Oil & Gas
Supporting efficiency and decarbonization
The oil and gas industry proved confident and resilient, and our Oil & Gas business area reported solid growth in 2019. DNV GL helped customers to retain a focus on cost efficiency, decarbonization and safety. Going forward, the industry faces an unprecedented combination of market forces, regulation, societal pressure over climate change, and challenges to integrate with other sectors like power and renewables. We foresee increasing digitalization and wider adoption of low-carbon energy carriers such as hydrogen for heating and transport.
As oil and gas companies intensify their focus on decarbonization, half (51% in 2019 vs. 44% in 2018) of senior industry professionals expected to focus on actively adapting to a less carbon-intensive energy mix according to our new industry outlook. Many customers continue to shift their portfolios from oil to gas. BP expects to move from about 50% gas today to 60% in 2025. ExxonMobil and Shell are among others increasing spending on non-fossil energy ventures.
Our industry outlook also showed that confidence in the oil & gas sector had increased to 76%, a doubling over the past two years. According to our research, most respondents (70%) expected to maintain or increase capital expenditure in the near future, and this was corroborated by developments in the market. In the midstream segment, more LNG projects reached final investment decisions in 2019 than in any other year, most of them in the US as it ramps up LNG exports.
DNV GL’s Oil & Gas business area reported growth in 2019. We continued to expand services to the midstream and downstream sectors, including gas transportation and distribution. We also enhanced our business development model to ensure availability when customers need us.
Our customers also remain focused on improving efficiency to control costs, and increasingly seek cost benefits from digitalization. Many upstream customers, particularly emerging independent operators in mature basins, want greater production efficiency. DNV GL is partnering with customers on several efficiency projects.
Our 2019 Energy Transition Outlook (ETO) highlighted that gas, renewables and carbon capture and storage (CCS) are needed to secure a rapid energy transition. Gas will become the largest primary energy source from the mid-2020s, increasing the need for more pipelines to connect shifting sources of supply and demand. We expect both LNG liquefaction and regasification capacity to double by 2030. Demand is set to grow in Greater China, the Indian subcontinent, and sub-Saharan Africa.
In China, we are supporting the safety, reliability and performance of a number of LNG regasification projects. In 2019, we provided Independent Validation Body services for an offshore development in Australia covering the FPSO, subsea production system package, subsea umbilicals, risers and flowlines (SURF) and gas export pipeline package.
We continued to support gas pipeline safety and reliability amid a surge in cross-border projects in 2019. Contract wins included independent verification services and submarine pipeline certification for Energinet’s section of the Baltic Pipe gas transportation project, and LNG-related marine service business in the Middle East and Eurasia. We also co-hosted a symposium with Cheniere Energy on issues involved in managing process safety for new LNG liquefaction facilities in the US.
Safety and environmental performance, and regulatory compliance, were core to some of our upstream service contract wins in 2019. These included classification and verification scopes for asset operations and projects involving Apache Corporation and Dana Petroleum offshore UK, and for Equinor offshore Canada.
We also offer virtual reality tools for customer hazard-awareness training. Our use of this with CNOOC International won the Award for Innovation in Safety at the Offshore Safety Awards 2019.
Our growing set of recommended practices for subsea applications is another important step towards a more united, sustain-able, and cost-effective sector. One new recommended practice launched in 2019 targets consistency in fabricating subsea pressure-retaining equipment; another unlocks new opportunities for more cost-efficient and environmentally friendly subsea processing for improved hydrocarbon recovery.
Our 2019 Energy Transition Outlook (ETO) makes it clear that gas will increasingly complement variable renewables to provide a secure supply of affordable, decarbonized energy for the long-term. The ETO also indicates a need to decarbonize gas production and consumption to help achieve climate change mitigation.
We are applying our longstanding expertise in natural gas transmission and distribution to help governments and operators demonstrate the technical feasibility of adapting existing natural gas infrastructure to carry hydrogen. Work on this in 2019 included support for the Hy4Heat and H21 initiatives in the UK and managing a feasibility project for Dutch gas network operator Stedin, which began supplying hydrogen produced by electrolysis to heat apartments in Rotterdam. We have also produced research on hydrogen gas as a clean energy source in support of the Norwegian government’s feasibility study for hydrogen production and use in Norway towards 2030. Read more.
We are partnering with customers to bring our expertise in assuring the safety, reliability and performance of assets in the physical world into the digital one. Our new Deep Search tool, available on our online data-sharing and analysis platform Veracity, lets users discover relevant data and information from vast sources within seconds. Veracity will also host offshore and onshore reliability data for equipment and parts.
Our Smart Mooring machine-learning algorithm accurately predicts potential mooring-line failure in real time for floating assets, providing a more cost-effective alternative to physical sensors for preventing undetected failures. These new digital tools are helping customers to make better decisions and enable safer and more reliable operations.
In partnership with TechnipFMC, we started developing the sector’s first methodology for qualifying the integrity of digital-twin technology that creates and updates virtual representations of physical assets and their behaviour. We also unveiled a concept for merging digital twins and risk analysis.
We marked the 40th anniversary of our International Sustainability Rating SystemTM (ISRS) by releasing a ninth version of this world-leading system for assessing, improving and demonstrating the health of an organization’s business processes. ISRS now includes risk categories such as cyber security that are relatively new to some industries.