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The Need for Continued Investment in Oil & Gas Industry

The Need for Continued Investment in Oil & Gas Industry

As we close another year, it’s good to be reminded of the unceasing relevance of the petrochemicals sector and the oil and gas supplies that underpin it.

In a statement released earlier this month, OPEC Secretary-General Mohammad Barkindo suggested that for and against parameters driving public discourse on fossil fuels is ‘the ultimate false dichotomy’. Barkindo’s recording for the World Petroleum Congress in Houston urged investment of $11.8 trillion to 2025 as vital to ensuring adequate crude oil and gas supplies over the next three years.


Orderly Transition to Avoid Energy Insecurity

Meanwhile, Aramco CEO Amin Nasser called for an "Orderly transition." He said, "Policymakers must have policies that are inclusive and just for all stakeholders around the globe."

"Industry in the US is picking up in terms of additional barrels that are coming from unconventional oil, and we are seeing that coming more and more. However, you need all energy sources – conventional and new energy sources of energy – to meet the demand that we are talking about.

In terms of spare capacity, Nasser said: ‘There is only three to four million [barrels per day crude oil equivalent spare capacity]. That lack of investment is impacting the market. As we see pick up in jet fuel [markets] and others there will not be any spare capacity and that will have a serious impact on the global economy and energy security."

Supporting a Sunset Industry

Tecnon OrbiChem founder Charles Fryer comments, "This is a good reminder that oil and gas are going to be essential for our wellbeing for many years to come, albeit on a declining trend."

Fryer, who remains a senior advisor to the company, adds, "Investment funds and stock markets are orientating towards growing industries, or possible breakthrough technologies, rather than ‘sunset industries’ like oil. Even pension funds are investing in wind and solar energy, electric vehicles, high-storage batteries, hydrogen production and transport, and even small-scale nuclear plants.

‘Petrochemicals need oil and there is the danger that the time will come when the petrochemical industry becomes starved of its basic feedstock."

There are Alternatives to Crude Oil as a Chemical Feedstock

Natural gas consists mostly of methane, which is very un-reactive chemically. To make it chemically useful, it is converted – or reformed – to the carbon monoxide and hydrogen mixture syngas (CH4 + ½O2 → CO + 2H2).

Biomass: coal or plastic waste can be converted to syngas for chemical use through partial oxidation in a gasifier in the presence of steam (2CH (biomass) + ½O2 + H2O → 2CO + 2H2). However, since the syngas yield is generally low in hydrogen content, a shift reaction is used to raise its proportion (CO + H2O → CO2 + H2). The shift reaction is the main method to purposely produce hydrogen.

Generally, the CO2 from the last reaction is isolated and disposed of though in the future, the sequestration and storage of this greenhouse gas will become increasingly prevalent. Operating the shift reaction in reverse (CO2 + H2 → CO + H2O) offers an opportunity to use those carbon dioxide emissions – carbon capture and utilization (CCU) – as opposed to carbon capture and storage (CCS) – provided there are abundant supplies of hydrogen.

Syngas is used to make ammonia, which is then used to make fertilizer comprising either urea (CH4N2O) or ammonium nitrate (NH4NO3). It can also be used to make methanol for use as chemical feedstocks. The methanol-to-olefins (MTO) process yields ethylene and propylene, which can be further reacted to produce polyolefins for plastics. Alternatively, methanol can be used to make acetic acid or dimethyl ether.

The use of the Fischer-Tropsch process to upgrade syngas provides a route to the production of liquid fuels, plus olefins and alcohols. The carbon monoxide in syngas can be used to produce oxo alcohols, which in turn can become acrylates, acetates, chemical intermediates, and plasticizers.  Other derivatives of CO are dimethyl carbonate, nickel tetracarbonyl, and phosgene.

Methanol: A Transport Medium for CH4

Natural gas is often produced in remote locations. Such ‘stranded gas’ can be sourced from shale gas and tight oil, associated gas from oil fields, and gas fields. To move it to market, however, it must be liquefied to LNG and transported in specialized cold vessels. Consequently, the costs are high.

An alternative is to convert the methane to methanol, via the production of syngas. The fact that methanol is liquid at ambient temperature, logistics costs are much lower. At the destination, methanol can be used as a transport fuel, or converted into chemicals including formaldehyde, dimethyl ether, MTBE, and acetic acid. It could also be used in the MTO and methanol-to-propylene processes described above.  

Debate, and experiments, continue around the use of methanol production as a sink for carbon dioxide where it is produced (for example at a steelworks). That process requires taking electrolytic hydrogen made from renewable electricity and applying the reverse shift reaction. The methanol can then be shipped to destinations for use as fuel or as a chemical feedstock.

UK Government Calls for Guidance

Barkindo’s statement precipitated the UK government’s launch of a consultation on the design of a new climate compatibility checkpoint for the oil and gas industry. The UK government’s Minister for Scotland Malcolm Offord reiterated the value of a petroleum-based economy going forward. Offord said, "Until we have sufficient supply in those [renewable energy] areas, maintaining a domestic supply of oil and gas – albeit reduced – will be necessary."

Launched on December 20, the consultation positions the UK as a driving force in the global shift away from fossil fuels. It also confirms the government's recognition of, "The important role that oil and gas will play over the coming decades," in a transition to low-carbon solutions. The consultation closes on 28 February 2022.

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