Future of oil and gas companies — Areas of Extreme Profit and Loss
In terms of the Deloitte Digital Maturity Index, Oil and Gas companies remain behind all other sectors, in terms of growth and innovation. Meaning that the sector needs to adopt significant measures to ramp up its profit. Now, this might be factually correct but it doesn’t predict the future of oil and gas companies. Recently, there has been a multitude of events that dramatically influence the sector and proposed a whole different picture of the same, in the next twenty years or so.
Counting on the same, we saw a young climate activist being internationally recognized for her efforts to save humanity from the disastrous climatic crisis. Thousands of environmental protesters hit the streets, clogged the roadway, spreading awareness about the uncomfy climatic events taking place recently, enunciating the sheer need to prevent them. Such events, though meant for the betterment of the world, turns detrimental when we put the oil and gas industry, under the lens.
The concept of a circular economy, one where people would continue using the resources while actively taking steps to reduce waste, affects the line of actions undertaken by the energy industry. Where the optimal usage of resources capitalizes on the energy industry, the need to restrict emissions mandates them to restructure their workforce. Either way, the industry has a lot to lose and gain.
It isn’t that the wave of circular economy has affected only the energy sector. Instead, it has spread across all business verticals. Firms such as Caterpillar, a re-manufacturing company and Walmart have actively adopted the aspects of circular economy and re-modeled their programs to map the circular economy directives.
The energy sector needs to follow an approach, similar to the one undertaken by the aforementioned firms. Recycling their machinery as used exploration to extraction, product generation, supply chain, and end-user usage, adopting methods to fine-tune their business strategies in terms of the circular economy prospects would help them reduce waste in the most reliable way, adding to the efficiency and sustainability of the industry.
How Does Circular Economy Affect Energy Industry?
With 43% of polymer production eliminated by 2040, it is important that the energy sector reinvigorate their undertakings to foster growth and implant productivity. There are many issues prevailing across the globe which both benefit and dismantle the sector at the same time. To make the most, oil and gas companies need to find their way out. Of all the challenges faced by the sector, the top three accounts for:
- Rising Waste Consciousness
Before we delve deeper into the idea of waste consciousness, let’s have a look at the survey conducted by Accenture, recently.
A total of 6000 users from across 11 different nations were considered and surveyed on what they think about waste consciousness. Surprisingly, 56% of them reckoned that packaging when sent to the landfill, harms the environment, and has a deteriorating effect.
Now, even after knowing that packaging done with plastic is better and less harmful, as compared to the non-plastic one, only 42% use the former. Additionally, the ban imposed by China on waste import has lead to the creation of an ecosystem where nations need to deal with their waste, storing them in their domestic landfills. Ocean plastic is a mother vital issue faced by the world today. The problem is serious and snowballing.
- Industrial Recalibration
Organizations place consumer satisfaction on top and to achieve the same, they embed extreme personalization of speed, products, minimizing material usage, localizing the supply chains and re-use of the materials. All of this in a way promotes the recalibration of the industry. Significant emerging technologies such as design regeneration and 3D printing that facilitate the effective usage of materials influence the move.
Apparently, industries are seen to save huge amounts with the inception of the recalibration method. There has been an array of organizations that took to industrial recalibration. Not to mention the fact that Industrial recalibration has a dramatic impact on the deglobalization of trade, bring about a reduction in the overall cost of supply chain and the usage of energy which ultimately accounts for closing the waste loop.
- Transition of Energy
Petrochemical happens to be one of the rapidly growing sectors in terms of demand, these days. It has been seen that there occurred a dramatic upsurge in their demands, as 1.3% more than the growth rate of the world’s GDP and around 1.8 times higher than the demand for any primary energy. Evidently, the firms need to take up this opportunity and meet the ever-growing demands, benefiting from the same. However, due to significant bans imposed, the growth of chemical largely suffers.
A research done by Accenture suggests that growth in demands might also lead to a loss equivalent to the conventional capacity of ~795 on the world scale of the polymer plants, which would be done by the processing of the recycling in a mechanical way. The practice of chemical recycling, proven to convert the wastage plastics into the feedstocks, is expected to undertake a higher share while utilizing and also feeding the emerging technology of conventional polymer. Either way, the demand for hydrocarbons is doomed to reduce.
Oil and Gas Sector — What Can Be Done?
In the wake of the events mentioned above, the oil and gas sector has huge potential for growth. A reduction in the demand for petrochemical would likely be around 2% and likewise, there occurs a significant increase in the demand for oil and gas by 0.5% each year. Even though the demand for petrochemicals remains the highest, if worked upon effectively, the oil and gas, sector can also witness greater demands which would ultimately account for higher productivity.
In a nutshell, there is a lot to be done. Amidst the plethora of events, of which some that benefit the industry & some have an adverse impact, it is the responsibility of the industrial leaders to adopt measures that adhere to the need of circular economy while gauging the benefits of the same.