How do oil giants lay out renewable energy at low oil prices?

◆ There seems to be an irreconcilable contradiction between oil and renewable energy. But this does not mean that renewable energy will “kill” oil companies, and some of them are now an important business for oil companies. It is worth noting that even in the "cold winter" period of oil prices, although the full rise of renewable energy will take time, the world's top oil companies have already launched the strategic layout of renewable energy, in terms of technology, operation, market and other aspects. Be prepared to capture potential opportunities.

Technology: Enhance reserves and compete for the hills

The renewable energy field is a capital- and technology-intensive industry. The breakthrough of core technology is phased. From laboratory research and development to large-scale production of the factory to product launch, it is the only way for every renewable energy commercial application. The continued investment of funds is the key.

In 2015, due to the impact of low oil prices, Total, which has a core business in the oil and gas industry, was also unable to survive. The total revenue of its main business decreased by 30.1% year-on-year. In order to survive the winter, Total reduced its capital expenditures to between $23 billion and $24 billion, and at least until 2017.

Although the planned expenditure limit has been repeatedly reduced, Total still insists on investing a total of 500 million U.S. dollars in photovoltaic power generation and biofuels every year, so that the proportion of renewable energy expenditure in the total expenditure of the company maintains a moderate growth, which shows that the company’s decision-making layer Expectations in the field.

Jacques Burundi, senior director of Total Group, pointed out that some key processes of the second generation of new bioenergy involve a series of complex processes and technologies, which require a large investment and a large amount of raw materials. It takes a long process to achieve industrial production.

Compared with the first generation, the biggest improvement of the second generation of biomass fuel is that it does not use food crops as raw materials, thus solving the dilemma of competing with people. Enzyme fermentation technology is the key technology to promote the efficient conversion of biocellulose.

Also doing new biomass fuels, Maarten Wetselaar, member of the Shell Group Executive Committee and president of the Natural Gas Integration and New Energy Division in 2016, said in an interview that as of mid-2016, Shell’s new energy investment accounted for At a lower level, less than 1%, but Shell has already defined the investment strategy for new energy in the future. In the annual R&D budget of US$1 billion, the new energy business will account for 1/5, and biomass fuel as the first focus area. It will always be the focus of Shell's investment and R&D.

As early as 2007, Shell signed a five-year agreement with Codexis, a US biocatalyst manufacturer, to develop new super enzymes for more efficient conversion to non-food biomass. At present, Shell has built a biomass fuel production base in Brazil. Although the economic cost is high, it has technical feasibility. With the advancement of technology, large-scale commercial production will be realized in the future.
It can be seen that not only Total, Shell, but also for many well-funded oil giants, the breakthrough of source technology often means possessing intellectual property rights and industry discourse rights. Although it is difficult and difficult to see benefits in the short term, these oil companies Still do not dare to reduce the source of research and development investment.

Management: multi-point layout, "plus warehouse" new energy

As the return on investment of the oil and gas industry continues to decrease, the adoption of diversification strategies to enhance the company's ability to resist risks, foster new performance growth points, and improve overall operational efficiency is the only way for traditional energy companies. At present, almost all of the oil giants are in the exhibition and have a diversified development strategy.

After years of continuous research, ExxonMobil has become a global leader in biofuel research, with a focus on biofuels and carbon capture storage technologies in the new energy sector.

Since 2012, ExxonMobil has partnered with Fuel Cell Energy to study how carbon capture technology can be used to collect carbon dioxide from power plants and then use carbon dioxide to generate electricity. The company is currently working closely with New Energy Group Inc. (REG), Michigan State University, and the University of Wisconsin-Madison to develop biofuels.
On June 19, 2017, ExxonMobil and Synthetic Genomics jointly announced that the two companies have jointly researched the genetically modified algae bio-fuel technology and made a historic breakthrough. By applying Synthetic Genomics' advanced cell engineering technology, a team of two companies modified the genes of the strain to increase the oil content of the strain from 20% to 40%. The research results have been published in the world's top scientific journal Nature Biotechnology. The US Department of International Energy believes that algae bio-oil is one of the most likely alternatives to oil, and ExxonMobil's cutting-edge results will greatly accelerate the transition process.

Compared with ExxonMobil's insistence on developing biofuel energy, BP has made a higher contribution to hydrogen energy while deploying biofuel investment plans, just as BP's slogan, “BP, not only contributes to oil” .

US Deputy Secretary of Energy Mike Siller has said that regardless of whether the oil era is about to come to an end, the advantage of developing a hydrogen energy economy is that it can make large-scale use of domestic resources for production, rather than relying on imports from other countries like oil.

The key to the practical use and scale of hydrogen energy utilization lies in the low-cost hydrogen production technology and hydrogen storage technology, which is precisely the strength of BP. John Mogford, vice president of the BP Group's natural gas, power generation and renewable energy business, said: "With hydrogen alone, BP now has 20 production routes."

Since the 1990s, BP has participated in numerous hydrogen demonstration projects around the world. At present, BP's daily industrial hydrogen production has reached 5,000 tons, which is enough to supply 10 million fuel cell vehicles. And BP is also the first multinational company to join the Chinese government-led first large-scale hydrogen fuel vehicle demonstration project.

The enlightenment of the international oil giant “Gaocang” new energy technology is that it can make the development of new energy industry

As an important part of the long-term strategy, it will gradually grow and enter a virtuous cycle, instead of blindly pursuing short-term investment returns. Multi-point layout does not mean that there must be more immediate "flowering". The key is to find out the future of the energy industry.

Market: Improve supply, activate demand

In the energy market, the long-term main products on the supply side are traditional energy types such as oil, natural gas and coal. On the demand side, users are more eager to get cleaner, more efficient, environmentally friendly, and cheaper products, but there aren't many options to choose from in addition to different brands. In other words, energy consumption is largely not “what is used and what is produced” under the conditions of a complete market mechanism, but “what is produced and what is used” with a certain planned economy. Under such circumstances, energy innovation depends more on the driving force of governments and suppliers.

In July 2017, at the G20 Hamburg Summit, several European powers announced a comprehensive timetable for the ban on gasoline and diesel vehicles. Among them, the Netherlands and Norway announced that the full ban will be achieved in 2025, which is the shortest time. This marks the end of the high price of oil, which means that fossil fuels will soon bid farewell to the historical stage in Europe.

As we all know, Europe is known for its environmental protection. With the increasingly prominent environmental problems, it has become an important global consensus to promote the development of energy consumption towards low carbonization and cleanliness. However, it is difficult to imagine the replacement of energy in such a short period of time. In this regard, the Norwegian National Petroleum Corporation has explored a new path as the pillar of Norwegian national energy.

According to the BBC's report in July this year, Hywind, the world's first commercial-grade offshore floating wind farm, was formed in the northeastern part of the Scottish region of the UK, including blades, each of which is 175 meters high and weighs 115,000 tons. Each blade is 75 meters long and is equivalent to the wingspan of an Airbus passenger aircraft. The wind farm is built by the Norwegian National Oil Company and provides electricity to 20,000 homes.

In 2015, despite the adverse impact of the sharp fall in fossil fuel prices, global new energy investment surpassed fossil fuel investment for the first time. At the same time, the Norwegian National Petroleum Corporation established a new energy solutions division, with offshore wind as a key investment. Norwegian national oil chief executive Eldar Saetre said: "New energy technology research and development will be an important investment direction for the company in the future. In the next 4 to 7 years, it will invest 200 million US dollars to develop new energy.
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Wind power development has reached the current stage, and its cost performance is forming a clear competitive advantage compared with coal power and hydropower. For every doubling of wind power generation capacity, the cost will drop by 15%, and in recent years, wind power growth worldwide has remained above 30%.

The Hywind project, which cost more than £200 million, is unusual in that it uses a number of new wind energy technologies, such as a 78-meter-high underwater ballast and three cables that are tied to the seabed to keep the turbine upright. The head of the Norwegian National Petroleum Corporation's low-carbon division said that the application of this series of technologies has opened a new door to wind power generation. Currently, this floating power plant can operate at depths of 100 to 700 meters underwater. Dive to a deeper place.

Experts from the International Energy Agency (IEA) Wind Energy Group are also optimistic about the prospects of floating wind power plants, and believe that floating wind power plants will far exceed fixed wind power plants in the coming decades.

Like many new technologies, the biggest challenge for offshore wind power generation will be construction costs. According to the IEA, the cost of floating wind power at sea is currently the same as that of a fixed reference wind farm ten years ago. The Norwegian National Oil Company estimates that the cost of floating wind power will be equal to that of traditional offshore wind farms by 2030.

Planning: delaying pain and promoting transformation

The transformation of traditional energy companies into new energy companies always goes through a transition period of mixed development. Today, most of the world's largest oil companies are in the early stages of this comprehensive energy development.
Transformation often comes at a price, and the longer the intermediate stage, the more stable the foundation, the more beneficial it is to delay the pain caused by the transition and promote a smooth transition. Oil companies with long-term planning often choose the established orbits very early, paving the way for unexpected energy changes. The relationship between Chevron and geothermal resources proves this.

Geothermal mining and oil and gas exploration technologies have similarities, but geothermal development costs are high and preparation time is long. In this respect, oil companies have a natural advantage, and with their capital, technology, investment experience and resource advantages, they have great potential in the development of geothermal energy.

Chevron is an oil company that started commercialization of geothermal resources earlier. Since the 1960s, Chevron has been involved in the geothermal industry and has focused its geothermal energy use on geothermal power generation.

In 1991, Chevron took the lead in undertaking the DeepStar program, which carried out a series of technical research on drilling and completion, workover, reservoir management, geology, flow control, marine environment and submarine production to cope with high temperature environment, and promoted new Downhole products and related services for efficient operation in geothermal fluid environments.

Geothermal recharge is a powerful measure to achieve the sustainable development of geothermal resources. It has been widely used in countries around the world, and it is of great significance for the protection of geothermal resources, reducing resource waste, extending the life of production wells and reducing environmental pollution. In order to ensure the injection effect, Chevron uses the improved Hall drawing and analysis method to show the extension of the crack in the reservoir, and also through the periodic pressure drop test, combined with the geomechanics created according to the geothermal field development calibration. The reservoir stimulation model is used to quantify the improvement in water injection efficiency.

After years of development, Chevron has become the world's largest geothermal energy producer, operating a total of four geothermal projects in Indonesia and the Philippines, supplying 1.273 million kilowatts of renewable energy to millions of people.

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