The decarbonization movement is gaining steam, and its impacts are reaching further into all industries. In addition to growing carbon-neutral commitments from companies and governments worldwide, Wall Street has taken note as investors shift attention to environmental, social and governance (ESG) opportunities. An ESG-focused company attracts capital through sustainable, responsible and ethical business operations — such as carbon footprint reductions — while maintaining positive returns.
This ESG-driven pivot of investors to support businesses that prioritize their long-term effect on the environment is thrusting oil and gas companies into a new arena: renewable generation.
Most oil and gas companies fuel their operations with natural gas, field gas and/or diesel, or by interconnecting to the local utility system. As these companies expand and add to their electrical load, though, they’re increasingly considering the integration of renewable generation assets.
In addition to attracting investors, renewable generation offers potential cost savings for oil and gas companies. Renewable projects, specifically solar generation, create opportunities for cost-competitive energy options. Renewable generation also offers oil and gas companies investment tax credits to offset taxable earnings, as well as carbon tax reductions attributable to offsetting a certain volume of emissions from their facilities.
Though the value is apparent, transitioning to renewable generation for oil and gas companies is far more complicated than simply adding a solar field. After all, most oil and gas operations run at full tilt 24/7, so relying solely on the intermittent generation of solar power isn’t an option. Instead, these companies would need to firm their renewable generation with a dispatchable resource, such as battery storage or a natural gas-fired unit, in order to bridge the gaps caused when the sun doesn’t shine. The reliability of power is extremely important for oil and gas companies, so integrating renewable generation requires planning and due diligence to see that core business operations are not negatively impacted.
To help develop and execute a seamless transition to an effective renewable-focused generation portfolio, oil and gas companies can lean on firms that have been active in this space and can bring comprehensive solutions to the table. The full-service approach from Burns & McDonnell, for example, starts with understanding the company’s use case, load profile and reliability needs — calculating the energy duration and capacity needed — and recommends the generation mix to achieve it. From there, the site is evaluated for environmental implications or constraints, final generation potential is determined, interconnection decisions and implementations are made, and final engineering, procurement and construction are conducted.
This holistic approach is invaluable because solar alone is not a reliable solution for the continuous operations of oil and gas companies. To both advance with the changing energy landscape and effectively power its facilities, these forward-thinking companies need to identify their goals and pinpoint the right mix of generation sources — which will fuel their future.
Energy-related costs typically rank among the highest operating expenses for oil and gas companies. Learn how to reduce costs by converting to electrical power or improving existing electrical infrastructure.