[saikarthik]

We all know that due to climate change, pollution and health hazard, fossil fuels are being replaced or at least started to.

Came accross this video which explains in short the beginning, present status and the possible future of oil as a product.

https://youtu.be/kzvYOTJkPkc

What do you people think about the possibility? Will the prediction be right or the oil companies are playing a gamble? If right, then why oil companies are diversifying rapidly instead of slow diversification?

Please post good stats and links to documentaries if available.

Note to Mods: searched for threads and couldn't find similar ones. So please move to appropriate thread/section if needed to.

[V.Narayan]

Love the subject. Anything to do with the environment and sustainability grabs my attention not for my own sake but for the sake of my children and one day their children who are likely to live long enough to see a lot of both the good and bad unfold. The glacier catastrophe in Uttarakhand being but one more reminder of the spreading perils of climate change.

So coming to oil. I cannot predict short term versus medium term demand - the variables are too many. But in the long term starting 10 years from now and going out to 40 years oil demand will decline and will eventually become one more important mineral needed for petro-chemicals & plastics rather than primarily for energy. The demand from automobiles & two-wheelers and trains will go out first. The demand from ships will go down next if wind and solar power can be effectively harnessed. The demand from aircraft will largely stay for the forseeable future unless battery energy density can be improved about 50X to 100X. Natural gas powered powerplants will continue for longer for load balancing the grid and fill in the gaps of solar & wind power (& tidal power?). Along with oil at some point coal will be pushed away too. But that can happen only when wind, tidal & solar get really large. The technology is improving at a very significant pace in all three including using brine as a storage of energy to feed the grid at night/low wind periods. Detractors and cynics are advised to read up on these before penning the usual cliched laments.

The geo-political change the oil demand decline will stir up will be equally dramatic. If you don't need to pander to the Middle East to get your petro-chemicals will you care what they do so long as it doesn't reach your shores. Or will the unemployed youth of the Middle East become a source of world wide trouble more than they already are. What will happen as the autocratic monarchies wobble and collapse. Will the Middle East become an even bigger hotbed for global terrorism than it is now? All this will unfold in parallel. And there are other nations whose economies are dependent on oil - Russia, Venezuela, Indonesia, Brunei and Norway. But for oil the USSR might have unfolded a decade earlier. But for oil Indonesia may break up into several independent countries. But for oil Brunei will become a small tourist country.

Mankind's relationship with mother Earth and consumption of energy underwent a fundamental change between c.1850 and today. Another round of change is now coming, and has been simmering for a while, where we shift gears to being more earth-friendly. For the whole world of transportation and power generation a new era is on us. It won't be easy, it won't be linear but it needs to happen if our grand children are to inherit a healthy planet.

[saikarthik]

Originally Posted by V.Narayan

The glacier catastrophe in Uttarakhand being but one more reminder of the spreading perils of climate change.

The demand from aircraft will largely stay for the forseeable future unless battery energy density can be improved about 50X to 100X. Natural gas powered powerplants will continue for longer for load balancing the grid and fill in the gaps of solar & wind power (& tidal power?).

Or will the unemployed youth of the Middle East become as source of world wide trouble more than they already are. What will happen as the autocratic monarchies wobble and collapse. Will the Middle East become an even bigger hotbed for global terrorism than it is now? All this will unfold in parallel.

Another round of change is now coming, and has been simmering for a while, where we shift gears to being more earth-friendly.

For the past 3 years, my new year wishes go out with some scary facts about climate change where some people take it for good others just bash me out for being a tourer on bike. We people are changing for good but I don't think that is is fast enough and we tend to change only at the point of break. If I can add to your point on glacier catastrophe, in past 3 years multiple cities have witnessed floods (Jaipur roads were a river- really?), flood-drought-flood in Chennai, multiple cyclones and the list goes on.

I get your point on switching to renewables, but creating these sources of energy to completely replace existing fossil powered sources will also need tremendous energy. It has to be done (already too late), so this will also cater to the oil demand.

For flights and ships, the battery technology is one of the most researched topics and we are in the stage of getting out few chemistries with more energy density to work in a couple of years. And for the natural gas, I saw another video explaining that India is planning to integrate national gas grid to state grid(also under construction) a total of approximately 24000-34000 kms in this decade. Also, compressed bio gas (CBG) plants are under construction to make use of agri waste.

Middle east is a big concern. Few countries like UAE have already made their secondary incomes by developing the cities in tourism and real estate market. But not all countries have their plans and will be a rough transition.

Now coming to people moving to eco-friendly alternatives, unless we reduce the use of unwanted products, we wont see a significant change. More spending potential and mindset change for comfort has just started in India. But Indians adapt fast, let us wait and watch as one of my friend use to say - Interesting times ahead.

[V.Narayan]

The rather weak readership numbers on Team BHP of climate & environment subjects is in itself an indicator of how far we need to go.

[McLaren Rulez]

The future of oil - not great. The future of oil companies is a different story though.

Many have already started diversifying and will become "energy companies". The ones that do it best will survive.

[aaggoswami]

Future doesn't look good for sure. Oil producing nations will have to rely on nations like India that simply cannot jump to EV bandwagon quickly, this is just for the flow of revenue by selling oil. There is very little the world can do when such a technology wave is coming in like a tsunami. But I am sure the oil producing firms eventually get in to power generation and distribution. If they do, it would be a huge plus for consumer to get options. But they wont be employing a huge task force as much as they do now. For Indian OMC, their survival will be tough in my view. Not quick to diversify with a lot of employees, they aren't the fittest for survival unless government gives them a boost at cost of tax payers. They have atleast a decade and half to get fit for future. India just cant survive without revenues from fuel. Lack of urban planning, last mile connectivity, harsh weather results into multiple vehicles per household. A family of 5 is likely to have more than one two-wheeler. The sheer amount of energy involved to recharge two wheelers, four wheelers is massive. And we aren't even discussing LCV, HCV. So for next 10-15 years, oil companies in India are safe from survival point of view but not future proof. Internationally, I expect Oil companies to diversify into power generation, distribution. I still feel India will get down to hydrogen as a fuel.

[saikarthik]

Originally Posted by aaggoswami

There is very little the world can do when such a technology wave is coming in like a tsunami. But I am sure the oil producing firms eventually get in to power generation and distribution. A family of 5 is likely to have more than one two-wheeler. The sheer amount of energy involved to recharge two wheelers, four wheelers is massive. Internationally, I expect Oil companies to diversify into power generation, distribution. I still feel India will get down to hydrogen as a fuel.

Originally Posted by McLaren Rulez

Many have already started diversifying and will become "energy companies". The ones that do it best will survive.

This point actually worries me - Oil companies getting into power generation. They have the power to lobby and force other technologies out making us purely rely on single energy source (read electricity), and will begin the monopoly in source and charge hefty sum per unit (kwh). I personally wish to have options in sources, let it be hydrogen or something new.

Another strain on infrastructure during co-existence of petrol pumps and charging, with large flow in number of vehicle to refill and many vehicles standing for a couple of hours. Of course, there are battery swapping tech, 350-500kW fast charging units in plan, but still for India it will be a huge nightmare.

[vj_torqueaddict]

The other day I was discussing with my friends about the same. As we have had “oil rich” nations , there will come a time when there will be “sun rich” nations.

When I looked up about the subject , I saw that it is already in the works(Sun rich nations) and India is one of the nations in that group.

[SnS_12]

As far as Indian Oil Refinery companies are concerned they are still investing in capacity expansion and also new facilities as they see demand continue to grow and need to scale up for the same.

On the other hand the Oil rich nations may loose their source of income from the black gold eventually but with the kind of funds they have access too I am sure they would control and own whatever alternate energy source is adopted by the world after fossil fuel goes extinct.

I have had many conversations with friends on how governments world over will plan to offset their income loss from heavily taxing fossil fuel (India for eg) and no one has a clue about it and feel the government is not even looking at that direction hinting at maybe going electric is not the future they foresee as well

[landcruiser123]

The extraction of black gold from the oil sands of Alberta, Canada is here to stay (unfortunately!) The countries which benefit from oil extraction aren't going to give up business easily. Getting rid of the addiction to oil is going to take a generation (=20 years) or two. All countries have already started their movement towards sustainable transportation. I expect (rather hope) Hydrogen will be efficient & cheap to produce for ships & trucks. Most cars & two-wheelers will be BEVs.

My only fear is that big oil might buy up companies in the renewable sector and destroy them at worst or impede their progress at the least. This happened in the decades after WW2 in the US when rail, streetcar, and public bus systems were bought out by GM + allies and their business was dismantled https://en.wikipedia.org/wiki/Genera...car_conspiracy I hope history doesn't repeat itself as whatever happens in the US has implications across many countries in the world.

While I don't agree with Putin on many things, I must say he has a point here. Sustainable development has its challenges, especially in the third world. But the advantage is that Asia & Africa can leap frog with the right incentive system.

https://www.youtube.com/watch?v=1CnyqLogH0Y

[locusjag]

Originally Posted by SnS_12

I have had many conversations with friends on how governments world over will plan to offset their income loss from heavily taxing fossil fuel (India for eg) and no one has a clue about it and feel the government is no even looking at that direction hinting at maybe going electric is not the future they foresee as well

Taxes on fossil fuels by countries like India aren't just a gift that keeps on giving. The country pays for fuel imports in a number of ways beyond just the immediate financial debt figures involved - import bills negatively impact our currency's strength for instance. And this is just one example that comes to my mind. I am not going to mention certain intangible costs, such as handing extremists with oil money so that they can publish inflammatory literature or directly mass-produce terrorists who in turn kill innocent Indians and Indian soldiers in Kashmir.

Looking at the VAT, Excise duties and Cess that state goverments and central government earn via fuels is a very narrow viewpoint. It's almost like a man who cannot get food, who cuts his veins to fill his stomach with.

PS: India used to pay Iran with sacks of wheat for their oil. The Trump administration put a stop to our oil imports from Iran though.

[srini1785]

O&G companies in india, save for Reliance industries are all PSU's and at least for political purposes (read govt jobs) , they would continue to maintain some presence in the near foreseeable future. There was a talk of stake sale in HPCL (or was it BPCL?) but no idea what happened to it. IOCL would eventually transform to a energy company and would probably partner with a private company for green tech. It could in addition to MS products , also do Hydrogen gas (a useful by product) , solar power and also battery tech.

This is what the GOI has in mind for almost all O&G PSU's. It would take at least 3-4 governments to realize this dream but the wait is worth it. The O&G companies cannot just disappear since the petrochemical complexes associated with them still produce some stuff like polymers, fertilizers , industrial gases and useful chemicals which are all by products of crude oil refineries. So when we are talking of future of O&G companies we are essentially talking about our entire lifestyle not just MSD and petrol.

The problem is only that in spite of large installed capacity these companies are no leaders in either adoption or pioneering new technologies. What the west had say 20 years ago is finding its way now into Indian O&G companies, thanks to absolutely great gatekeepers of technology like EIL which hold the keys to all O&G companies.

All said, we are not in that bad shape as compared to countries that wholly rely on Oil exports to sustain their economies. This includes countries like Russia and Saudi which are starkly different in their "inhouse" technological capabilities. How these countries steer their economies out of oil is now a big question. Recently, VAT was introduced in KSA and there the talk of Income tax , working at McDonalds etc which are, to our view nothing much but a big thing in KSA. What remains to be seen is how projects like Neom city would take off and become successful. Grand dreams cost money which so far they were digging out of the earth.

As far as Indian Oil Refinery companies are concerned they are still investing in capacity expansion and also new facilities as they see demand continue to grow and need to scale up for the same.

As far as i know, the new refinery in Ranjangaon is stopped and the only major capacity expansion that happened was the SRU ( Sulphur recovery unit) and MSQ upgrade for the BS6 standards.

[aashishnb]

IMO, the 800-pound gorilla (dragon) in the room is China becoming the new middle east with its lithium reserves. It is already dumping lithium & solar PV panels in the rest of the getting us all addicted & dependent.

This would slow/hamper progress of other technologies, not so much dependant on a single source.

Oil companies, as a comparison are widely dispersed across the world (largely the west but still...), and their primary goal os profit as against any geo-political achievements.

[Jeroen]

I do think the world at large will be relying on oil for some time to come. Not only for powering cars, ships, planes and power plants. Oil, or oil based products as a commodity is used in the production of countless products we take for granted.

So the transition is going to take some time.

There is a somewhat different angle to the succes, or lack of, of the oil companies as well. Investors are beginning to shy away from oil. Here in the west many private investors will only invest in green and renewable type of enterprises. It is partly because we see a very different kind of investor compared to the past, but also because there is a very different sentiment out in the world as well.

E.g. we are seeing for instance the large pension funds decreasing their position in oil. Pension schemes here in the west are going through major overhaul. One of the commonalities of all the new schemes is, that you as an individual employer get a say into how much risk and in what kind of companies your want your pension money to be invested!

We had a pension briefing the other day at our company. And they showed us, what kind of invest profiles all of us had chosen; Nobody wants a pension that is based on companies dealing in oil, weapons, child labour, etc.

So there is a lot more “conscious” going into investment decision than ever before. Not just private investors, and some big names in the investment world too.

Companies like Shell International were always very high in the list of most desirable companies to work for. I have a number of friends working for Shell. They were always very proud, but nowadays they tell me, they don’t talk about it much, because they might be getting awkward responses from people if they find out.

I used to be the Managing Director of a private investment company in the 80s/90s. It was almost a given we had strong position of Shell in our portfolio. Solid stock and dividend!

I have not any oil companies in my portfolio for the last decade at all.

If anything, a lot of the glamour, attractiveness of the oil companies is about to vanish. At least here in the west.

They really need to re-invent themselves completely and very few have even began to make a half decent start. With investors becoming increasingly more reluctant to invest in oil, the pressure is on.

Jeroen.

[bhargav2015]

Being an Environmental Engineer in the Petrochemicals and O&G sector for over a decade, I can say with certainty that the change is happening. The demand for oil is unlikely to die but the shift of end-use, from Motor Spirits (Petrol & Diesel) to value added products, such as plastics, polymers, elastomers and the entire downstream value chain will continue for a couple of decades.
However, within the mobility space (considering we @ tbhp live in this zone), it's gonna be really interesting since personal mobility will get electrified but there is still quite some distance to cover in HCVs and mass transit sectors. Lot of clamoring has commenced in this space, since electric cars (PHEV included) being the future is a foregone conclusion. Eastern Railways has already completely moved to electricity a western railways will get there by 2023.
Coming to coal, gasification and Coal Bed Methane, methanol and derivative production are capital intensive, and unless subsidies are given or our OMCs themselves invest, it is going to be slow progress.
In the end, we can responsibly use these resources to do our bit, the futures and its uncertainties notwithstanding.