The Response of Oil and Gas Industry towards the Climate

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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 industrys 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.

The response of oil and gas industry towards the climate change

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

The response of oil and gas industry towards the climate change

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 50s 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).
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The response of oil and gas industry towards the climate change

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 greenhouse 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
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The response of oil and gas industry towards the climate change
strategies indicate the companys 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

The response of oil and gas industry towards the climate change
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
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The response of oil and gas industry towards the climate change
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
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The response of oil and gas industry towards the climate change
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 oilgas 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 lightenergy 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 greenhouse gas and can be applied over a number of mechanical procedures.
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The response of oil and gas industry towards the climate change

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, biobutanol extracted from the same procedure can provide results as effective as gasoline. The
production of these fuels is cost efficient in which the extraction of these chemicals can occur by
simple biomass, fossils and the reaction with carbon-dioxide and water. These alcohol-fuels are
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The response of oil and gas industry towards the climate change
found to be less toxic and can be adapted as the sustainable production in the oil-gas industry and
are proven to be environment friendly (Lamy et al., 2002).

Ammonia
The utilization of ammonia as fuel is considered to be beneficial for the profitability of oil-gas
industry because it the energy that ammonia emits is partially equalized by the energy produced
by diesel. Ammonia is widely available in the natural resources characterized as fossils which
make the extraction and refining of ammonia feasible at the infrastructure that is adept at the
refining procedure. Thus, there exists vast paradigm for the companies that want to gain
sustainable competitive edge in the oil-gas industry by the utilization of ammonia. The
combustion of ammonia results in the emission of water and nitrogen which implies no negative
effects on the climatic condition and thus, the energy production by ammonia ensures the
industrys liability towards the climate change (Wojcik et al., 2003).

Conclusion
The environmental hazards that are being generated by the emission of carbon dioxide and toxic
gases by the combustion of fuel used for the production and mechanics has been addressed by
the oil-gas industry in order to adapt to certain business strategies that provide the industry with
the long term business scope and profitability. The measures to reduce the emission of toxic
gases was boycotted by the oil-gas industry but the industrys social responsibility towards the
planet and it habitats and the decrease in the oil reservoirs made the industry to adapt. There
exists number of substitutes that can provide the mechanism of tradition fuel and result in the
reduced or no emission of toxic substances. The utilization of biomass energy takes the
infrastructure but can provide profitable prospects to the industry whereas, the utilization of
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The response of oil and gas industry towards the climate change
biofuel, algae-fuel is considered to be cost effective. There exists need for the building of
infrastructure for the plant of wind and solar energy mechanisms but the procedure adheres to the
one time capital requirement by the company and proves to be profitable and cost effective in the
long run. However, the production of H-CNG, liquid nitrogen, alcohol fuels and ammonia needs
their production and refining and can be profitable but the process will have to be backed by the
energy resources in order to produce these energy alternatives. The decreasing rate of oil
reservoirs has generated issues in order to meet the ever-increasing of the fuel but there exists
wide prospect for the oil-gas industry to strategize and adapt their business prospects to ensure
the future sustainability of business in terms of profit and competitive advantage.

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The response of oil and gas industry towards the climate change

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The response of oil and gas industry towards the climate change
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