Technology to boost energy supplies and provide path to lower carbon future

Advances in technology will keep energy supplies plentiful and affordable – enough to meet projected demand many times over – and help pave the way to a lower carbon energy mix, according to data published in the BP Technology Outlook.

‘Technology opens up a whole range of possibilities across the energy sector,’ said Bob Dudley, BP Group Chief Executive at the publication launch. ‘It can bring great value to consumers and businesses, and it can also disrupt and challenge existing models. Today, for the first time, we are sharing our analysis of energy technologies and the options they present society in the quest for an abundant, sustainable and lower carbon energy future.’

The 80-page study brings together previously internal BP analysis and the work of other noted business and academic experts, setting out technology and policy choices that governments and industry can make around energy resources, oil and gas supply, power generation, transport, and options for reducing carbon emissions.

In essence, the study finds that simply applying today’s best technologies to discover oil and gas resources could significantly increase ‘proved reserves’ from 2.9tn boe to 4.8tn boe – nearly double the 2.5tn barrels required to meet projected cumulative global demand through to 2050.

In the power sector, which currently accounts for 38% of world primary energy demand, gas and coal-fired power are generally the most competitive today. BP’s analysis predicts wind and solar will continue reducing costs at around 14% and 24% respectively, while doubling in installed capacity, consistent with past performance, and hence become more competitive over time.

In North America, and ignoring taxes and subsidies, modern combined-cycle gas turbine power plants would have a cost advantage over coal today if policymakers were to adopt a modest price on carbon dioxide (CO₂) of less than $40/t. By 2050 a CO₂ price of $80/t would make onshore wind technology competitive with gas-fired power, with utility scale solar photovoltaic close to being competitive, even accounting for the cost of managing intermittency. This price on carbon would also make carbon capture and sequestration (CCS) with gas-fired power economic.

Meanwhile, the transport sector is set to become more fuel efficient. The publication suggests that liquid fuels will continue to dominate global transportation through to 2035 and beyond, largely due to their high energy density. The average efficiency of new light-duty vehicles is expected to improve by between 2% and 3% per year as a result of increased hybridisation and improved powertrains, combined with advanced fuels and lubricants.

By 2050, electric vehicles could be approaching cost-parity with the internal combustion engine, due to advances in battery technology, while fuel cell vehicles could still have further to go.

Digital technologies such as advanced sensors, data analytics, robotics and automation, enabled by supercomputing, are forecast to ‘transform’ the energy system. These technologies have the ‘most widespread potential to drive change and make energy supply and consumption safer, more reliable, more efficient and more cost-effective,’ commented David Eyton, BP Group Head of Technology. ‘They are already transforming the oil and gas industry, and the longer term possibilities are frankly difficult to imagine.’

On the radar
Meanwhile, a new report from Lloyd’s Register Energy reveals that whilst the current business environment is creating opportunities for innovation, almost half of oil and gas executives surveyed admit they have fallen short of their innovation goals. The number of respondents saying they have fallen short has almost doubled as the oil price has gone down, with only 26% saying they had fallen short in spring 2014.

‘The oil and gas industry is undergoing a period of significant uncertainty,’ says John Wishart, Group Energy Director, Lloyd’s Register. ‘The oil price slowdown is clearly impacting investment in innovation initiatives. However, our report finds that contrary to perceived wisdom, innovation has a crucial role to play in the current environment, where it creates operational efficiencies and is cost-effective. To innovate properly and achieve business goals companies must address a number of common challenges, including collaborating more openly, using data more effectively and changing traditional mind-sets. Encouragingly, our findings show that overall the industry understands the need for innovation and has begun reaching out to other sectors to gain technological insight.’

In the opening part of Technology Radar 2015, the report considers the role for innovation in a changing landscape and concludes that the cyclical downturn should be a driver of innovation, not a barrier. Crucially for industry professionals, the report outlines three scenarios for how different oil prices may affect innovation, examining the types of innovation that will be prioritised in each scenario. The majority of oil and gas executives believe the oil price will sit between $50–$70/b in the next year, with the highest percentage (27%) believing it will hover around $70/b. This will in many cases hinder investment in innovation.

The report also looks at how executives are placing increasing emphasis on collaboration, both internally and outside of the industry, as they adapt technology from other sectors. Two-thirds of respondents say they are under pressure to collaborate with other organisations within the sector. When they do collaborate, upstream companies focus on the early stages of a project, and often around safety. The report reveals an overarching cultural shift is still required to fully integrate genuine collaboration in innovation.

Finally, in part three of the report, the role for data collection and analytics in driving innovation is assessed, finding that more advanced data collection and analytics are a ‘must have’ in the current low oil price environment. Lack of data and systems integration across different parts of the business are huge barriers to successful data collection and analytics, with silos the biggest cause of the issue.

Despite understandable pessimism due to the current landscape, Technology Radar 2015 shows that the downturn in the oil price is strengthening the need for innovation, not weakening it.

The BP Technology Outlook is available online at www.bp.com/technology

The Technology Radar 2015 report can be found at www.lr.org/technologyradar