Some 64% of industry leaders braced for the energy transition

Nearly two-thirds – or 64%  – of leaders in the oil and gas sector expect to increase or sustain spending on gas projects in 2018, as the sector prepares for gas to overtake oil as the world’s primary energy source in the mid-2030s, according to a new survey from DNV GL.

In the next decade, the vast majority (86%) of the 813 senior industry professionals surveyed agree that gas will play an increasingly important role in the global energy mix, up from 77% last year.

The findings appear in Transition in motion, a special report from DNV GL’s research on the outlook for the oil and gas industry in 2018. It highlights that the global energy transition will be the primary driver for investment in natural gas and LNG projects this year.

However, the report adds that the pace of the oil and gas industry’s intentions to lower carbon emissions differs by region. A third of survey respondents in North America (33%) say that their company is actively preparing for the shift to a lower carbon energy mix this year, compared to more than half (51%) in Middle East and North Africa.

Gas is well on course to becoming the largest single source of energy, with demand set to peak in the mid-2030s, well after the use of each of the other fossil fuels has gone into long-term decline, according to DNV GL’s 2017 Energy transition outlook. The model used in the report predicts the industry’s intentions for increasing gas investments will accelerate in the early-2020s as major oil companies decarbonise their business portfolios.

Power generation is predicted to be the primary consumer of gas in most regions, although manufacturing could demand similar volumes in emerging markets, the Transition Outlook highlights. It also suggests that North East Eurasia and the Middle East and North Africa will increase gas output towards 2040 at least, overtaking North America as the world’s largest gas producer. Production is also forecast to double in China, the Indian Subcontinent and South East Asia.

Commenting on the overall findings, Liv Hovem, CEO of DNV GL – Oil and Gas, says: ‘Society’s transition to a less carbon-intensive energy mix is already a reality, and oil and gas will continue to be crucial components. Our research affirms that the industry is already taking positive steps to secure the important role we forecast gas to play in helping to meet future, lower-carbon energy requirements.’

‘Significant investment will be needed in the gas industry over the coming decades to increase capacity, transform assets to source and transport a decarbonised mix of energies, and to safely build and maintain the infrastructure needed to connect emerging supply regions with evolving demand centres,’ Hovem adds.

Other key findings from the report include:

●     Nearly a quarter (24%) believe that onshore pipeline projects currently in development are adaptable enough to cope with potential long-term changes in the gas mix, such as greater variety of calorific values, hydrogen and biogas. Some 13% disagree.

●     A total of 72% believe that, as traditional coal energy generation becomes obsolete over the coming decades, the long-term attractiveness of gas will significantly improve.

●     The number of respondents stating that traditional oil and gas prices will decouple in the long-term has increased from 45% in 2017 to 55% this year.

Figure 1: Top five drivers for investment in natural gas and/or LNG in 2018
Source: DNV GL