Oil, gas and the ‘long transition’ to a low-carbon economy

Deutsche Welle
8 Min Read

Oil and gas industry representatives are gathering in Norway for the biennial ONS energy conference. Conference Committee Chair John Knight talks to DW about the role of oil and gas in a transitioning energy economy.
The Offshore Northern Seas (ONS) conference and exhibition, taking place in the Norwegian city of Stavanger from August 29 to September 1, is a platform for oil and gas industry representatives to discuss political, economic and technological issues affecting their business, as well as showcase the latest innovations in the sector.

DW talked to the head of the conference committee, John Knight.

Deutsche Welle: This is the first Offshore Northern Seas meeting since the landmark Paris Agreement. How has that climate protection deal affected the energy industry’s outlook?

John Knight: I think it has underlined for the oil and gas industry globally the seriousness of society and politicians about the need to transition at some speed to a low-carbon economy. That has led to a greater urgency in defining what the place of oil and gas is in that transition.

There have been new initiatives from many of the larger oil and gas companies in collaborative coalitions like the Oil and Gas Climate Initiative (OGCI). Several of those companies have come together and for the first time as a collective called for more effective carbon tax.

This added urgency for collaborative action, and a better explanation of the contribution of oil and gas companies to the transition, is the main accomplishment of Paris in terms of change of pace and approach in the oil and gas industry.

As the ONS Conference Committee Chair and EVP of Norwegian gas giant Statoil, what do you want to achieve at the ONS gathering? What are your main goals?

The largest part of ONS from my point of view is the exhibition of new offshore technologies – both for oil and gas, but also for new energy solutions and renewables.

Then there’s the conference, where the objective is to discuss the main components of the transition facing the industry, such as climate and sustainability. Other items we’ll discuss include how business models are changing to the new lower price environment in both oil and gas: new margins, and a new set of risks.

The third element of the transition that we’ll discuss is how leadership, mindsets and behaviors have to change to cope with this much more complex world that we’re now facing.

Then there’s also a leadership summit, and that will be shared with the Munich Security Conference. There, we’ll discuss global questions of energy security – both from the supply side and also the demand side. For example, the role of gas in the European fuel mix and the security issues connected to that.

Norway has profited considerably from oil in recent decades. Given that there is more emphasis on boosting green technologies nowadays, what does this mean for the industry?

Sometimes the discussion about this subject is painted in black and white: When is oil and gas going to be finished? And when will new energy solutions like renewables and new forms of storage become the dominant parameter? I don’t see it like that at all. This is a long transition, and even in a 2-degree [Celsius global] warming scenario, there is not only a place for gas production – it’s also very necessary that this is elongated. I think it’s about how we transition the energy mix over the next 50 years.

From the point of view of large oil and gas companies, some of us are choosing to begin now to invest in new energy solutions that are not hydrocarbon-linked. In our own case, we’ve been investing in offshore wind as a source of electricity generation, together with our sister company Statkraft.

Other companies, for example Total, give more prominence to solar. So I think you will see over the next decade increased investment by many oil and gas companies in renewable technologies and new energy solutions – but not to the exclusion of new investment in oil and gas. You’ll see the proportion of new energy solutions and oil and gas are gradually changing between now and 2030. But it’s not a black-and-white picture.

The ONS conference is being organized in conjunction with the Munich Security Conference, linking our energy supplies with global security. How do you see this partnership?

I think Munich wanted to do this in Norway with ONS partly because ONS is one of the biggest global conference and exhibition centers in the world. But mostly I think because Norway finds itself at the heart of many of these global security issues.

In a European context, one of the biggest energy security issues is the free flow of competitive gas to all parts of Europe. And with the disruptions we’ve seen in gas from some eastern quarters, as well as the international difficulties with Russia at the moment, the question of the security of supply of gas to Europe is a critical one. And Norway is one of the biggest suppliers of gas, so all the elements of that are perhaps at the heart of European energy security.

Norwegian business and Norwegian companies like ours have all invested internationally and we have all suffered from global insecurity. Our plants in Algeria in the Sahara have been attacked by terrorists twice, so the geopolitics and security issues of the Middle East affect all parts of the world and the business of Statoil and the oil industry generally. And so we think it’s fitting to discuss those issues in a Norwegian setting.

Access to energy is an important tool to increase living standards in developing and underdeveloped countries. How can we tackle conflicting challenges when we try to provide energy, fight poverty, and at the same time take care of our environment?

One of the greatest contributions that the oil and gas industry can make to reduce carbon emissions and improve air quality is to provide secure and affordable gas supplies to the electricity sector, to phase out coal.

Coal is a dirty fuel – not only because of its CO2 emissions, but also because of its particulate emissions, particularly in developing countries. So helping China and India and other such nations to wean themselves off the coal habit is perhaps the greatest contribution that the oil and gas industry can make in the near term.

John Knight is the chair of the 2016 ONS Conference Committee and executive vice president of global strategy and business development at Statoil, a Norwegian multinational oil and gas company.

Interview: Srinivas Mazumdaru

TAGGED: , , ,
Share This Article
Leave a comment