Optimising energy sourcing and consumption in the oil and gas sector

Abstract

Oil and gas companies are fairly large users of electricity, and the rising cost of electricity has become a major issue for the sector. Oil and gas producers often develop their own gas-fired generation plants and consume their own gas as generation fuel. An increasing price of gas in the domestic market has resulted in a corresponding increase in the opportunity cost of utilising gas for power generation.

Declining costs of renewable energy and battery storage open opportunities for oil and gas companies to reduce the consumption of their own gas and source electricity at a lower cost, as well as achieve their sustainability objectives. Gas-fired generation is expected to continue to play a key role in ensuring the reliability of electricity supply. However, the percentage of renewable energy in the supply mix can be increased significantly without compromising the reliability.

This paper will focus on the opportunities that exist for oil and gas companies to reduce their overall energy supply costs through a differentiated approach considering renewable energy sources and batteries, competitive tendering of energy supply requirements, and attracting capital from independent power producers and institutional investors. The paper will draw on lessons learnt from other energy intensive businesses in Australia.