CTO: COVID-19 and its impact on energy
A new, cleaner-energy optimism in the post-pandemic world.
COVID-19 has the world rethinking energy and emissions.
At the recent Atlantic Council’s virtual Global Energy Forum, the discussion focused on the pandemic’s unprecedented sweeping impact across the energy sector.
Hosted as part of the UAE’s annual Abu Dhabi Sustainability Week, consensus at the forum was 2021 is a pivotal year for the world’s energy sector.
The event, convened by Washington-based think tank the Atlantic Council, assembles the world’s top energy and foreign policy decision makers to share insights into the world’s energy systems, and galvanize impetus toward the trending global energy topics.
This year’s scene-setting gathering was hosted to a buoyant background of the U.S. presidential inauguration, and included a special conversation with HRH the Prince of Wales, who said that achieving sustainability and profitability simultaneously was entirely possible.
He called for “regional and global cooperation around green and renewable energy investment and production.”
Aramco chief technology officer Ahmad O. Al-Khowaiter was alongside the powerful lineup of speakers and respected experts sharing their insights at the forum.
Energy transition coming fast
“Real friends say the bitter truth,” said International Energy Agency (IEA) executive director Fatih Birol, adding “the bitter truth is that real energy transitions are coming, and they are coming fast.”
“I believe no country, no oil- or gas-producing government, no companies, nobody, will be unaffected by clean energy transitions,” he added.
Birol, delivering one of the forum’s most sought after sessions, said global energy demand declined about 5% in 2020, and that this was seven times deeper than the demand decline during the 2008-2009 world financial crisis.
Although emissions went down 7% last year, Birol warned this was not due to policy changes or new technologies.
“It was mainly because of the economic downturn and pandemic,” he said. “If you want to see a structural decline again, new policies are needed.”
Birol was keen to emphasize that oil will be required for the foreseeable future.
In a panel session he said, “The world will need oil and gas for several years to come.”
“The producers in [the] Middle East are, almost all of them, are low-cost producers, and they will continue to bring oil to the markets,” Birol noted.
Aramco, well-invested in clean energy
Energy and emissions is a forethought for the world, but planning for the world’s energy future is nothing new at Aramco.
The world's largest oil exporting company, Aramco has the lowest upstream carbon intensity associated with oil production when compared with the world’s other major oil producers.
Al-Khowaiter, participating in a panel discussing “The role of the Middle East and North Africa in the energy transitions,” said Aramco’s long history of energy leadership was the kind of futuristic view needed by today’s energy industry.
“We have invested many years, long before the concerns globally around emissions, in the cleanliness of our product,” he said.
“We have about 10 kilograms of CO2 emitted with every barrel of oil we produce,” said Al-Khowaiter.
At Aramco, we believe not only in the affordability of energy, but as well, the sustainability of energy.
— Ahmad O. Al-Khowaiter
Referencing the Kingdom’s Master Gas System, he said, “We invested long ago, in the late 70s, mainly in capturing the associated gas, which had zero value at the time, but for environmental reasons, and what turned out to be great economic reasons.”
Aramco moving to lower carbon products
For some time, Aramco has been undergoing its own transition to lower carbon footprint products.
Al-Khowaiter said Aramco is transitioning to a lower emission product mix.
Behind the company’s transition is efficiency of its existing hydrocarbon production, and the low-emissions conversion of hydrocarbons to valuable materials.
“We are even getting more efficient in our production, and so we are investing in the more efficient production of oil, and that includes [the use of] renewable energy, if it is economically competitive,” he added.
Aramco is developing new lower emission uses of hydrocarbons, like carbon-based high performance materials.
The materials needed for the world’s energy transition are mainly polymers and carbon-based products.
“The uses of hydrocarbons go beyond energy,” said Al-Khowaiter. “We have a major program in what is called crude to chemicals.”
[Following three sentences sourced from Nov. 16, 2020 Prospectus]
Mid-last year, for a total consideration of $69.1 billion, Aramco acquired the 70% equity interest held in SABIC by Saudi Arabia’s sovereign wealth fund.
Aramco’s chemicals business now operates in more than 50 countries.
The acquisition made Aramco a major global producer of petrochemicals, expanding the company’s capabilities in procurement, manufacturing, marketing and sales.
In 2015, Aramco pioneered carbon capture and enhanced oil recovery in the Middle East.
Through carbon capture utilization and storage (CCUS) technology, Aramco is expecting to produce carbon-free products like blue hydrogen or blue ammonia.
Describing the sun as finally rising on hydrogen, Al-Khowaiter said, “Hydrogen technology has matured tremendously over the last 10 years.”
He said the costs of fuel cells, which are the main technology that utilizes hydrogen, are becoming economic.
“We know the cost of hydrogen is very competitive but the challenge is moving it to the consumer.”
Al-Khowaiter said infrastructure work was needed to economically deliver hydrogen from production to the consumer.
Last year Aramco shipped a 40-ton cargo of blue ammonia to Japan for zero-carbon power generation.
“The logic behind our blue ammonia project was demonstrating that ammonia could be a competitive means to transfer renewable or decarbonized hydrocarbons to markets,” said Al-Khowaiter.
“I think it is that kind of work that we are doing right now, which will enable hydrogen at scale, and therefore be economically competitive with hydrocarbons.
“If we can transfer that same energy in hydrogen, or a hydrogen carrier, like ammonia, we will get the same value from our hydrocarbons,” he noted.
Abu Dhabi Sustainability Week
Held annually in conjunction with the Abu Dhabi Sustainability Week, the Atlantic Council’s “Global Energy Forum” is recognized as a key event toward setting the world’s global energy agenda for the year ahead.
Panel participants alongside Al-Khowaiter were Masdar Clean Energy executive director Yousif Al Ali; Jordan energy minister HE Hala Adel Al-Zawati; Schneider Electric Middle East and North Africa president Caspar Herzberg; and Atlantic Council senior fellow Jean-François Seznec.