How oil & gas companies can make the best capital choices for a net-zero future

Natural gas, oil and even coal are still forecast to meet a significant proportion of the world’s primary energy demand for the next two decades and beyond. In that respect, making oil and gas production cleaner will be critical to limiting the global temperature increase.

While many oil & gas companies have declared their intention to become carbon neutral by 2050, the challenge is also managing the impact on financial results during the transition. Players must look to build optionality and agility to boost short-term profitability while reshaping their business model as they invest in long-term strategic success.
 

Harnessing technology to thrive

All forward-thinking oil and gas companies are looking for ways to harness technology.

For larger players, plans include investing in renewable energy sources, such as solar, wind, hydrogen and biofuels, diversifying into ancillary low-carbon businesses such as battery packs and grid-balancing technologies, and turning Scope 3 emissions into a business opportunity.

Many small and mid-sized companies, primarily independent oil & gas producers, which lack sufficient scale of operation or financing to invest in asset diversification, are focused on Scope 1 & 2 emissions reductions.
 

Preparing for the future with ongoing scenario planning

Ongoing scenario planning is a crucial tool for engaging with an uncertain future on a real-time basis, allowing you to fine-tune your model as driving forces change.

The future of energy will have many moving pieces: consumer behaviour, innovation, global relations and regulation, and action on climate change—to name only a few of the areas of uncertainty. For each of these uncertainties, the impact will play out differently across different scenarios.

For example, different technologies will enable different futures and will enable those futures faster or slower, depending on how quickly they are adopted.
 

92 driving forces shaping the future of energy

Deloitte’s Future of Energy Scenario Planning toolset identifies 92 high-impact driving forces that can shape the future of energy in predictable and unpredictable ways.

Working through the implications of these driving forces for your company – based on your business model, capabilities, and other factors – will help you understand the basis of competition, your role in the future, and enable you to make the right capital choices at the right time.

To learn more about our approach to creating advantage in the face of systemic uncertainty via scenario planning, please get in touch with me or download our report here.