Home GCC GCC’s energy space: What does the future hold? Stakeholders across local and regional countries are keen to pursue sustainable fuels by Zainab Mansoor July 25, 2021 The regional energy landscape has gone through layers of disruption to evolve into its current form. As the demand side of the equation evolved, a departure from the traditional way of powering the world’s energy needs was witnessed through an accelerated uptake of digital interventions and a marked shift towards ‘cleaner’ options. Companies across the industry spectrum adopted indigenous, technology-driven solutions for operational benefits and sustainability. Painting a green picture Amid larger economic recovery and regenerative strategies, a number of stakeholders are keen to build a future without the cloud of climatic cataclysm. Hydrogen is a resourceful fuel and can be used in several ways across the entire energy spectrum, but the traditional way of producing it entails substantial carbon emissions. However, it does draw a crucial link between traditional and sustainable fuels and, in its low carbon form, could possibly signal the world’s transition to a sustainable energy future. Hence clean hydrogen has now secured a major spot within the future’s energy drawing board. While blue hydrogen, in which carbon emissions are captured and stored, is one option, the cleanest alternative is green hydrogen, which is created when renewable energy is used to split water molecules via electrolysis. “For a sustainable future, we will need a mix of fuels and energy sources, depending on the application and environment, to ensure we can get to net zero quickly and cost effectively,” opines Jonathan Carpenter, vice president of New Energy Services at Petrofac. “The Gulf has enormous renewable energy resources – particularly solar – that will be increasingly harnessed for domestic power generation and needs. Potentially, green hydrogen, green ammonia and green methanol can also be produced for export. However, this will be constrained by freshwater availability in the region and desalination plant deployments. As a result, the Gulf has the opportunity to remain a major energy exporter for the foreseeable future, while also providing clean, low cost and abundant energy domestically which can be a catalyst for further economic growth and development,” he adds. Stakeholders across local and regional countries have shown intent to pursue sustainable fuels. In May, UAE firm Bee’ah announced that it will be pursuing the region’s first waste-to-hydrogen project, which includes a green hydrogen generation plant and a hydrogen vehicle fuelling station, in collaboration with UK-based Chinook Sciences. Earlier this year, Mubadala Investment Company, state-owned ADNOC and ADQ formed the Abu Dhabi Hydrogen Alliance to develop a roadmap to accelerate the country’s adoption and use of hydrogen in major sectors. Oman’s OQ too announced recently that, as part of an international consortium, it is developing one of the biggest green fuel projects in the world. Saudi Arabia also has ambitious plans – it aims to develop the world’s largest green hydrogen project after an agreement was signed between Air Products, ACWA Power and NEOM last year. The $5bn green hydrogen-based ammonia production facility will be located in NEOM and will produce green ammonia for export to global markets. Meanwhile, an Abu Dhabi Ports’ subsidiary also announced the formation of a green ammonia production facility, in which privately-owned Helios Industry plans to invest over $1bn. The plant will use solar power to electrolyse water and split molecules, and at peak capacity, release 40,000 tonnes of green hydrogen, which will be used to produce 200,000 tonnes of green ammonia. While green hydrogen does inspire hope, the technology to produce it remains expensive. A study by Strategy&, part of the PwC network, reveals that green hydrogen is currently more expensive than traditional production processes, roughly twice as much as gray hydrogen. However, advances in electrolysis technology, decreasing costs of renewables, and increased economies of scale should significantly reduce its production cost and make it an economically viable solution. Furthermore, GCC countries have several advantages, primarily highyield solar and wind resources, that can generate power at a very low levelised cost of energy. These will allow the GCC region to produce green hydrogen at scale and at low cost. “We expect that the total demand for green hydrogen could reach about 530 million tons (Mt) by 2050, displacing roughly 10.4 billion barrels of oil equivalent (37 per cent of pre-pandemic global oil production) in various sectors such as heating, transportation, power generation, chemicals, and primary steel manufacturing. This is part of a broader move towards decarbonisation that has sped up thanks to the Covid19 pandemic, which has slashed hydrocarbon demand. At that point, we expect that the yearly global export market for green hydrogen will be worth about $300bn,” the study read. Transnational alliances have also been formed to pursue low-carbon fuel forms and address climate change. In 2020, Saudi Aramco announced that the world’s first blue ammonia shipment was dispatched from Saudi Arabia to Japan. Ammonia releases zero carbon emissions when burned in thermal power plants and “has the potential to make a significant contribution to an affordable and reliable low-carbon energy future,” according to the energy giant. Ammonia can also be used across multiple industrial applications. ADNOC revealed recently that it would advance a blue ammonia production facility in Ruwais to meet demands for low-carbon fuels. Blue ammonia is produced from nitrogen and blue hydrogen that is derived from natural gas feedstocks, with carbon emissions captured and stored. “Ammonia will allow large quantities of the energy captured from renewables, which is converted to hydrogen and then ammonia, to be transported cheaply and can be used to power ships but also replace natural gas or coal in power stations, effectively displacing these fossil fuels in the process. If needed, ammonia can also be converted back to hydrogen at the destination, if that is the preferred fuel source,” adds Carpenter. Going ahead, in the face of towering climatic and environmental implications, the search for sustainable energy sources continues unabated. The future of biofuels – which are sourced from biomass – also appears promising. “Biofuels represent an important aspect of the roadmap for transport decarbonisation. To meet our sustainable energy goals, we may also anticipate the need for increasing deployment of many kinds of biofuels. These include not only ethanol, biodiesel and biogas, but also other types of alcohols, such as methanol or butanol, as well as renewable diesel (HVO) and other so-called drop-in fuels that meet the fossil fuel quality standards” a report by the International Renewable Energy Agency (IRENA) revealed. However, the primary challenge for biofuels is the ability to produce at scale; presently, biofuels rely on feedstocks that are generally not as widely available in the volumes needed to make an effective substitute for fossil-derived fuels, opines Carpenter. “Expanding production will require significant land and water use that are not sustainable. Present biofuels production works best when it is focused on a localised supply chain of feedstock to produce biofuels to meet localised demand, as to limit emissions to enhance its sustainability. Freshwater availability also remains a key challenge for biofuels – particularly in water-stressed regions like here in the Middle East.” This challenge is also driving innovation, with many technology companies looking to convert more abundant raw materials, or even waste, into biofuels to drive both increased scale and improved economics, he adds. “One such example is the Green Fuels’ project in Oman with Wakud, where their technology takes used cooking oil via a transesterification process to create biodiesel. Tyres, municipal waste, even sewage and animal slurry, can be converted into fuels, including aviation fuel, which will help to address one of the hardest sectors to decarbonise.” Advanced biofuels – which make use of non-food and non-feed biomass, including waste materials and energy specific crops – also offer opportunities to mitigate climate change, harness waste and energy crops, create new jobs, and strengthen energy independence, the IRENA report states. However, despite the advantages of a transition to producing and using 2G (second generation) biofuels, the emergence of the advanced biofuel industry has been sluggish due to numerous barriers such as high production costs, immature supply chains, dependence on government support schemes that are subject to political influences, and consequent uncertainty around market size, it said. Digital dive As technological advancements permeate industrial ecosystems, and as companies within the oil and gas sector increasingly integrate their physical systems with digital solutions, businesses can derive timely insights, respond to real-time queries, foster safety and scale operational efficiencies. Emerging technologies will not only equip companies to adapt to changing market conditions and help achieve their sustainability objectives, but also effectively alter how energy is supplied to the world. “There is a serious focus in the oil and gas industry to improve on sustainability, efficiency and reduce emissions/environment impact – while maintaining health and safety levels. In this context, we see a focus on digitalisation solutions, seeing as they are a key enabler for critical aspects like predictive/preventive maintenance, workplace hazard reduction, remote operations, enhanced inspection, and operations ability, and overall asset life extension through higher reliability and reduced risk,” opines Abhay Bhargava, senior director, Industrial Practice, Middle East and South Asia at Frost & Sullivan. Key technologies and solutions being used across the oil and gas landscape include sensors, analytics, drones, cloud/edge computing, AR/VR and digital twins, blockchain, 3D printing/additives, connected fields, wearables, robotics and 5G. However, the industry is dealing with and prioritising only those technologies that can support in advancing the automation of activities, which can result in higher efficiency of assets and extension of life, he adds. Technologies such as a digital twin – which is a virtual representation of assets/processes – is a bridge between physical and digital worlds. Oil giant BP deploys APEX, a simulation and surveillance system that creates a virtual copy of all the company’s production systems throughout the world. APEX delivered 30,000 barrels of additional oil and gas production per day during 2017 across BP’s global portfolio, according to the company’s website. “The benefits of digital twin technology go beyond simple convenience – providing avenues of real-time monitoring, faster response times, better prediction of potential issues/ deviations to processes, and even the ability to control entire assets/processes remotely,” says Bhargava. Stakeholder collaborations and key initiatives that address factors impeding the development of sustainable fuels, as well as widespread adoption of digital solutions will underpin the world’s transition to a sustainable global energy system. Tags ADNOC energy Oman Saudi Aramco UAE 0 Comments You might also like Meet ARIF, ADNOC Distribution’s new investor relations chatbot Standard Chartered expands private banking team in the UAE UAE finalises pact to boost trade with Eurasian Economic Union UAE set to roll out 15% tax for global corporate giants