The Emerging Challenges for the
Petroleum Industry by 2050 and
the Methods Being Adopted to
Tackle such Challenges
Introduction
Challenges in petroleum industry
increases as we approach 2050
Challenges relates to increase in new
complex and risky projects (Pant,
2008,222).
Changes in society has contributed
to these challenges as well as
opportunities in petroleum industry
Challenges require urgent measure
to make the world a better place.
The petroleum industry is facing so many challenges everyday and the challenges are
progressively increasing as we approach the year 2050. These challenges are mainly
compounded by the increase in the magnitude of projects being initiated. Some of the
projects are very complex, risky and very dangerous (Pant, 2008,222). In addition, the
societies are changing at a very alarming rate hence requiring so much from the business
world and from those who are governing them. Therefore, these changes in the society
have led to so many challenges and more opportunities in equal measures in the petroleum
industry, those who formulate policies and the society at large. These challenges therefore
need quick interventions in order to make the world a better place to live before the year
2050 (HILYARD, 2012,200).
Geopolitics
The fluctuation of fiscal regime in Host-Governments makes enormous pressure on oil
companies
Innovation in tax regimes is another ‘headache’ for Operating companies. China recently
introduced experimental resource tax on crude oil and natural gas products with 5%-10% on
sales. (BBC).
The geopolitical challenges have affected the social responsinility. This challenge includes
relations with various stakeholder groups, health and safety concerns
Horizontal drilling and Fracturing
Doubts in drilling methods capabilities to revolutionize global oil and gas
The two methods in doubt are horizontal and fracturing drilling
Opposition in using fracturing- France and UK has banned it
US has complained that it causes small earth quakes
Risk of underground contamination
The petroleum industry has been using both the hydraulic fracturing and horizontal drilling.
However this two technologies are in doubt whether it will really revolutionize the global oil
and gas industries. Fracturing has already transformed the North American gas market and
has resulted in an oil boom in North Dakota. But elsewhere the technology is running into
increasing opposition. France has banned its use. In the United Kingdom and in the United
States it has been blamed for triggering (small) earthquakes. Fears about groundwater
contamination and the visual and environmental impact of surface facilities could also limit
political acceptability and the widespread deployment of the technology. The reserves and
the technical ability to get at them are there, but the political acceptability is questionable.
Competition
Performance in emerging markets mostly is dependent on government pricing policy
A significant risk is involved for any foreign direct investments and creates the issue of
‘bargaining power’ of the state.
The environmental pressure and market demand that oil companies experience today force
them to explore new industries, i.e. renewables
According to Petroleum Review, 47% of respondents had already invested in ‘cleantech’.
This urge requires additional resources, company policy and revised strategy
Climate
High pollution because of high rate of industrialization
Reduction of pollution is embrace advanced technology and change intellect in innovations
Minimization of carbon emissions through regulations
Speed up implementation of renewable energy
There are high levels of pollution especially in the developing world due to high rate of
industrialization. Pollution causes increase in heat due to destruction of the ozone layer in
the sky. The solution to pollution therefore is to come up with an advanced technology and
also a change in the intellect on how people do their new innovations. This would involve
coming up with new ways of ensuring that resources are well preserved and that production
of carbon is minimized or reduced to the lowest levels possible.
In order to reduce production of carbon dioxide therefore, there is need to regulate the use
and destruction of carbon dioxide from the environment. In addition there should be in
increase and speed up in the production of renewable energy like wind energy and solar
energy. This would also reduce the high cost in energy consumption hence increasing in
development. Another factor would be increase in the production and use of all the
available natural gases. However, this will only be determined by the amount of investment
a given country puts in this projects. Reports indicate that if these policies are well
implemented, then pollution of the environment would reduce by 2020.
Increased Demand for Energy
Increase in population in urban centers will exert pressure on energy resources
Substitution of energy sources will become essential
2050 demand for energy will increase to 40% from hydrocarbon grows to 80% (Hilyard,
2012).
Challenges is coming up with stable and secure source of energy by 2050
According to the UN reports, 2050, so many people will be living in the urban centre.
Consequently, due to this steady growth of people in the urban centres, there is need for a
steady supply of energy to this people especially those living in the slum areas. Those living
in the slums would need power for both heat and light. Therefore substitution of energy
sources will be a very important aspect in sorting out energy problems in the slums.
Around the world, demand for energy is increasing fundamentally. By 2050 it is predicted
that the demand for energy will grow to as high as 40% with energy from hydrocarbon
growing to 80%. Despite the fact that recession heat countries in 2008-2009, the demand
for energy is steadily growing. Therefore the major challenge is how to come up with very
stable and secure energy source by the year 2050 (HILYARD, 2012).
As people move to middle class economy consumption of energy increases
Petroleum industry is facing challenges of providing the energy constantly without
interfering the environment
Rapid growth of photovoltaic (PV) technologies will help to address the challenges inherent
in petroleum industry (Hilyard, 2012).
Solutions to the emerging challenges
adoption of wind energy will act as a substitute in energy generation
Wind energy is cleaner energy hence has less environmental effects
Construction of taller wind turbines will help capture more energy from stronger winds
blowing at greater heights (Seba, 2010).
The future availability of critical materials is a widely acknowledged concern within the
energy community. Other studies have examined (Tilder, Blostein & Amidon 2009).
Wind turbines across the globe are being made taller to capture more energy from the
stronger winds that blow at greater heights. But it’s not easy, or sometimes even
economically feasible, to build taller towers, with shipping constraints on tower diameters
and the expense involved in construction. Now Keystone Tower Systems — co-founded by
Eric Smith ’01, SM ’07, Rosalind Takata ’00, SM ’06, and Alexander Slocum, the Pappalardo
Professor of Mechanical Engineering at MIT — is developing a novel system that adapts a
traditional pipe-making technology to churn out wind (SEBA, 2010).
Conclusion
Energy industry has changed drastically in the last 30 years
Oils and gas producers have moved into ever deeper water
Deregulation of utility sector
Increased use of renewable energy
Inherent challenges in ensuring sustainable, secure and affordable supply in the next 30
years
Increase in energy demand in 2035 by 40% requiring $ 38 trillion of investment
Over the course of the past 30 years the energy industry has changed dramatically: oil and
gas producers have moved into ever deeper water and unconventional plays. The utilities
sector has been de-regulated and unbundled in much of the OECD world. Renewable have
rapidly grown, following the emergence of climate change as a core issue on the
international agenda. Ensuring the sustainable, secure and affordable supply of energy over
the next 30 years is going to be much more challenging. Energy demand will increase by 40%
by 2035, requiring $38 trillion of investment in energy.
References
HILYARD, J. (2012). The oil & gas industry: a nontechnical guide. Tulsa, Okla, PennWell.
NATIONS UNIES. (2007). Emerging global energy security risks. New York, United Nations
PANT, G. (2008). India, the emerging energy player. New Delhi, Pearson Longman.
SEBA, T. (2010). Solar trillions: 7 market and investment opportunities in the emerging clean-
energy economy. San Francisco, CA, Seba Group.
TILDER, L., BLOSTEIN, B., & AMIDON, J. (2009). Design ecologies essays on the nature of design. New
York, N.Y., Princeton Architectural Press
