The issue of peak oil – the conceived time at which global oil demand will reach its zenith and thereafter begin its decline – has been a matter for discussion ever since the limitations of oil, as a finite resource, first became apparent. However, with the unlocking of large reserves in the 20th century, aided by increasingly sophisticated and efficient exploration and extraction technologies, the prospect seemed very distant.

The world, and especially the developed world, embraced the combustion engine and it rapidly moved from a luxury to a necessity for both industry and consumers. At that time, the debate around peak oil was confined to niche academic researchers and economists; and their forecasting techniques were too imprecise to give any clear indication of when it would actually occur.

Oil alternatives

Things have changed, however. The impact of fossil fuel use on our environment has become widely accepted and our global society has started to focus on alternative fuels to replace oil, despite the realities of the oil economies that rely on it. In October, the latest report by the UN Intergovernmental Panel on Climate Change provided a stark warning that countries and industries need to act much faster than was originally thought if an environmental disaster is to be to averted.

Another trend that is causing demand for oil products to fall is the increasing use of electric cars

And while EPC contractors are not in the business of making detailed forecasts about the timing of peak oil, we do need to plan today for the trends that are set to drive our energy needs in the coming decades.

One example of the way in which industry is already being forced to adapt is the introduction by the International Maritime Organisation of new rules on sulphur content in fuel oil for shipping. By 2020, ship-owners will have to comply with a new 0.5 per cent cap on the amount of sulphur in marine fuel, compared with the existing limit of 3.5 per cent enforced back in 2012. The immediate impact will be on consumers of high-sulphur fuel oil (HSFO), namely shippers. Refineries that produce large quantities of HSFO will also be affected.

Electric cars

Another trend that is causing demand for oil products to fall is the increasing use of electric cars. As battery and engineering technologies have evolved, electric vehicles are becoming more mainstream, having been treated with scepticism only 10 years ago. While no country has yet introduced legislation to force consumers to switch to electric vehicles, there is little doubt that usage is increasing, and the latest UN report may prompt legislative moves to further increase such usage.

One approach to refining that will help the industry manage these developments, and which SNC-Lavalin has been involved in developing, is the integration of refining and petrochemical operations. This will enable national and international oil companies to not only change the grade of the fuel oils that they produce, but also to combine this with the production of other materials to offset the reduction in demand for oil.

Petrochemicals demand

The case for petrochemicals is further strengthened by expected global population growth, of which the greater proportion is likely to be affluent and, therefore, more in need of products based on petrochemicals. There is now strong demand from oil and gas clients for integrated plant configurations.

Advances in digital technologies are also bringing benefits to the industry

Building and operating a grassroots facility is a complex undertaking, but the economics associated with modifying an existing plant can be even more challenging. So, how does a company considering such an investment balance the project risks with the potential rewards of retrofitting current production assets to integrate with new petrochemicals units? Factors that will critically impact this investment include the availability of internal feedstocks such as propane, butane or naphtha; the synergies of utility streams such as power, steam, process water and hydrogen; and the ability to leverage staffing for maintenance, operations, management and logistics benefits.

At SNC-Lavalin, detailed modelling exercises incorporate all of these factors. The objective is to assess whether integration is appropriate and, if it is, which market drivers will deliver the optimum return on investment. The result is a detailed economic analysis for the overall profitability of an integrated complex.

Digital technologies

Advances in digital technologies are also bringing benefits to the industry. Examples include digital scanning tools to de-risk critical installations in hazardous environments, and analytics solutions based on Big Data to optimise parts-inventory management.

In a rapidly changing industrial, economic and geopolitical landscape, it is important for companies engaged in the production of oil products to be able to plan for multiple scenarios in a cost-effective way that will deliver optimal returns. Different territories and countries will have their particular features. What is universal is the need o plan a project from the most data-led and informed position possible.

Sachi Maiti is global technology taskforce director at SNC-Lavalin

This month's Agenda in features

• Surviving life after peak oil: While the debate about the timing of peak oil demand continues, energy producers are gearing up to embrace the life that lies beyond

• A peak into the future: The oil and gas industry needs to embrace digital transformation if it is to see beyond peak oil, says vice-president of oil and gas industry programmes at Emerson Automation Solutions, Christopher Amstutz
• Infographic: Diverging trajectories