By Wal van Lierop and Jean-Michel Gires
Chrysalix EVC
Global demand for energy continues to soar. Powered by a rising global middle class and widespread economic development, the U.S. Energy Information Administration (EIA) predicts that global energy consumption will grow by more than 50 percent by 2040.
The global energy industry must seek new avenues to meet this growing demand. Nearly all of the easy-to-produce oil has already been recovered from developed oilfields. What remains requires advanced technology and large-scale investment to produce. While technology improvements in shale, deep offshore and heavy oil have expanded our resource access and recovery, much more improvement is needed to meet the scale of anticipated demand.
At the same time, governments around the globe are implementing regulations to reduce emissions and mitigate climate change. For example, EU mandates require expanded biofuels production and 20 percent emissions cuts at oil refineries by 2020, and California requires its fuel mix to reduce carbon intensity 10 percent by 2020.
The oil industry faces the challenge of meeting these mandates cost-effectively while serving growing demand. Without new technologies, regulations can increase the costs of producing petroleum products. The requirements for lower emissions create powerful catalysts for innovation and opportunity for technologies that can deliver greater efficiencies, economics and sustainability across markets.
In-house research and development departments have developed powerful, efficient and cost-effective technologies that are expanding our reach and energy security. However, these capabilities are being stressed by today’s rapid pace of change and continuous need for greater efficiencies and lower emissions. To tackle today’s energy challenges, oil and gas companies must expand their innovation funnel to include external partners that bring fresh thinking and perspective to these challenges. We see opportunity and profits to be made from the collaboration that results.
Several win-win solutions deployed in oilfields today have been born from this philosophy.
Consider thermal enhanced oil recovery (EOR), the leading method of extracting hard-to-produce heavy oil. Thermal EOR can boost well productivity by 300 percent, and as a result, oil companies spent more than $21 billion on EOR technology in 2012 alone. However, today’s leading method of EOR burns vast amounts of natural gas, generating extensive emissions.
Enter solar EOR.
This new technology uses the sun’s energy to power EOR, expanding production while reducing an oil field’s gas consumption and emissions by up to 80 percent. Solar EOR has already been proven in desert oilfields around the world, and has received financial backing from oil majors Shell and Chevron. In Oman, Petroleum Development Oman and solar EOR provider GlassPoint partnered to build the Middle East’s largest solar EOR facility. And in California’s Central Valley, two projects have been producing solar steam for years.
Carbon Capture and Reuse (CCR) is another example of how innovative technology can help oil and gas companies meet regulatory mandates while increasing production. For example, NRG Energy recently announced plans to build a $1 billion project in Fort Bend County, which would be the first of its kind.
Today’s energy landscape is increasingly complex, with changing regulatory and demand pressures that sometimes send conflicting messages. Yet necessity is the mother of invention, and these unique challenges present powerful motivation to the oil and gas industry to fundamentally shift its market approach. By seeking out innovation partnerships and focusing on breakthrough technologies, the oil and gas industry can seize this opportunity to thrive.
And if the opportunity is taken, it will make our future more innovative, more sustainable, and more exciting.
Wal van Lierop is CEO and co-founder of Chrysalix EVC, a venture investor in sustainable innovations for energy intensive industries. Jean-Michel Gires is a Venture Partner at Chrysalix EVC based in Calgary, and former Executive Vice President at Total.
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