Yes, there really is an energy transition taking place around the world. And there’s a transformation coming for the oil and gas industry. But those changes might not be what people expect.
In a recent online presentation to investors, ExxonMobil included a projection of the global energy mix up to 2050. Oil, natural gas and coal made up 80 percent of the world’s total energy supply in 2023, by Exxon’s estimate. By 2050, that will fall to 67 percent, it predicted – 54 percent from oil and gas, 13 percent from coal.
That’s a meaningful move away from hydrocarbon energy. Yet some other projections forecast an even larger change in the energy mix, with oil, gas and coal falling far below 50 percent of the total.
Why the large variation?
“One reason is that people really haven’t understood what the costs would be to achieve net zero. Sure, you can bring in some low-cost renewable energy, but bringing in a lot of it gets expensive, because you have to bring in a lot of storage,” said Joseph Powell, founding executive director of the University of Houston Energy Transition Institute.
Powell is a former director of the American Institute of Chemical Engineers. He served as Shell’s first chief scientist-chemical engineering from 2006-20, capping a 36-year industry career, and is co-author of “Sustainable Development in the Process Industries: Cases and Impact.”
He said 20 percent of the world can afford low-carbon technology; but 80 percent – the developing world – needs access to more energy. Those countries have limited money to spend on green energy development.
“You have to understand – there’s already a lot of money spoken for in (gross domestic product). And discretionary income is only part of that,” he noted.
Powell estimated it would take half of the world’s discretionary income to meet global low-carbon emission goals.
Workforce Transition
Consulting, audit and advisory firm Deloitte issued a new report in May on the energy outlook, “U.S. Energy and Chemicals Workforce: Transforming for a Resilient Future.” The study looks at challenges and opportunities in energy and chemicals, including petrochemicals, over the next decade.
Among its findings: 60 percent of the energy and chemical sector’s workforce, or around 1.2 million employees, will need “upskilling” – adding enhanced skills for the same position – because of emerging technologies. And 534,000 will need reskilling/retraining for new positions.
“We’ve had some attrition in the workforce so we’ll need to attract new people as well as upskill current employees. Upskilling will teach them how to work adjacent with technologies like AI,” said Nichelle McLemore, principal and U.S. oil and gas leader for Deloitte Consulting LLP in Houston.
“Increasingly, the workforce will need to work adjacent to AI and other new digital technologies,” she noted.
Deloitte predicts that just over a third of the sector’s future operations will be led by computing and AI, not by humans, although humans remain “in the loop.” Almost two-thirds of tasks will be human-driven “and a third could be done by AI, robotics, information. And that’s sort of a good thing, if you think about safety, first,” McLemore said.
The report predicts overall energy and chemicals employment will grow 4.1 percent by 2033, led by a 5.5 percent pickup in chemicals. It expects energy employment to increase by a modest 1.1 percent, but that’s a significant turnaround from the past decade.
U.S. oil and gas direct employment declined by 27.7 percent from 2014 to 2024, according to Deloitte. That period included a major industry turndown and a worldwide pandemic.
“I think people in the industry will be surprised to find that the workforce will continue to grow – these industries need to grow by half a million or so – because it doesn’t feel like the industry they’ve been reading about,” McLemore said.
A Growing Global Appetite for Energy
Job expansion partly reflects projected growth in worldwide energy demand over the next two decades, especially demand for electricity.
“We’ve got AI coming in and adding 20 percent more (demand) onto the grid. Electric vehicles add another 20 percent onto the grid,” Powell noted.
Most of the energy demand growth will happen outside the United States and other developed countries, experts predict, although the United States has seen a strong post-pandemic comeback in demand. Americans have gone right back to traveling the country and taking international flights.
“There’s nothing more convenient than high-density, liquid fuel,” Powell said.
“People really love to travel. That really surprised me, coming out of COVID,” he added.
Powell noted that China remains extensively committed to manufacturing consumer goods for the world, and also adopting and selling low-carbon solutions “while a lot of the rest of the world is sort of surfing and trying to figure out where their policies should be.”
Policymakers are trying to balance climate concerns with economic realities, hoping to find a best-solution approach that won’t stymie growth. So far, economic considerations are paramount in energy planning.
“The concern over the environment is there, but it’s not as urgent an issue to them as economic well-being,” Powell said
‘Absolutely Change’
Deloitte listed several disruptive factors affecting energy and chemical companies, including rising cost pressures, a changing business landscape and accelerating digital breakthroughs.
McLemore said to her, the biggest challenge or headwind facing the energy industry today is simply “change.”
“It is absolutely change. Even conversations I had with clients two years ago have been stood on their head. With the one exception: You have to be efficient to be flexible for what is coming,” McLemore observed.
Companies need to look at, “How can you bring together the best people from the best places – upskilling and reskilling, continuous learning, leveraging the experienced workers you have now,” she said.
“We do have an aging workforce – about 40 percent or so is over 45. There is an issue of retention of experienced employees in the industry,” she noted.
McLemore emphasized the need for companies to build a culture of continuous learning, noting, “You can’t just train for where AI is right now. Last year, we weren’t talking about agentic AI nearly as much as we are now.”
“Things can change quickly, and that’s why employees need to be able to keep up with the changes. We don’t always know where things are going to go,” she said.
With AI and other computer technologies already altering the dynamics of the energy and chemicals sector, “it’s an interesting moment,” McLemore commented. “Some of the demographic trends are interesting. Younger workers might not see the energy industry as a first choice.”
“Doing nothing creates a lot of pressure. Doing nothing is not necessarily favorable to the industry,” she observed.
McLemore said a better approach would be “if we as an industry tell our story and help the younger generation to think about the subsurface, to think about what is under their feet right now and how that affects and powers their lifestyle.”
The Big Picture
A number of large corporations, including energy companies, earlier announced plans to reach net-zero emissions in their operations by 2050. Most scaled back those ambitions as the difficulty and cost of carbon neutrality became apparent. In February, BP announced it would cut its “transition investment” in green energy by more than $5 billion a year.
“Some of the European majors like BP and Shell have made a very strong pivot. It was really disappointing the market didn’t support them,” Powell said.
“I think the major players are committed to bringing low-carbon solutions, but people have to be willing to buy them,” he added.
No one can say for certain what the world’s energy picture will look like 25 years from now. Current projections include a wide range of possibilities, but at the moment, it seems likely that:
Oil, natural gas and coal will decline as a percentage of the global energy mix while still making up a substantial majority of the world’s energy supply beyond mid-century.
Energy demand will continue to increase in the next two decades, the biggest overall growth coming outside North America and Europe.
Energy-sector employment will grow moderately, with many employees adding new skills or being retrained for new positions.
The future of climate and emissions action faces uncertainty.
“People are going to have to come to grips with, ‘What are the priorities?’ How much are they willing to invest in low-carbon solutions?” Powell said. “How does that play out worldwide, when you’ve got 80 percent of the world that needs more energy?”