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The Response of Oil and Gas Industry towards the Climate Change
ABSTRACT
The reduction of oil reservoirs and increase in the climate change due to the emission of toxic gases has resulted in the oil-gas industry’s adaptation towards the sustainable and alternative fuels. The alternative fuels by means of bio-mass energy, bio-fuel, wind and solar panels, hydrogen-CNG, liquid nitrogen, alcohol fuels and ammonia has been proven to be cost efficient and as effective as traditional oil reservoirs. The adaptability of oil-gas industry with respect to their preferred alternative fuel by means of infrastructure and product line will initially be expensive but they will also provide the long term profit and competitive advantage.
Contents
Introduction 3
Response of Oil-Gas Industry towards the Climate Change 4
Potential Business Adaptability for Sustainable Advantage 6
Biomass Energy 6
Biofuel 6
Algae-based Fuel 7
Wind Power and Solar Cells 8
H-CNG 9
Liquid nitrogen 9
Alcohol-Fuels 9
Ammonia 10
Conclusion 10
REFERENCES 12
Introduction
The gradual change in climate has been accounted as an international issue that concerns the business model of the companies that are branded with oil-gas industry. The weather configuration for a specific time changes and persists for certain time duration indicates the climate change and, the change takes place by means of its average properties that prevail for an extended time (Kolk and Levy 2001). The change in the climate occurs due to volcanic-eruptions and biotic procedures whereas, there also exists the contribution of certain human activities that cause gradual change in climate and the procedure is characterized by the global warming.
The human activities with respect to the increased industrialization due to technological advancements have increased and the utilization of these technologies has resulted in the continuous emission of certain radiations and gases that has increased the global warming. The industrial activities emit carbon dioxide, methane and CFC gases and their concentration in the atmosphere has been increased. The continuous and increasing utilization of fuel by means of oil and gas is considered to be the main source of global warming that is being initiated by the human activities (Vitousek, 1994). According to Le-Quere et al., (2013), it has been observed that the emission of carbon dioxide from the combustion of fossil fuel in the year 2011 was approximated at 34.8 billion tons and during the 50’s the extent to which carbon dioxide is present is atmosphere had been increased up to 255 parts-per-million whereas, in the year 2013, the average combustion of carbon dioxide is approximated at 400 parts-per-million. Moreover, the extent to which methane gas emits in the atmosphere tends to impose large effect on the global temperature and it has been estimated that the methane has been increased by 150 percent since the year 1750 is currently found up to 1820 parts-per-billion (Solomon et al., 2007).
Response of Oil-Gas Industry towards the Climate Change
The industry of petroleum and gas is responsible for the discovering, extracting and refining of oil resources in order to meet the ever-increasing demand of fuel in all over the world. The upstream industry for oil and gas tends to explore the oil reservoirs and extract the oil from drilling procedure which, as a by-product, emits methane in the environment and causes adverse effects on the climate. According to EPA (2014), the business operations that are being conducted by this industry result in the increase in environmental temperature and also cause the depletion of ozone-layer due to the combustion of the fuel that is being extracted. Therefore, the role of oil and gas industry in the climate change is considered to be eminent. Rottem and Moe (2007) implies that the rising temperature of earth will result in the glacier meltdown, which will ultimately provide the oil and gas companies to explore the area for the presence of fuel reservoirs but the current notion lies hypothetically which cannot be relied for the profitability of business and for the fulfillment of fuel demand. Moreover, the negative aspects that have been generated due to the emission of methane and carbon dioxide, by the combustion of fuel, are also not negligible in accordance with their hazardous effects on life. Therefore, it has become necessary for oil and gas companies to mitigate the adverse effects that are being generated by their business process in order to make their contribution in the control of green-house gases (GHG).
Skjaerseth&Skodvin (2001) infers that the strategies with respect to the emission of green-house gas and its adverse effects are formulated and addressed by oil and gas companies and the ground on which these strategies are being formulated mainly consists of environmental risks that have been caused by the emission of hazardous gases. Moreover, it has become important for companies to maintain their reputation with respect to CSR that they conduct and these strategies indicate the company’s adaptability and reputation which ultimately provides the companies with competitive edge and sustainability in the competitive environment. The increasing emphasis of public policies implemented by the government has caused the oil and gas companies to take specific measures in order to demonstration their positive image by being environment friendly.
The implementation of policy with respect to gas emission took place in the United States in the year 1989 but the organization are opposed by oil-gas industry which initiated its activities to oppose such practices that are used to mitigate the effect of the climatic change in the year 1989 by the formation of Global Climate Coalition and this stride by the energy-resource industry was criticized heavily by the ecologists and media which resulted in the diffusion of this coalition in the year 2002 (Brown, 2000). According to Revkin (2009), the scientific experts working in these companies refused to come up with any rational that could deny the contribution of oil and gas industries in the recurring climate change. Therefore, the emphasis of the industry changed towards its social responsibility in order to strengthen their market position and reduce the negative effects that were being imposed on these companies due to their denial for their contribution in the emission of green-house gases and, their acceptance towards their contribution and attempts towards the mitigation of such climate change improved their image and resulted the slowdown in the criticism. The measures adopted by the this industry were originated as a response from the U.S Climate-Action-Partnership (USCAP) in which the companies were granted with tax and incentive programs in order to be exhilarated for the utilization of efficient procedures that emit less carbon dioxide and methane and, for the development of the alternative energy resources (Engel, 2005). The industry visualized the dual benefits from the government policies and thus, adhered towards the efficient procedures for the reduction of green-house gases.
Potential Business Adaptability for Sustainable Advantage
The potential prospects that can be adapted by the oil-gas industry which is required to maintain the sustainable competitive edge in the long term are discussed below:
Biomass Energy
The energy-resource industry has been making developments in the effective utilization of biomass energy in which biomass or dimethyl-ether can be used as an alternative fuel and its utilization will certainly emit the volatile-organic-compounds but the effects of these VOC will not be as hazardous as the VOC emitted from the petroleum and gas fuel. The production of biomass or dimethyl-ether is not limited to one procedure and many efficient procedures exist for the production of biomass which is also proven to be cost effective by means of production. Furthermore, the cost efficiency by many sectors of the economy can also be supported with the fact that the cheap natural gas can be used to generate high energy dimethyl-ether which will result in more productivity and more efficiency. Moreover, the emission of green-house gases is evidently reduced when the utilization of traditional fuel is replaced by the dimethyl-ether (Semelsberger et al., 2006; Xu et al., 1997). Therefore, the mitigation of green-houses gases can take place by the efficient production of biomass by the oil-gas industry as an alternative.
Biofuel
The alternative fuel by means of biofuel is produced by the processing of organic-matter by following the fermentation process and photosynthesis in which ethanol is produced as a byproduct. According to Kumar (2011), the statistics for the year 2010 indicate that the production of biofuel is approximated 105 billion-liter. Moreover, the production of biofuel varies with respect to the sources from which the biofuel will be produced which indicate that the proper planning for the production of biofuel is required to make it cost effective. However, the utilization of biofuel is considered to be environment friendly because it helps in the reduced carbon dioxide emission. The economic benefit to the society from the utilization of biofuel is much greater than the hazards that are being generated by the emission of carbon dioxide, which makes the production of biofuel feasible to be applied as an alternative resource by the oil and gas company to mitigate the climate change and save the oil reservoirs (Hall et al., 2011). The biofuel technology has been used by Brazilian cars and the overall procedure is tend to be more renewable and prior studies indicate that it has proven to be more efficient by means of transportation. It has been inferred by Ryan et al., (2006) that the adaptability of biofuels from oil producing company will result the company to gain market share and will ensure its sustainability in the future with the reduced carbon-dioxide emission and ultimately, will also generate business profits.
Algae-based Fuel
Hossain et al., (2008) suggests that the oil-gas industry has indulged its emphasis on the alternative resource of energy generated from the algae based fuel in which algal-oil is used as an alternative for fuel where algae play role in the absorption of carbon-dioxide and in this way prevents the emission of carbon-dioxide in the environment. The issue of continuous depletion of carbon-dioxide faced by energy-production companies is gradually substituted due to the industrial move towards the production of algae which is again cost efficient and environment friendly. This way the energy-resource companies have sustained their long term profitability by increasing their product line for the production of energy and have gained a substantial competitive advantage by the gradual development in the very same field. The conversion and utilization of transesterified-lipids by means of biodiesel also reduces the dependency of oil for large scale production purposes and provides oil-gas industry to grow and sustain in a new prospectus (Meher et al., 2006).
Wind Power and Solar Cells
The energy generated by the wind power is also found to be a sustainable investment by the oil-gas companies and can provide energy at large scale which is sufficient enough for the mechanism of industries and ships. The energy produced by this process is considered to reduce the emission of carbon-dioxide and provides a vast prospectus for oil-gas industry to diverse in order to produce sustainable energy sources and the technology is also considered to be one of the fast growing resource of energy (Burton et al., 2001). In accordance with the findings of Lewis and Nocera (2006), the production of solar-panel by means of solar cells is also increasing due to its efficiency and recycling procedure which generates the energy by utilizing the light-energy depicted from sun. The installation of solar-panel can make the industrial mechanisms work whereas the installation of solar-cell can work with the solar cars which will ultimately help in the reduced utilization of petroleum-reservoirs and will not impose the negative effects on the climate. Jacobson (2005) infers that the oil-gas industry has immense region to create sustainable business growth in the efficient development and production of hydrogen fuel-cells in order to replace the traditional fuel resources. There exist numerous types of fuel-cells that can be produced by number of methods i.e. PEMFC and SOFC; that are currently expensive to be utilized at large level but the continuous developments and advancements in this technology can provide with the alternative energy-source that is not hazardous in terms of emission of green-house gas and can be applied over a number of mechanical procedures.
H-CNG
The compressed-natural-gas is when added with hydrogen makes the combustion process less toxic for the environment and ultimately proves to be environment-friendly. The natural-gas is generally considered to be methane and its extraction is easy from the wastage of human and animal and, from the by-product of flora and fauna. It has been statistically proven that the utilization of H-CNG emits carbon-dioxide three times less than the traditional fossil fuel. Therefore, the oil-gas industry can invest in the infrastructure for the production of H-CNG so that the future business prospects of the company can remain sustainable and profitable during the depreciation of oil-reservoirs (Alcorn and Kenny, 2007).
Liquid nitrogen
The liquid nitrogen can be utilized as a substitute for energy resource in which nitrogen can be stored and heated in order to generate energy from the steam. The apparatus used in this procedure for the production of energy can be recycles and hence, prove to less threatening to the climate change. However, the process could be costly due to the utilization of liquid-nitrogen but the technological advancement can make the process efficient in the future perspective and the companies that indulge in the production of energy by means of liquid-nitrogen can get benefit in the long run (Pukrushpan et al., 2004).
Alcohol-Fuels
The utilization of alcohol-fuels by means of methanol and ethanol can take place by the synthesizing the natural gas and it also be obtained by the procedure of biomass. However, bio-butanol extracted from the same procedure can provide results as effective as gasoline. The production of these fuels is…
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