Why EV has significant dependence on oil and gas industry? | HCLTech

Why EV has significant dependence on oil and gas industry?

Why EV has significant dependence on oil and gas industry?
August 23, 2022

In my entry, we wrote about the varied uses and products that come out of a barrel of crude oil.  We saw that only 40% of the barrel is actually used for energy  . But rest of the barrel is used for products we depend on daily, products for which there isn’t currently a good sourcing substitute.  The challenge that most upstream oil and gas companies face today in the arena of sustainability is much different from almost every other industry. Most industries are being held accountable for the amount of hydrocarbons they consume in the course of their business whether it’s supply chain, logistics, building operations, manufacturing, and many other areas. Upstream oil and gas companies have the same accountability along with a significant challenge that no other industries face -- how to produce hydrocarbons in a more sustainable way?

How Much Oil is in an Electric Vehicle?

In other words, not only do we have to consider our own operations but we also must attest to a reduction in carbon, CO2, Methane, etc. in the production of the world’s hydrocarbons. How do we do this? What will it take to achieve not just net zero but a true change in the business model over the next 20-30 years to where our production of hydrocarbons are not seen as a violation of sustainability to begin with.  HCLTech has built solutions with proven results in tracking, reporting and in making operational decisions based on the analysis.  Our IoT Works business creates and deploys these solutions to further their operational transition.  Our Zero Impact Platform delivers a set of functionalities to optimize energy consumption in a manufacturing environment at the enterprise level – enabling organizations to optimize assets and process performances, enhance OEE and other KPIs, reduce their carbon footprint and achieve their net-zero sustainability goals. AI powered ZIP begins by collecting real-time non aggregated data from the shop floors across plants at multiple sites, normalizing the data and analyzing efficiency of the optimization measures. The Cloud-based solution then identifies global energy optimization potential across the plants with reference to best-in-class standards, cross checking them against the efficiency measures and finally, applying the identified energy optimization measures to the identified assets/processes/sites. The key value of ZIP lies in the Digital Twin backed/intelligent enterprise level inter-comparability it introduces while arriving at energy optimization measures – eliminating effort and time intensive local optimization measures.

The claims of the supermajors about net zero and their pivoting business models to alternative fuels garners a lot of attention. They siphon millions and billions of dollars to these new business units which have a vital role in the sustainable economy going forward. We do need alternatives such as solar, wind, hydrogen, biofuels, algae, and so on to replace our energy sources. But do keep in mind that’s just primarily addressing the 40% of the barrel.  Let’s break this down to a major focus area that we can all relate to, the transition from gas-powered vehicles to electric-powered vehicles (EV). It is true that operating EVs reduce hydrocarbon usage. But keep in mind that the electricity to power those vehicles still primarily come from hydrocarbon generation sources such as oil, gas and coal. But, even before we drive a mile, that EV has significant dependence on oil and gas in order to even be a viable form of transportation.

In the infographic, the author runs through the impact of electric vehicle on oil and gas industry. Not the least of which boils down to weight. EVs have a weight problem not found in our gas-powered cars and batteries. Batteries for EVs weigh thousands of pounds in order to get the car as a vehicle that can travel a few hundred miles on a single charge. Much of the way cars lose excess weight are through the use of plastics and all of those plastics are generated out of petrochemicals coming out of oil and gas. As they write, “although it sounds counterintuitive, the major advancements made by today’s EVs were made possible by petrochemicals derived from oil and gas”.

To produce oil and gas, companies have solutions that allow them to operate pumps, compressors, heaters, treaters, separators, and even the capturing of CO2 and Methane, which will allow those hydrocarbons to be produced more efficiently than ever before. This ‘greening’ of the oilfield will ensure that we still have the resources to use the hydrocarbons at a much lower carbon footprint that can be tracked, traced, reported, and analyzed. For instance, HCLTech has several IoT solutions covering the net-zero platforms and the reduction of the carbon footprint through the use of sensors and technology.

These capabilities are critical for the industry considering that most oil and gas in the US isn’t produced by any of the supermajors that I mentioned before. Hundreds of oil and gas production companies, without the vast resources of the supermajors, still have to produce hydrocarbons in a responsible manner for the foreseeable future. There really isn’t a viable plan today that eliminates the need for oil and gas. Just ask the EV manufacturers. So, oil and gas exploration and production is here to stay…at least for the next 100 years or so. 

Our challenge is to produce these hydrocarbons in a way that lessons the carbon footprint during production and to use a variety of innovations to reduce that footprint as those hydrocarbons are used.

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