What Does Energy Transition Actually Mean for the Oil & Gas Industry?

What does energy transition mean? What are we transitioning to? Why now? How long will it take? And how will we get there? The scope of this paper focuses on defining the different drivers and strategies that various entities in the oil and gas industry are utilizing to transform operations and business strategies – specifically segmented to the United States, United Kingdom, and Europe. To operators, the primary focus is to transform their business (influenced by regulations and legislative policies) by reducing their carbon emissions while also investing in cleaner energy sources, such as geothermal, renewables, and hydrogen. For service companies, aside from internal decarbonization, it is another potential revenue stream by offering products, equipment, and services to operators in the ‘energy transition sector’. For ‘developing’ countries, the primary focus is on the fundamental commitment for energy diversification (e.g., energy security) in order to achieve sustainable self-sufficient energy source/s that are less impacted by socio-economical or geo-political factors. In contrast, for ‘developed’ countries, it is net-zero goals and energy security. For example, agencies such as the Department of Energy, offering funding or incentivizing projects on decarbonization, clean energy initiatives, or supporting emerging technologies on renewable and alternative energy. In hindsight, the energy transition shift will have different outcomes to different parties. The main focus in this paper is to break down the ‘buzz word’ associated with energy transition as a popular concept, fettered by technology hype, political agendas, and/or financial influences that are inherently attached to the term ‘energy transition.’ Furthermore, the paper will explain the misconceptions and intricacies behind the strategies that companies, and government agencies are undertaking in this energy paradigm shift. Lastly, emphasis will be made on what is driving this paradigm shift: technology, policy, and cultural change. Further light will be shined on how the industry's previous institutional mindset has changed to a broad, open-minded desire to create a net-positive outcome using Environmental, Social, and Governance techniques.