Balancing Net-Zero and Energy Security: A Digitally-Enabled and Collaborative Journey

Balancing Net-Zero and Energy Security: A Digitally-Enabled and Collaborative Journey

December 12, 2023
Time to read: 8 minutes
Haavard Oestensen

Decarbonisation will undoubtedly necessitate strong multilateral cooperation. Information sharing across industry verticals, companies, and between stakeholders is not optional. Multilateral digital twin ecosystems, covering upstream through downstream and beyond, now offer significant opportunities to break down siloes through collaboration, information sharing and the necessary integrated understanding of especially scope 3 emissions to drive energy transition across the complete energy value chain. Ready to work together?

This article picks up on some of the engaging discussions that I had the privilege of participating in during the recent World Energy Capital Assembly in London (Nov. 2023). Special thanks to our CEO Shane McArdle for joining the event and sharing insights around crucial topics including the energy transition, the importance of industry collaboration, and the role of technology in reaching global net-zero goals.

Navigating the narrowing path to limit global warming to 1.5°C amidst growing energy security challenges is for sure an ambitious journey. To execute the necessary pathway, the energy industry must collectively establish an industry-level roadmap that promotes international stakeholder collaboration with dedicated decarbonisation efforts that operate independent of ongoing geopolitical influences.

It is easy to recognise the hard realities of climate change, especially how energy transition demands a rapid rate of adoption of carbon abatement solutions and a substantial increase in renewable energy production. Yet, as the world’s demand for energy grows, the continued production of oil and gas will remain vital. Clean and renewable energy advancements must therefore happen concurrently with responsible and sustainable development of oil and gas resources, and must be scaled to establish reliable and resilient energy systems.

Consider this: Fully inclusive global access to modern energy targeted by 2030 requires an annual investment of over USD 45 billion, as indicated by scenarios from the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA).

When trying to answer how to balance meeting the world’s increasing energy needs while (as recently noted by ExxonMobil CEO Darren Woods) “bending the curve on emissions”, an opportunity emerges: The intersection between digital transformation and expansive collaboration.

The power of collaborative digital transformation

Why is it so important for organisations across the energy value chain to collaborate and coordinate, and in what ways can digital technologies be leveraged?

  • Interoperability: Decarbonisation is a multilateral collaboration and integration exercise – no single technology provider, government entity or energy operator can achieve this alone. Technology can act as a cooperation vehicle that drives industry standardisation for improved interoperability. Emphasizing the importance of breaking down operational siloes, the focus is on creating shareable information across the value chain to ensure comprehensive and inclusive decision-making.
  • Impactful decarbonisation: Digital ecosystems represent a significant opportunity to understand the value chain impact, especially when it comes to supply chains and the potential for reducing scope 3 emissions in upstream and downstream. Shared data and orchestrated ways of working with large numbers of systems enable companies to achieve rapid, higher-quality decision-making for operations and business processes including emissions management and reduction.
  • On average, a company's supply chain emissions exceed its operational emissions by a factor of 11.4. The overlapping nature of supply chains requires a strategic industry effort to really impact emissions in scopes 1, 2 and 3 of the GHG (Greenhouse Gas) Protocol.
  • Inclusivity: Energy companies often work together in joint ventures and with host governments to ensure the safe, secure, and sustainable supply of energy needed for human prosperity. This collaborative spirit drives successful developments in new energy resources and carbon abatement including solar, wind, hydrogen, and CCS. Digitalization facilitates inclusivity, offering enhanced tools, data access, transparency, and decision-making support to manage the complexities of the energy system.
  • Innovation: Technology fosters collective visibility and interconnectivity, driving new problem-solving approaches within a digital ecosystem. It enhances remote collaboration, enabling synergies for decarbonization efforts across the energy value chain, irrespective of geographical location.

The good news is that all these requirements can be solved through the intentional application of digital technology and collaborative, motivated parties.

Decoding digital twin potential for decarbonisation

Few technologies are broad enough in scope to deal with complexities spanning across new and existing wells, facilities, pipelines, vessels, grid systems and intermittent energy sources – each, unfortunately, equipped with its own isolated systems, processes, and insular ways of working.

A digital twin can, especially when applied as part of a larger ecosystem of interconnected twins.

“The key success factor in decoding net-zero? Industry players who support an ecosystem of interconnected twins that form a collective source of truth – connecting not only data between systems and a digital twin interface but also exchanging real-time information for systems within and between organisations.” – Haavard Oestensen, Chief Commercial Officer & EVP, Kongsberg Digital

A digital twin is agnostic and able to ingest the various data sources of the facility, vessel, or equipment in question, and augments this data with sophisticated technologies to meet a broad range of business, operational, and environmental goals.

What will enable operators to successfully curb emissions without compromising energy security?

  • A digital twin with the ability to tap into vast datasets and analyse operational and environmental impact with new technologies like simulation, hybrid Machine Learning and Generative AI.

  • Tooling that leverages technology to make work more integrated, analytical, and interesting – so that workers can do more, have a greater impact, and tackle the immense challenges of the energy transition.

Once information can flow to the right place to be used by different teams, the data foundation is solidified. The next opportunities after data connections and real-time information flows? Real-time continuous monitoring, emissions tracking, and remediation options for faster, more informed decision-making.

The benefits that follow collaborative platforms are lucrative: operational siloes are broken down, cross-organisational collaboration can flourish and collective goals around shared emissions data and decarbonisation efforts are managed with a data-driven approach.

But you may of course have heard about this before – digitalising operating facilities for improved performance, digital transformation and decarbonization. What is next? Consider an integrated network of digital twins, where the twins are interoperable and exchange data, for example related to how products delivered from upstream to downstream impact downstream emissions; or, how facilities upstream must produce to achieve a delivery plan to be consumed into a midstream or downstream facility.

In a connected twin environment with interoperability standards, API availability, and data standards, a world where real-time emissions reduction amongst parties – aided by large language models, cross-facility supply-demand balancing algorithms, and optimization for energy reduction – become a matter of choices made by stakeholders rather than technological limitation. The point: Collaborative industry stakeholders who are serious about net zero ambitions can grab the opportunity to integrate with their value chain partners in this way. Ecosystems of digital twins may surface as a key enabler in optimising for emissions reduction at the industry level.

Reducing emissions through digital transformation for further investment unlocking

Does all this provide a compelling basis for exploring additional investment in an industry already struggling to attract significant inflows? Considering recent changes in energy security, an energy mix will remain essential throughout the transition to cleaner and more intermittent energy sources. Hydrocarbons will remain relevant due to existing infrastructure, economic considerations, and the challenges of completely replacing them with alternative resources.

What’s the medium-term outlook for oil?

The Oil 2023 report by the International Energy Agency (IEA) provides an analysis and forecast to 2028. Some key takeaways from the report:

  • A peak in oil is imminent, but continued demand for petrochemical feedstock and air travel means that oil consumption is forecasted to increase up until 2028.

  • Strong growth in oil demand amongst emerging economies, accompanied by the expansion of the global petrochemical industry and its hunger for oil, is projected to offset the decline seen in more advanced economies.

  • In line with projected demand for the next 5 years, a net additional production capacity of 5.9 mb/d will be brought online by 2028.

A study by the Climate Policy Initiative evaluated the cost of capital for climate projects based on a shortlist of 47 EMDE (Emerging Market and Developing Economies) countries. Considering the 2030 solar installation targets set by the governments of each of the shortlisted countries, the study found that a total of ~USD 175 billion of capital will be needed, of which 70% (USD 120 billion) would be debt.

Now, consider this: the cost of capital actually increases from solar PV to onshore wind and offshore wind power, meaning that other renewable energy sources will cost even more. The promise to deliver a lower carbon energy system comes at an incredibly high cost for emerging markets that collectively house approximately 85% of the world’s population (around 6 billion people).

Oil will remain a vital part of the energy mix in the medium term and possibly beyond. Despite this, achieving net zero is possible by directing technology towards helping companies reduce their emissions through more efficient, resilient, and data-driven operations.

"As a digital solution provider, our role in the energy transition is to help improve the performance of existing assets so that returns can be improved. We want to urge efficiency in the parts of the world that really need an increase in renewable energy resources. By adopting digital twin technologies today and scaling them across ecosystems, the industry can start improving the efficiency of the energy system. If adopting the same standards across asset classes, the industry can include renewable energy producers and transmission operators, enabling improved returns on investment whilst transforming, whether in oil and gas, solar, wind or hydrogen.”

Haavard Oestensen, Chief Commercial Officer and EVP, Kongsberg Digital.

The investment in digital itself may seem substantial but is hugely overshadowed by the annual investment requirements of USD 45 billion to ensure modern energy systems by 2030. The long-term soft and hard savings of digital operating models warrant further investment into existing and new energy ventures, proving the immense potential of technology to reduce emissions and free up cash flow through improved uptime, better resource utilisation, and the availability of operational transparency and insights.

Did you know? The worldwide Digital Twin Market generated USD 9.5 billion in 2022 and is projected to attain USD 274.2 billion by 2032, with a compound annual growth rate (CAGR) of 40.5% from 2022 to 2032.

For a workflow like condition-based monitoring through proactive technical monitoring (PTM) a digital twin can guide a business to a systematic approach that converts ways of working from reaction to prediction – even for remote monitoring from onshore. Unplanned downtime is reduced significantly, resources are deployed on an as-needed basis depending on data-based maintenance schedules and dollars saved can be measured per service cycle.

From a value chain perspective, workflows like this can tie your operational performance to financial performance in a way that is measurable across the business. It will take more than just digital transformation. True transformation and technology adoption need processes mapped, routines redefined, processes re-engineered, governance, metrics, and more – it’s a journey. But when the results become visible, financially and in terms of emissions reduction, your technology investment becomes a catalyst for further investments in intermittent and new energy sources that will shape the future of the energy landscape.

Interconnected digital twin capabilities for emissions reduction across upstream, midstream and downstream

Within these segments of the value chain, digital twin technology can specifically target the below challenges by offering workflows that are user-friendly and mask the complexity of data through visualisation, dashboards and information that can be filtered according to operational goals, a user’s role and even a specific pain point like estimating the remaining useful life (RUL) of a selected piece of equipment.

  1. Reduce flaring and venting to minimise emissions related to the release of methane and other greenhouse gases during the extraction and processing of oil and gas.
    Digital twin capabilities: Real-time monitoring and predictive analytics.
  2. Lower emissions associated with the operation of heavy machinery and equipment used in exploration and production.
    Digital twin capabilities:
    Continuous monitoring, preventive maintenance, and emissions tracking for reporting purposes.
  3. Minimise emissions arising from the transportation of personnel and materials to and from extraction sites.
    Digital twin capabilities:
    Route optimisation, fuel consumption analysis and overall logistics management.
  4. Manage energy intensity arising from high energy requirements for drilling, extraction, and processing activities.
    Digital twin capabilities: Monitoring and analysis to identify energy-efficient measures across operations.
  1. Lower the risk of methane and other emissions resulting from leaks and releases during the transportation of oil and gas through pipelines.
    Digital twin capabilities:
    Advanced monitoring and predictive analysis of pipelines to detect and even prevent leaks.
  2. Limit emissions from the use of compressor stations to maintain pressure in pipelines.
    Digital twin capabilities:
    Continuous monitoring and maintenance optimization.
  3. Optimise the use of vehicles for the transportation of oil and gas products to minimise associated emissions.
    Digital twin capabilities: Information transparency, route optimization and fuel efficiency.
  4. Minimise processing emissions from energy-intensive processing activities such as refining and liquefaction.
    Digital twin capabilities:
    Process optimization, emissions tracking, and simulation capabilities to test various operational scenarios.
  1. Minimise unplanned and planned downtime and increase overall plant reliability – a stable reliable facility tends to be a lower emitter.
    Digital twin capabilities: Integrate equipment and production process loops in a single environment, with look-ahead and what-if scenario modeling capabilities to reduce production-limiting events.
  2. Reduce energy consumption and improve usage of intermittent energy supply sources.
    Digital twin capabilities:
    Model a digital twin environment that utilizes AI and contextual data to correlate production needs with higher accuracy production forecasts, avoiding over- and under-consumption. Integrate the adjacent energy supply sources (e.g., localized H2) to optimize across a network of digital twins.
  3. Increase situational awareness of emissions in real-time, enabling rapid remediation and reduction.
    Digital twin capabilities:
    Model the plant condition in real-time, utilizing hybrid analytics (production simulators combined with ML algorithms to create virtual sensors across the plant, including composition vectors and CO2 volume).
  4. Model and optimize localized microgrids used to distribute energy across facilities, increasing energy efficiency.
    Digital twin capabilities:
    Integrated real-time simulation of the microgrid performance, combined with contextual data from the plant (asset data and plant condition).

From upstream to downstream, the Industrial Work Surface can help you balance net-zero priorities and deal with the increasing complexity of energy systems – for businesses, people, and the environment. See what it can do for you.

About the author

Balancing Net-Zero and Energy Security: A Digitally-Enabled and Collaborative Journey

Haavard Oestensen

Chief Commercial Officer at Kongsberg Digital

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