On February 24 I had the opportunity to host a meaningful and fascinating conversation on digital strategies for navigating today’s energy transition.
This executive conversation, held virtually, brought together Zsolt Huff, SVP of downstream production at MOL Group, Dr. Bela Kelemen, President, European Petroleum Refining Association (EPRA), Dr. Damon Hill, President of Growth and Development, Wood Group, and Giuseppe Citterio, Chief Energy and Sustainability Officer, Saras S.p.A..
A few themes came to the forefront during our 90 minute conversation. Zsolt Huff began with a brief presentation that revealed to the audience MOL’s just announced energy transition strategy that he had presented that morning to SARAS investors. Zsolt showed how MOL intends to not only participate, but be a leader in energy transition and circular economy in Central and Eastern Europe. MOL’s updated long-term strategy is ambitious yet fundamental for a heretofore traditional refining group. Point one of the MOL strategy is to extend their value chain, in several steps, not only to pivot toward becoming a petrochemical producer, but to go further and evolve their business over ten years toward specialty chemicals. Point two of their strategy is become a leader in what MOL calls “powering mobility,” in a sustainable fashion.
Investments, Huff said, will preferentially be made by selecting technologies and energy types that support these goals. He said work is already underway to conduct detailed analysis of the sustainability and business value of potential investments, looking at economics but also at carbon footprint and waste re-use metrics.
Huff looks at the new initiatives that MOL is pursuing as being quite different in their structure from their traditional refining and distribution business. While the business skills needed in their traditional business are about execution, and a fundamentally hierarchical management style; MOL is already seeing that the digital and technology investments needed to be leaders in shifting to assets with minimal carbon footprint and integrated circular economy must be pursued by collaborative teams to be successful on the timescales needed by MOL and the market. It is a new way of working, and one he believes energizes the new generation of workers.
Bela Kelemen, representing approximately 40 refiners who make up the EPRA followed up Huff’s remarks by pointing out that a recent association meeting showed that there are at least 20 very significant projects underway today in Europe to position companies for the energy transition strategies that will be needed to support the EU Green Deal in areas such as carbon capture, hydrogen, and biofuels. Kelemen said that when thinking about value created by these projects, and by the energy industry in general, “it is time to elevate sustainability value as separate and on an equal footing with traditional ways of analyzing capital investment.”
Damon Hill talked about the pivot being made by Wood Group, who are moving beyond their traditional refining businesses to become partners with energy companies in evaluating energy transition technologies such as hydrogen and biofuels, and in collaborating in new ways with asset developers to manage and reduce the risk as refiners and energy companies navigate the sustainability landscape. He emphasized the importance of EPCs working with asset owners to understand, minimize and manage project and financial risk in the energy sector in order to satisfy the sustainability requirements of the capital markets.
AspenTech SVP John Hague followed Zsolt’s presentation with a short overview of how digital technologies are crucial in advancing the various strategic levers that will impact a company’s sustainability progress. He pointed out the ways in which sustainability first-movers worldwide are already creating impressive carbon reduction value using digital technology in several different ways. And he mentioned several examples, including a global energy-reduction program that Dow Chemical has pursued for over a decade, creating both significant carbon reduction and at the same time over $700 million in saved energy consumption costs. He also discussed the sophisticated refinery-wide emissions monitoring digital twin system that won Bharat Petroleum (BPCL) an innovation award this year from the Indian Government.
Giuseppe Citterio described how SARAS has taken a different strategy from MOL in moving towards energy transition; namely they have been making significant investments in wind energy conversion turbine farms. He gave some details of the challenges of ensuring the reliability of new technologies such as advanced wind generators. He described the impactful and successful implementation of advanced digital technology, done in collaboration with AspenTech using Aspen Mtell across their wind farms. He outlined the important role of digital technology, and value created, in reducing maintenance costs and increasing availability, crucial in ensuring the economic viability of new technology and citing concrete statistics of the positive impact of this AI technology on their new energy division.
All of the panelists talked about the criticality of skilled and motivated workforces as traditional companies move to embrace the sustainability initiatives of the EU. Sustainability will be a key driver in recruiting a new generation of workers into the energy industry, and the panelists discussed ways of training the work force on an ongoing basis to keep workers engaged. The nature of the work will change. The challenge of making digital technology work for both the “digital native” younger workers as well as key seasoned experienced operators and knowledge workers is a key priority.
In preparing for this executive conversation, it became immediately clear to me that the panelists were highly motivated to share their views with the audience that AspenTech had assembled from across Europe. This is an area that these refining leaders have been spending much time considering and planning within their organizations. It is a crucial time for the energy industry in general, and one that calls for a lot of cross-company collaboration and new kinds of partnerships.
These panelists shared some of their key thoughts and ideas on the topic of energy transition. The only regret of those of us participating was that the time was too short, and I look forward to a follow-on conversation. If you didn’t have the opportunity to take part, check back for the on-demand recording which will be available later this month. In the meantime, "take a walk through the energy transition" in this article.