Digital Energy Journal- BP, Equinor on technologies which drive energy transition

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BP, Equinor on technologies which drive energy transition

Monday, February 7, 2022

DNV held a panel to discuss which technologies can drive the energy transition with senior speakers from BP, Equinor, JP Morgan and Corvus Energy.

For the energy transition, companies should work with technologies which exist now, rather than wait for new ones to be invented, said David Eyton, EVP innovation and engineering with BP.

He was speaking at an online forum organised by DNV on Sept 1, together with the launch of its Energy Transition Outlook 2021 report.

'The IPCC's 6th Assessment Report shows we really cannot wait for game changing technologies to address climate change. Waiting for game changing technologies effectively means game over for the world.'

'IEA says 45 per cent of [energy transition technologies] aren't commercial yet, but by investing we can drive the cost down.'

'What would be game changing is to scale up. We already have renewable power - wind and solar. We already have electrification of transport. I'm confident battery technologies will continue to improve, and perhaps help with the intermittency of the renewable power system.

In BP we are scaling up low energy hydrocarbon production. We're investing particularly in digital technologies - these have enormous capacity to optimise energy systems.'

Digital technology can be considered 'the unsung hero,' he said.

'We have a corporate venture capital arm to compliment internal R&D. We established a new capability in BP - Innovation and Engineering, which combines science, engineering, digital and new business models.'

Hydrogen

'It is clear that in 'hard to abate' sectors, where electrification is difficult, we need sustainably sourced hydrogen and biofuels,' he said.

BP plans to build the world's largest hydrogen plant. 'Our optimism is shaped by nations' commitments to net zero. BP has made a similar commitment. We can't see how this can be achieved in 'hard to abate' sectors without hydrogen.'

'The stars are beginning to align; national policy is a clear driver of this.'

In BP's scenario forecasts for the future, it anticipates hydrogen in 2050 could be between 1 and 10 per cent of the total energy system. 1 per cent in its 'business as usual' scenario, 4 per cent in its 'rapid change' scenario and 10 per cent in its 'net zero' scenario.

Even 5 per cent would give it a bigger share of energy than nuclear power has today, he said.

Mr Eyton was asked about what cost advantage blue (fossil based) hydrogen will have over green (renewables based), bearing in mind DNV's forecast that only 18 per cent of hydrogen in 2050 will be blue.

'Hydrogen is very expensive to transport, the solutions at least for decades are likely to be local,' Mr Eyton replied.

'In some places blue hydrogen will be cost effective. In some places green hydrogen is more cost effective than blue, because they don't have reservoirs.'

'We do see potential for green costs to come down as electrolysers, fuel cells [reduce in price]. But blue hydrogen starts off in places where it works with an advantage today. Our own scenarios up to 2050 see a 50:50 balance between the two of them.'

Equinor

Equinor's energy transition initiatives have three legs, to optimise oil and gas production, to accelerate renewables, and to work hard on low carbon solutions, said Arne Sigve Nylund, EVP, Projects, Drilling & Procurement, Equinor.

'We will use our competence [developed over] decades to do this.'

In terms of being carbon efficient with its existing operations, Equinor 'has a very good starting point,' he said. It is working on projects to provide electrical power to offshore platforms, generated from hydro-electric plants onshore, and floating wind farms offshore.

'When it comes to oil and gas, we need to be profitable in a volatile market,' he said. 'We need the cashflow to finance the transition going forward.'

Mr Nylund was asked how CCS deployment could be improved. 'If we look at the Emission Trading Scheme carbon price in the EU, it is 55 Eur / tonne, which also makes this a very interesting proposition,' he said.

JP Morgan

Decarbonisation 'will be an incremental process of going through a series of different pathways,' said Andrian Dacy, Global Head of Transportation, and a former head of shipping, with bank JP Morgan.

For shipping, these pathways can include weather routing, hull designs and other means of reducing drag, and new fuels.

For fuel, 'there's some incremental / immediate options which are available, LNG being one of them. [Also] methanol - which Maersk was in the press with recently.'

'The holy grail [for shipping] is ammonia and then hydrogen. That will require significant retrofits of ship design. Hydrogen takes up a lot more space, containment systems will have to be improved.'

'People are making steps. We should certainly take some satisfaction from the steps being made.'

On the question of the need for carbon prices, he said 'it is probably going to require a stick more than a carrot. People often don't make a decision with millions and billions of dollars without being motivated to do so.'

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