How to own the transition to a lower carbon future

What is the strategy to grow New Energy Services? 

Our purpose at Petrofac is to “enable our clients to meet the world’s evolving energy needs”. That single statement neatly sums up the importance of new energy to Petrofac and reflects our strategy for growth.  

We are taking a client-centric approach, which means we are helping clients to navigate the energy transition, including the decarbonisation of their existing assets and the repurposing of their existing infrastructure, as well as the pursuit of entirely new opportunities. 

So, yes, we are committed to a net-zero carbon future. But we see the traditional energy industry as part of the solution, not part of the problem. And we believe that, given its location, its geology, its entrepreneurialism, and its existing skill set, the Middle East ought to be a big beneficiary of the global energy transition. 

What new energies are you focussing on? 

Drawing on our traditional strengths and specialisms, we are focussing on five main areas. 

First, carbon capture, utilisation and storage (CCUS), where are using our expertise in gas processing, transport and storage to safely and economically capture and store carbon. 

Second, hydrogen, where we are redirecting our wind, solar and gas capabilities to design and build green hydrogen projects, and our hydrocarbons experience to deliver other large-scale blue hydrogen solutions. 

Third, offshore wind, where we are building on a decade’s experience in designing and building HVAC and HVDC electrical substations and deploying our operations experience to extend our support to the sector. 

Fourth, waste-to-value, where we are using our downstream credentials to transform waste feedstocks into valuable products, such as sustainable land transport and aviation fuels. 

And finally, emissions reduction, where we are drawing on a 40-year track record in designing and operating oil and gas assets to reduce the carbon intensity of existing operations through, for example, electrification, flare reduction, and improving operational efficiency. 

What opportunities does Petrofac see in the energy transition sector? 

In the past couple of years, the number of new energy projects we are working on has turned from a trickle into a steady stream. Recent wins include front-end engineering for Australia’s largest commercial-scale green hydrogen project, an innovative UK-based carbon capture and storage project, and one of the largest windfarms in the North Sea. And the bidding pipeline is awash with similar opportunities. 

Of course, it’s still early days for the energy transition. And this has a big impact on client needs, what they want from a company like Petrofac, and the type of opportunities we see.   

For example, many clients are looking to create first-of-a-kind projects, or to scale-up pilot schemes. And this means they want a true partner, who can help them achieve project sign-offs, secure final investment decisions, select the most appropriate technologies, mitigate technical and execution risks, and achieve certainty of cost and schedule. 

It’s about helping them to unlock complex projects. This is an area where Petrofac has always been strong, aligning our goals and incentives with client goals and needs. 

How will EPC firms contribute towards a lower-carbon future? 

The transition will require the energy industry to enhance its existing energy infrastructure, as well as devising, developing and operating an entirely new generation of assets. This spells opportunity for those EPC firms with the right skills and mindsets.  

There is also an opportunity for firms to be role models and get their own houses in order. At Petrofac, for example, we have a strident sustainability strategy, have committed to reach net-zero by 2030 and signed an MoU with Storegga, as a customer of its proposed UK-based large scale Direct Air Capture (DAC) facility. We are also actively supporting our supply chain partners in pursuing their own reduction targets.  

At the same time, let’s remember that, irrespective of how quickly the transition happens, hydrocarbons will remain part of an integrated energy mix for some years to come. This will require continuing EPC investments to meet this demand, if only to offset a natural decline in existing production, and to decommission those assets that are no longer viable. 

I can’t talk for other EPC firms but, at Petrofac, we see the energy transition as a strategic opportunity. We not only have a role to play but have the inherent skills to help the industry transition to a lower-carbon future. 

How can an oil & gas industry own its transition to net-zero emissions? 

Again, oil and gas is not going to disappear anytime soon. But the way the sector operates is quickly – and rightly – evolving. And, given the tone being set by governments across the Middle East, I firmly believe that the region and its energy industry can take a leadership role in the energy transition. 

If we adopt the right mindset, we have every reason to believe in a bright future – one that presents significant opportunity to all energy companies and can enable the region build on its status as the clear leader of the global energy sector. 

What markets have the biggest potential for NES? 

The market potential varies by region. 

In the UKCS, for example, offshore wind has raced ahead, and there is a burgeoning opportunity for CCUS. 

Here in the Middle East, the climate lends itself to concentrated solar, especially for energy intensive applications like seawater desalination. Similarly, the region is perfectly positioned to produce green hydrogen (whereby, using solar or wind energy, hydrogen gas is extracted from seawater). This hydrogen can then be used as a clean fuel for heating industrial complexes or adding to conventional gas networks. It can also be converted to ammonia for use in shipping which, in turn, would help to decarbonise that sector. And it could be a way to channel excess renewable power – for use when the sun isn’t shining or the wind isn’t blowing. 

CCUS is an opportunity here also. The region has several existing reservoirs, for example in Abu Dhabi, which are ideally suited for using CO2 in enhanced oil recovery, or even for storage. In the short-to-medium term, these technologies could allow the oil and gas industry to extend field and infrastructure life. And, eventually, the region could become a vast CO2 sink, where the world’s greenhouse gasses are imported for safe underground storage. 

Another option is Direct Air Capture with Carbon Storage (DACCS). An immediate application could come in a country like Saudi Arabia, where oil production already benefits from very low levels of CO2 intensity. By using DACCS, it could be possible to completely decarbonise this production or to abate the emissions of industries where the challenge of capturing emissions at source (such as Aviation) is otherwise impossible or uneconomic. 

Finally, there is the potential to investigate the potential for wate-to-value technologies. Instead of being sent to landfill, urban waste and used cooking oil can be chemically processed to produce sustainable diesel, jet or marine fuels helping these hard-to-decarbonise sectors to get their CO2 footprint down.  

Of course, all of this is easier said than done. As an industry, we can’t pretend we are able to do it all on our own. We need to forge new partnerships, for example with utility companies and private developers, work with new technologies, and partner with investors to raise the billions of necessary dollars and develop new economic models. 

However, when you get changes of this scale, you also get commensurate business opportunities, and I believe the region’s energy sector is in pole position to benefit from them.