Because of the Novel Coronavirus health crisis, the global economy is already undergoing a challenging situation. Steps taken by the government has resulted in a significant reduction in energy demands.
As the world recovers from the crisis and things are finally getting back to normal, the pressure to restore economic growth will be more than ever.
The oil and gas sector has particularly been impacted by the pandemic. A sharp change in the demand and supply curve of oil well pumps and other tubular pipes and casings has also been witnessed.
Compared with other industries, the oil and gas sector has lagged a bit in terms of technological innovation.
Here, it's important to understand that technological solutions do have massive potential when it comes to revamping and addressing the industry's challenges.
There is a wide range of gas and oil technologies, including power switching, renewable gas, distributed generation, and SSLNG that can successfully reduce 1/3rd of emissions from the gas and energy sector by 2040.
Innovation in the oil and gas sector can contribute to environmental benefits and human development. This is only possible if we give proper attention to these below-listed factors.
1. Government Policy
Technological development trends in the oil and gas sector indicate that significant opportunity still exists to improve the further operational efficiency and outcome of gas technologies, which also have a positive impact on capital deployment costs.
Investing in the right technologies could upscale the global market size by a whopping 2.5 times by the end of 2040.
Here, the role of government policy is inevitable as it can successfully promote gas adoption by focusing on R&D at an early stage.
Effective Government Policies for Facilitating Innovation in the Oil and Gas Sector
Research & Development
The Research & Development (R&D) support by the government is of the utmost importance when the development and deployment of capital-intensive technologies are involved.
For example, the US government funding back in the 1990s has contributed at a large scale in the development of the first CNG engines designed specifically for gas-driven vehicles.
The money used for research and development at that time has significantly improved the operational efficiency of devices that were dependent on natural gas combustion.
As a result, a noticeable decline in combustion-related emissions has been observed. It's also a government's responsibility to invest in solutions that promote low-carbon emissions.
Market-Based Measures
An extensive list of possible policy measures is already accessible to the policymakers so that they can encourage and promote clean technologies.
Effective measures need to be taken from the government's side to ensure a noticeable reduction in GHG emissions.
While plenty of work has already been done in this regard, there is still room for improvement. It's the government's responsibility to devise practical market-based solutions that can help maintain the fuel quality standards.
The formulation of effective government policy is also crucial in supporting the creation of new markets. The right policy can also assist in setting standards and exclude hurdles to adoption.
To cope with the present-day challenges, policymakers should consider creating complementary enabling policies that help set portfolio standards and low carbon fuel standards.
Incentives for Gas Switching Adoption
Past statistics suggest that although policy mechanisms are necessary, these are often inadequate for driving current technology adoption. Fuel switching in the space of construction, energy, and industrial sectors has proved to be effective. But again, solid strategies and policies are needed to attain the desired outcomes from these particular market segments.
2. Infrastructure Investment
For oil and gas technologies to achieve their optimum potential, extensive capital investment will be needed to facilitate infrastructure expansion.
Access to Gas
To benefit from fuel switching, the government should also pay attention to power generation and distribution infrastructure. Bunkering infrastructure should also be given due consideration.
The power generation sector particularly needs updated carbon pricing policies to warrant market-based investment in CCUS.
Developing Capacity for Zero-Carbon Gas
Investments in the space of renewable gas and advanced CCUS technologies will be needed to create new value chains for the supply of zero-carbon gas.
The needed investment in natural gas infrastructure should be adequate to meet the goal of achieving emission reductions in energy systems.
Targeted Infrastructure to Support New Technology Adoption
Targeted infrastructure support is another important element that can promote the adoption of new gas technologies.
This is particularly beneficial for the transport and construction sectors where consumers confront adoption barriers in the form of capital requirements.
To overcome the issues of incremental capital, measures such as low-interest financing and loans must be introduced to reduce the financial burden.
3. Industry Innovation
Last but not least, innovation in the natural gas sector can also help reduce the impact of carbon emissions in the oil and gas sector. For this, sustained R&D investment is crucial to help improve the efficiency and cost-effectiveness of gas technologies.
Modular Technology Applications
The governments must also find ways to develop and deploy smaller-scale modular technology applications that guarantee quick growth and better results.
India is one of the biggest examples where the development of a low-cost gas distribution model has resulted in fast gas access.
New Business Models
Companies and investors must also take steps to introduce new business deployment models. These new models should incorporate innovative market-based solutions to help consumers get access to the most precious natural resources without breaking their bank.
Conclusion
All in all, there are plenty of things the government and investors can do now to improve the operational efficiency of the oil and gas sector.
Apart from these basic things, one can also take help from robotics and automation, fleet management, cloud computing, and logistic evolution to overcome the challenges of this important yet often neglected sector.
What measures government and companies should take to cope with the challenges in the oil and gas industry after a pandemic?
Feel free to share your opinions in the comments section below. We’d love to hear back!
