As part of the Women’s Energy Council Celebrating Equal initiative we asked the members of our Global Female Influencer 275 list to answer the question – 2030: How is the energy industry different from 2020?
Below are the thoughts of Iman Hill, E&P Executive and Non-Executive Director
The Oil and Gas industry is characterised by the ability to adapt and evolve. 2020 is quite different to the previous decade and I expect the forthcoming decade to be one of accelerating change in which the industry will respond in the following key areas:
- New business models to address the imperative to reduce energy-related emissions in line with international climate targets.
- Smart and rapid deployment of technology to drive performance management, operational excellence and risk management.
- Shift in investment focus, ESG and availability of finance.
- Adapting to a new corporate landscape of ever-increasing consolidation.
- New ways of working.
1. Clean Energy Transitions – the embryonic business models and technologies of 2020 are mainstream in 2030
The industry faces the challenge of balancing short-term profits with its long-term license to operate. Demand for energy will continue to grow, particularly in the developing economies with big populations, but society demands energy services that simultaneously address emissions reduction. Companies have begun publicly stating net zero emissions targets, but public statements will need to be backed by solid implementable plans which will come at a substantial cost. Boards and Shareholders will have to hold CEOs and executive management teams to account, creating reward and remuneration structures that drive that accountability. 2030 will see those companies that have managed to; i) identify, capture and redeploy capital to attractive investment opportunities in the new energy markets and ii) grow, or buy in the new capabilities required to manage and maximise the return on those investments, flourish and capture the lion’s share of investment and financing. It is my guess that those companies will also be the ones who are able to attract new graduate and mid-career talent from a generation that is increasingly conscious about the environmental impact of what they engage in.
Smart coalitions and collaborative business models will also be the norm, whether those are pan industry, IOC/NOC or partnerships across traditional fossil fuel and low carbon energy providers.
Hydrogen, enabled by surplus renewable energy, will consolidate its position as a disruptor to fossil fuels for supply to energy intensive industries and, in time, even to smaller scale less energy intensive projects. Full-scale carbon capture and storage projects will finally be a reality. Research spend is focused on net zero and low emissions technologies.
we talk about this a lot, but in 2020 there are still companies that demonstrate, by their unwillingness to spend even small amounts in this area, that they really don’t believe in it. By 2030 it will be part of the DNA with the keyword being integration. The integration of wells and production technologies with information technology to drive all aspects of business. Digitalisation, Artificial Intelligence and ever more powerful computing will drive enhanced recovery from oil and gas reservoirs.
3. Investment and Financing
The environmental pressures already seen in 2020 intensify and seriously impact access to finance which will only be available at much higher hurdle rates and shorter payback periods, and only to those companies who are evidencing real commitment to ESG. Investment for exploration is a thing of the past, seriously dampening pure frontier exploration activity. Shareholders become more ‘activist’ in holding companies to account.
4. The Corporate Landscape
Consolidation of the industry continues in an attempt to cut costs that are already low and to leverage economies of scale. Oil and Gas companies with any scale have reinvented themselves as integrated energy providers, adding Power as part of their global offering, and fully integrating renewable energy as a balance against future decline of fossil fuels.
In 2020, those companies that have diversified to build businesses investing in the metals value chain of new energy (lithium, copper etc), as well as traditional upstream, can be counted on the fingers of one hand, it would make sense that this space is likely to see noticeable growth by 2030.
5. Different Ways of Working is the Norm
I didn’t want to mention Covid-19 as I’m sure we’re all saturated from reading and hearing about it, but there is a positive side effect! In this decade to 2030, we would hope that virtual meetings will replace at least 50% of travel reducing the global carbon footprint. Flexible working and working from home will no longer be viewed as career limiting choices. In embracing them, companies may even see a positive impact on the retention of that part of the population that remains to-date predominantly accountable for child rearing…women!