lead in the renewable space,” he says. “But it needs to be profitable.”
