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Key Takeaways
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The oil and gas industry is changing. This is evident in national and regional climate policies, shifting investor signals, and the rapid growth of low-carbon technology. All of these factors are affecting how service companies, producers, and financiers work in the market and with regulatory drivers.
Major policy packages like the U.S. Inflation Reduction Act, the EU’s Fit for 55, and other national plans are already shaping the investment incentives and permits. In fact, between August 2022 and January 2025, U.S. clean energy project investments totaled over USD $160 billion, demonstrating policy-driven momentum. Meanwhile, some banks and asset managers persist in advocating for sustainability-linked strategies. (1)
Your task as a professional or stakeholder within this sector is to get through this complexity without losing sight of the long-term goal. And this is where expert consulting comes in handy. Professionals in the oil and gas industry work with consulting firms and specialized advisers to help them with aspects like portfolio prioritization and transition strategy.
Read on to learn how the right consulting strategies can help oil and gas companies become more stable as the clean energy change takes place.
Assessing Transition Risks and Opportunities
You need to see the big picture to be resilient. The transition to cleaner energy creates a complex picture of risks and opportunities. This is the new reality that oil and gas companies have to deal with. While there are threats like reduced demand or regulatory pressure, there are also opportunities like pivoting toward low-carbon fuels.
To turn the complexity of the market into a structured, data-driven plan, the following are the top considerations to address:
Policy and Regulatory Analysis
It’s important for people in the oil and gas sector not to treat environmental mandates as after-the-fact compliance. View these regulatory policies as indicators of future changes in costs, market structure, and trade flows. To accomplish this, it’s important to proactively look into new environmental laws and changing ESG reporting standards.
These include new rules like the U.S. Securities and Exchange Commission (SEC) requiring publicly traded companies to disclose their climate-related risks and how these affect their finances. More and more, climate change risks are seen as material to investors, which means that rules about exposure can affect prices and access to capital. If you can see these shifts coming, you can change how you allocate capital and protect project valuations before rules take effect. (2)
Market and Competitor Evaluation
Energy carriers and alternative fuels are becoming more popular. To keep your market share, you need to know when the next move will be. The market is changing in ways that go beyond the wellhead. Companies unable or unwilling to adapt to this shift may lose their relevance in the energy market.
Moreover, defending your market share means using active intelligence and not just doing simple tracking. It means comparing carbon capture, utilization, and storage (CCUS) pilots and looking into why a competitor buys a renewable developer. Doing this can show threats and opportunities relevant to ensuring you remain competitive in the energy industry.
Investment and Supply Chain Insights
Long-term value and operating continuity in the energy transition depend on how resilient the supply chain is. Companies that misallocate capital, such as by investing too much in assets that aren't being used, can face financial and operational consequences. The same thing can happen to those firms that don't pay attention to supply chain risks like component shortages.
To have a resilient supply chain, it requires mapping how much an oil and gas company needs rare elements for power projects. Electric-generating technologies like permanent magnets, wind turbines, and EV motors depend on rare earth elements like dysprosium and neodymium. Supply chain and processing are highly concentrated. This creates a strategic weakness that companies should clearly plan out.
It's beneficial for large upstream, midstream, and downstream operators to work with the best oil and gas consulting firms. Their knowledge helps operators lower risk and maximize their resources.
Diversifying Into Low-Carbon Portfolios
As the world tries to reduce its carbon footprint, one way to achieve and maintain growth in the oil and gas sector is through diversification. It entails using unique assets like engineering power, capital, and project-scale knowledge to take over new markets.
Consultants focus on the following points to get a better sense of where to go:
Examining Potential Returns in Renewable Energy
Your new equation now for allocating capital calls for a more in-depth look at green investments. In countries such as the U.S. and U.K., interconnection waits represent a bottleneck. Large backlogs and multi-year delays raise development risk, carrying costs, and merchant periods. In this case, the internal rate of return (IRR) of a solar photovoltaics (PV) project needs to be tested against grid congestion and interconnection lines in the region.
Similarly, the merchant power risk for an offshore wind farm needs to be modeled against changing power purchase agreement (PPA) structures. This in-depth analysis gives you the confidence to strategically place billions of dollars on wind, solar, or geothermal assets.
Comparing Regional Opportunities for Clean Energy Projects
The success of a clean energy project depends on the market, the availability of grid or transportation infrastructure, and the support from the government. In fact, a country's well-developed financial systems and governance levels affect the financing of a project finance deal. Low financial development and governance hinder renewable energy projects. (3)
Before moving forward, analyzing these factors is a good strategy. This requires a forensic comparison that goes beyond high-level incentives to analyze specific variables, such as Texas's Renewable Energy Credit (REC) program's bankability versus Germany's grid's capacity to absorb new offshore wind. It also extends to contrasts such as Japan's solar land-use constraints versus Chile's.
Designing Entry Strategies That Match the Company’s Strengths
When entering new energy markets, use current balance-sheet strength, engineering or project expertise, and asset footprints. This strategy is more preferable than attempting to create a whole other kind of firm overnight. It's a custom plan that turns your unique strengths, such as unmatched subsurface geology knowledge or mastery of complicated project finance, into clear benefits in new markets.
In other words, it means making a specific plan. A usual and sensible approach is to use the CO2 transport and storage infrastructure and midstream networks that are already in place. Your first move will give you authority and momentum if you have a good plan.
Companies can move into areas that lower their carbon footprint and support steady growth with the help of a focused diversity plan.
Optimizing Existing Operations for Efficiency
Legacy upstream and midstream assets are not liabilities that need to be abandoned. Instead, they are sources of margin and cash that can be optimized (production efficiency, dependability, and cost reductions). Established assets are like an engine that needs to be refined. This is where the money for future investments is made.
To make these improvements even better, focus on the following areas:
Review Equipment Performance and Asset Integrity
Any complex industrial facility, such as an oil and gas plant, pipeline network, or refinery, often fails because of a critical component breaking down. This could be a pipeline corroding, a valve wearing down, or a heat exchanger getting clogged, among others. That's why many operators use systematic integrity management and inspection regimes instead of assuming uniform reliability across the facility.
In particular, a forensic performance acts like a diagnostic scan that looks at the condition of certain systems, such as the rate of erosion in subsea manifolds, the heat exchanger fouling in your cracking units, or the stability of the cathodic protection on your cross-country pipelines. The insight gained gives you the exact recipe for changes that make things more reliable, use less energy, and protect your license to operate.
Recommend Emission-Reducing Practices That Lower Operating Costs
True cost optimization happens when you make the most of both financial and environmental efficiency. This means implementing practices like flare gas recovery units on certain midstream assets and switching to frac pumps that are powered by electricity. It can also entail using advanced process control to make heater treater combustion work better.
Each step turns wasted fuel and extra pollution into recovered goods and lower OPEX. Putting waste gas to work cuts down on the need to buy fuel gas, reduces waste, and can improve reliability.
Introduce Tools That Support Real-Time Decision-Making
In today's market, data that is too far behind is a direct threat to profits. When operational visibility is delayed, unplanned downtime, curtailments, and missed market chances happen more often. But with the right digital solutions, such as Internet of Things (IoT) sensor networks that are built in and artificial intelligence or AI-powered predictive analytics tools, your control room can be a proactive command center.
Using tools that support quick decision-making gives your team detailed, real-time data. They will then use this information to change the path of pipeline flows based on changes in pressure and detect the early vibration signature of a failed pump hours before it breaks.
Focusing on operational efficiency helps companies improve reliability and perform better across all of their existing assets.
Developing Long-Term Transition Roadmaps
A transition that does not have a plan is just a dream. Companies that use structured transition plans do a better job of execution, capital allocation, and risk management than their competitors. Your strategy needs a clear, doable plan that aligns today's cash-generating assets with tomorrow's profitable opportunities.
Below are the essential aspects to address when creating a transition roadmap:
Outlining Steps for Gradual Decarbonization
You need a sequenced execution plan to reach net zero strategy or deep decarbonization goals. Break them down into steps that are done in a certain order. Plans often don't lead to measured results when they aren't put in order.
For instance, you could set up a pilot project to reduce methane emissions in the Permian for year one. You could also give the go-ahead for a refinery to retrofit with carbon capture by year two Moreover, you'll then make sure that they can buy green hydrogen by year 10. These are illustrative, yet the principle is true: with measurable project milestones you can ensure accountability and that progress is always being made.
Coordinating Capital Allocation for Traditional and Cleaner Assets
An oil and gas firm's major problem is determining how to spread limited capital over two goals simultaneously. It's to maximize cash flow today while funding the future. The scale of this dilemma varies by company because balance sheet strength and investor expectations differ.
This is where you provide decisive value. You make the capital plan and use complex financial models to figure out how much equity a new green hydrogen business needs and how much return an old deepwater asset can get. The economics of green hydrogen are quite susceptible to things like the cost of financing, the cost of electrolyzers, the price of power, and government backing. So, models must be run across wide, realistic scenarios.
Structured transition roadmaps help businesses put their long-term environmental goals into a set of measurable steps that can be taken in order.
Managing Workforce Transformation
Skills and talent gaps are the biggest barrier standing in the way of energy transition progress. Even with enough finance and technology, companies without skilled workers fail to implement low-carbon initiatives. Your job is to plan the approach for human capital.
To achieve this, you need to do a thorough capability gap analysis to find the exact engineers you need for a carbon capture project. Alternatively, you need to find the data scientists you need for predictive asset maintenance. Strategic flexibility and future-ready knowledge must underpin the company's operational resiliency.
As clients move toward cleaner solutions, workforce planning must proactively redesign roles and reporting structures. This includes making a plan for how a traditional refinery team can change to co-manage a biofuel unit that is housed next to the refinery. It also entails planning on how the responsibilities of a gas trading desk can be redistributed to include carbon credit portfolios.
Planning the workforce ahead of time to include new roles and training programs cuts down on disruptions. It speeds up the process of employees taking on new duties.
Final Thoughts
Companies that make it through the energy transition do so by following structured, long-term plans. This is also where consulting firms become essential partners. Their services help energy companies turn uncertain futures into plans that they can carry out. These methods include risk assessments, scenario planning, portfolio modeling, and implementation frameworks. Companies that invest in these strategies position themselves for long-term stability in a changing market.
References:
1. "Announced investments for clean energy projects in the United States from August 2022 to January 2025, by sector", Source: https://www.statista.com/statistics/1474859/us-clean-energy-investment-announced-by-sector/
2. "Reality Check For Regulators: A Dangerous Carbon Bubble Persists", Source: https://www.forbes.com/sites/johnkostyack/2024/06/26/reality-check-for-regulators-a-dangerous-carbon-bubble-persists/
3. "Determinants of Project Finance success for renewable energy", Source: https://www.sciencedirect.com/science/article/abs/pii/S0960148123004810
