In a recent Deloitte survey of representatives from a range of industries, over a third of respondents say the impact of Electric Vehicles (EVs) on their business will be felt as soon as 2020.

The survey was conducted to gain an understanding of industry perspectives on EVs and their impact on business. The overwhelming finding is that while oil and gas companies have a high level of awareness of the potential of EVs to disrupt their business models, they are not rising to this challenge to the same extent as those in other sectors.

Two-thirds (68 per cent) of oil and gas respondents expect EVs to disrupt their business model, less than half (43 per cent) of respondents from other sectors have similar expectations. 80 per cent say EVs will affect their business by or before 2030, just 12 years away.

As digitisation and electrification spread across all industries, Deloitte Australia oil and gas leader Bernadette Cullinane, and Steve McGill, Deloitte Australia energy specialist, said one of the biggest game-changers for the oil and gas industry will come from the transportation sector.

The internal combustion engine (ICE) has been the undisputed king of the road for over 100 years due to the energy density of petroleum fuels, but it may hand over this crown to the electric vehicle (EV) in the coming decade.

In their paper Enter the Volt-Age: Electric vehicle disruption of the oil and gas industry at APPEA 2018 in Adelaide, Ms Cullinane explained that globally, road transportation fuels account for 45 per cent of the total demand for oil.

“The underlying assumption of ever-increasing demand for crude oil due to an increasing appetite for transportation may soon stall. EVs are offering increasingly superior qualities in all three dimensions of the energy trilemma – security of supply, affordability and environmental sustainability,” Ms Cullinane said.

Cullinane highlighted another report to APPEA visitors earlier in the week, Hydrocarbons to electrons – Crossing the chasm to the new energy future, which explores how the drive towards a low carbon future is creating new opportunities for the oil and gas sector.

She said the shift from hydrocarbons to electrons is leading many in the oil and gas industry to fundamentally reimagine what the energy company of the future looks like.

EVs moving into the fast lane

There are questions around just how seriously the oil and gas sector is taking the EV revolution and the steps it is taking to anticipate and successfully prepare for the disruption. Only half of the survey respondents from the oil and gas sector (53 per cent) are addressing the risks and opportunities EVs present; in comparison, other sectors are materially more active (64 per cent).

“Factors driving the EV revolution include the improvement in battery, solar photovoltaics (PV) and wind technologies and subsequent reduction in their costs and the widespread embrace of electrification by automotive manufacturers,” said Mr McGill.

“Change will not come in the form of a one-for-one fuel switch from petrol to electricity, but rather through a fundamental re-imagining of the concept of transportation. The challenges and opportunities of this major disruption are significant.

“With EV releases coming from every major car manufacturer, autonomous-EV trials underway throughout the world, and emissions and combustion engine ban legislation in the works in a number of cities and countries globally, the world sits on the cusp of a global transportation transformation that will impact all market segments and industries, including Australia’s LNG industry.”

Ms Cullinane said the EV opportunity is enormous – oil and gas operators must recognise this and should not ignore the rise of EVs.

“They should use their massive competitive advantage in the form of large capital reserves, great technological prowess and their skills in managing large and risky capital projects and operations to get out in front of the unfolding energy and transport revolution.

“In today’s rapidly changing energy landscape, oil and gas companies must get into the driver’s seat if they want to be competitive in tomorrow’s energy economy.”

Elisa is an experienced industry journalist and is a regular contributor to a range of energy and infrastructure titles. She has a unique knack for quickly finding the angle in any story her audience is most interested in learning more about.

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