SLB Digital Forum: Oxy’s Hollub says industry well-positioned to lead energy transition

Kurt Abraham, Editor-in-Chief, World Oil September 26, 2022

(WO) — One of the more interesting and thoughtful panel sessions last week at Schlumberger’s Digital Forum in Luzern, Switzerland, was focused on the Energy Transition. The discussion of what should be done and how to do it, along with who should lead the way, was far-ranging.

Occidental Petroleum President and CEO Vicki Hollub

Panelists included Occidental Petroleum President and CEO Vicki Hollub, OGCI Climate Investments CEO, Dr. Pratima Rangarajan, and Schlumberger’s Chief Strategy and Sustainability Officer, Dr. Katharina Beumelberg.

Role of industry in the transition. Asked what the role of the oil and gas industry should be in driving the Energy Transition, Oxy’s Hollub had some definite, clear thoughts. “I would say that our industry is uniquely positioned to be the leader in the energy transition,” declared Hollub. “The reality is that we can't have a transition without oil and gas, and sometimes we like to say that it's really an addition. It's an addition of additional ways to provide energy. But oil and gas will be with us for a very, very long time.”

The Oxy CEO further explained that CCUS is another reason for the the industry to lead the transition. “We're the industry that handles the most gas for the industry, that handles the most CO2 and we're the industry that can actually drill the wells to get the CO2 underground to be either sequester it or use it in oil and gas reservoirs. So I think that we are part of the solution. The other part of it is we're an industry that has always been able to innovate our way out of problems. And I do believe that the next five or ten years there's going to be such an increase in the level of innovation in our industry, I think, its going to surpass anything that we've seen before.

Use of CO2. Asked by the panel’s moderator how she should explain the concept of net zero oil to her climate-aware daughter, Hollub provided an excellent, if lengthy argument/explanation. “This is a concept that if the world does not get [it], then there will not be a just Energy Transition, because we won't be able to afford [it]. So, the concept is, and the way it works, imagine that you have a granite countertop and you're in your kitchen, and your husband spills red wine. It goes onto the countertop, and if it's not sealed, every line of wine is going to stain and it's going to stay there. And these are very tiny marble pores. That's exactly the way CO2 sequestration works in a reservoir. So, instead of putting what we view to be a commodity—CO2—into a saline reservoir, where you never get any additional benefit from it, we should put CO2 into every oil reservoir in the world that we can get it into. Because, if you do that, what it does is produce incremental oil that comes from residual oil that's left in the ground that you cannot get by natural means or by pumping water through.

“In conventional reservoirs,” continued Hollub, “usually you only get 15% to 20% of the oil underground, and in shale reservoirs it's only 10%. So, we're leaving anywhere from from 70 or 80 or 90% of the oil in the ground. If we inject CO2 into that reservoir, in those small micro pores where the oil molecules are that can’t be moved by water, the CO2 will become immiscible. And for those oil molecules, it makes each molecule bigger and makes it less viscous and pops it out of that little micro pore. Then, CO2 goes into that micro pore. So that's how you get incremental oil with CO2—oil is then pushed to a producing well and produced. It's net zero or net negative oil, because it takes more CO2 injected into the reservoir than what the barrels produced from that injection will emit when used. If the world gets that, then what that means is that every oil reservoir that that can be, needs to be produced with CO2 enhanced oil recovery. The last barrel of oil produced in the world should come from CO2 enhanced oil recovery.” 

SLB Digital Forum Day One, second panel (Hollub, Rangarajan and Beumelberg)

From the investment viewpoint. Meanwhile, the moderator asked OGCI’s Rangarajan from more of an investment angle, how she assesses the industry’s ability to drive the Energy Transition.  “If you if you think about human development in energy, it's an almost linear progression for the early stages of energy,” said Rangarajan. “It's only in the West, where we have enough energy that it plateaus off, and we use more than our fair share. So, for the rest of the world, it's absolutely critical. This transition is everybody's transition. This is not just the energy industry. And frankly, the message we should be sharing is that everyone should be participating and making sure this industry takes a leadership position, not pushes us out.

Rangarajan said the second fact that was brought up earlier in the Forum, which she deems very important, is that the role of the different energy sources has not changed. “Oil and gas is still 40%,” she analyzed. “Coal is still 40%. Renewables still remain less than 10% of the energy mix, and it's only because we keep increasing our consumption and demand. If we actually want to move off this ratio, it's clear that we have to at least change the demand signals, which we did talk about. But I don't think it's credible to get to net zero without changing demand signals, however unpopular it is for those of us in the West.

The OGCI executive then mentioned a third factor, which has to do with other sectors of the global economy. “The other sectors are downstream of the energy sectors,” offered Rangarajan. “And they need energy to produce, whether it's cement, iron, steel or any of the above. But keep in mind that if we do this, for steel or cement—between them responsible for 15% of carbon dioxide emissions, equivalent—only half of their emissions come from energy. The rest comes from the process. It's because we live in a carbon world. So, all of these industries, none of them have innovated as much as the energy industry has. So, I think it's imperative for this industry to take more of a leadership position, not just to lead the industry itself, but to lead the way for other sectors who haven't innovated as much.” 

Bringing it all together. The moderator referred to the “energy trilemma” of keeping energy affordable and sustainable, while also making it green and decarbonized, and, at the same time, ensuring that it’s reliable and secure. She asked Schlumberger’s Beumelberg how to do all of this simultaneously. “I must say I was very impressed how [Saudi Aramco President and CEO] Amin Nasser talked about it, because I think that was totally spot on and formed a path for the reliability and the affordability that we all want and that we all need for growth, for the development of our planet,” said Beumelberg. “Actually, we do need oil and gas, and we do need to make sure that we decarbonize it. And for this discussion, this decarbonization, we do need the relevant investment for the industry. And then on the other side, for driving the industry to be more sustainable, we actually, as you said, need the investment in invention, as well.”

Beumelberg acknowledged that the oil and gas industry has many assets at its disposal to satisfy the trilemma. “Plus, we do have a lot of experience, capabilities, and long-term knowledge that the industry has built up,” she said. “We can use that to really scale the kind of new energy system that is arriving next to the oil and gas industry, and that will help to decarbonize our energy supply, overall. And I think that's something where we really need to, as Vicki [Hollub] elaborated on, where we need to build on the subsurface know-how that we have, and on the enormous digital know-how. This will enable us to scale these technologies far faster globally, and it will drive the transition.”

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