Upstream Oil 'Must Become Leaner, Greener': DNV GL

The upstream oil and gas industry must find leaner and cleaner production techniques over the coming decades as it adapts to the unfolding energy transition, technical advisers, DNV GL, said October 24.

As renewables takes a larger share of the energy mix globally, fossil fuel production must become more socially conscious and cost-competitive, it said.

DNV GL sees oil demand peaking in 2023 and gas demand peaking in 2034. But decline rates mean that new oil fields will be needed until at least the 2040s, while new gas developments will be required beyond 2050. With fewer giants left to be found, DNV GL predicts that operators will favour production from a greater number of smaller reservoirs with shorter lifespans, lower break-even costs and reduced social impact compared to those currently in operation.

The head of DNV GL's oil and gas division, Liv Hovem, said: "Smaller reservoirs will likely be harder to explore and develop commercially. Digitally-enabled technologies such as directional drilling and steerable drill bits, 4D seismic backed by advanced data analytics and steam flooding, will be crucial to ensure that exploration and production is economic and efficient".

Existing technologies for decarbonisation, such as carbon capture and storage (CCS) will also need to be implemented at scale for the oil and gas sector to stay relevant in a rapidly decarbonising energy mix. It forecasts that CCS will capture only 1.5% of emissions related to energy and industrial processes in 2050.

DNV GL also expects global warming to be 2.6°C above pre-industrial levels in 2050, well above the 2°C target set out by the COP 21 Paris Agreement on climate change. By 2050, the  DNV GL predicts that 972 gigatons of carbon will be emitted, overshooting the 810 gigaton budget associated with the target.