Not long ago, ‘peak oil’ referred to maximum oil production. The point at which the world’s oil fields could no longer keep pace with rising demand. Today, peak oil is all about the end of growth in demand for oil.
Technologies such as fracking and directional drilling mean producers can reach previously inaccessible reservoirs, removing access to oil as a limiting factor. Instead, the constraint is the cost of getting it out of the ground. But emerging technologies such as renewable energy, electric vehicles and digitalisation are reducing our need for oil.
It is not possible to say with any confidence when we will reach peak oil – Opec says 2040, others say mid-2020s. But everyone agrees that it is coming. And, most importantly, the region’s oil producers are already beginning to prepare for life after peak oil.
Increased investment in renewable, alternative and clean energy reflects an acknowledgment that fossil fuels and renewables need to coexist. The desire to develop income streams other than crude oil exports is seeing the launch of a new generation of downstream projects, from new greenfield petrochemicals facilities and refinery expansions to the integration of existing refineries with new petrochemical plants.
Together, these new strategies will see the diversification of national and international oil companies into more diversified energy companies, with activities stretching from oil production and solar energy to technology development and plastics production. And as they seek to drive profitability, the diversification drive will also see vertical integration of previously separate industries, standardisation and design simplification, and the introduction of disruptive business models and new technologies.
For business in the region, peak oil means that everything is changing. And now is the time to prepare for it.
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
- Equipping the oil industry for change: Global technology taskforce director at SNC-Lavalin, Sachi Maiti, examines the ramifications of peak oil and how producers can plan for it
- 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
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