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Free Malaysia Today
4 days ago
- Business
- Free Malaysia Today
O&G players worldwide cutting costs amid triple-threat
While the oil and gas sector may be experiencing job losses now, industry experts anticipate a resurgence of opportunities, particularly in greener sectors such as Carbon Capture, Utilisation and Storage (CCUS), within the next two to three years. (Evanto Elements pic) PETALING JAYA : The oil and gas industry, once stable and resistant to change, is now under intense pressure to rethink how it operates. Shifting global demand, ongoing political conflicts and volatile commodity markets are forcing the sector to adapt like never before. Recently, major international corporations such as Shell, BP and Chevron have undertaken comprehensive operational restructuring, including significant workforce reductions. Investment strategies are being reshaped by the triple-threat of rising operational expenses, tougher environmental regulations, and the substantial cost of adopting advanced technologies—resulting in significant adjustments to workforce size and structure. Out-of-commission oil fields Operating costs have risen, especially in upstream exploration and production. With the easier- to-reach resources fast depleting, oil companies must now tap into the more difficult reserves like sour gas and deepwater projects, which require higher investment. As a result, oil companies have begun re-evaluating their corporate investment plans, with a projected 6% decline in upstream oil investment projected in 2025—the first year-on-year reduction since 2020. Oil companies are struggling as drilling costs rise and price forecasts weaken. Active rigs are drilling at significantly lower levels slowing upstream activity. With oil prices hovering around US$63 per barrel, shrinking profit margins are forcing firms to delay or cancel projects. Earlier this year, ConocoPhillips exited its joint-venture with Petronas in the US$3.3 billion (RM13.7 billion) Salam-Patawali deepwater oil and gas project, first discovered in 2018. The company has also announced plans to shrink its global workforce by end-2025. They are also reportedly eyeing the sale of assets in the Permian Basin worth over US$1 billion (RM4.2 billion). They are not the only ones. US-based Chevron plans to cut 15% to 20% of its global workforce, potentially impacting 6,000 to 8,000 employees, over the next year. Meanwhile, ExxonMobil will release nearly 400 workers in 2026 following its merger with Pioneer Natural Resources. BP, based in the UK, is in the midst of plans to eliminate 4,700 jobs and 3,000 contractor positions by 2026 as part of a US$2 billion cost-cutting drive. In the UK's North Sea, Spain's Repsol is also looking to shrink its workforce through field decommissioning, potentially impacting 2,000 jobs. These layoffs reflect a broader industry trend of adapting to economic uncertainties, declining output from maturing fields, and the increasing focus on cost optimisation and energy transition. Impact of green regulations Adherence to environmental compliance is also becoming increasingly capital-intensive. More stringent global regulations concerning carbon emissions, flaring and methane management are obliging companies to allocate significant investment toward monitoring systems, equipment upgrades and cleaner processes. This includes a growing focus on Carbon Capture, Utilisation and Storage (CCUS) projects, which are projected to experience a tenfold increase in investment by 2027. Non-compliance with these evolving environmental, social and governance (ESG) criteria pose significant business risks, such as limited access to funding and reputational damage. To manage these rising obligations, many entities are streamlining their workforces in high-carbon divisions. Heavy upfront costs Companies are investing more in advanced technologies like automation, artificial intelligence (AI) for data analysis and compliance, and monitoring systems powered by the Internet of Things (IoT) to improve efficiency and meet regulatory demands. While these technological upgrades may yield long-term cost reductions, their implementation necessitates substantial upfront capital expenditure, such as modernising rigs with automation capabilities or deploying sophisticated AI-driven monitoring systems. Widespread adoption of AI alone could potentially lead to cost savings ranging from 10% to 20% by 2025. This shift toward technology-driven models is streamlining operations, replacing traditional roles with automated solutions, and consolidating functions to boost productivity and financial stability—rather than simply expanding existing setups. Prominent industry participants such as Exxon and Chevron are focussing production growth in more efficient regions like the Permian basin, leveraging consolidation and technology-driven improvements to manage costs amid declining upstream investment. Petronas, for its part, is focusing on innovation, sustainability and human capital development to support Malaysia's net-zero commitment involves not only accelerating investments in renewable energy and advanced low-carbon technologies, but also cultivating a forward-thinking workforce equipped to tackle the dynamic challenges of the global energy landscape. By nurturing talent, fostering a collaborative culture, and prioritising digital transformation, Petronas aims to drive meaningful progress towards environmental goals while securing long-term business growth. Enhanced partnerships, research initiatives, and community engagement will be central to this strategy, positioning the company as a leader in sustainable energy and responsible corporate stewardship for Malaysia's future. Where do we go from here? The overarching imperative is clear: oil and gas companies are re-conceptualising business practices to better navigate current cost pressures and align with future energy demands. Strategic actions are already evident at major international corporations like BP, Shell and Chevron. These are not merely reactive measures to short-term market changes, but critical strategic decisions made to ensure that the energy industry remains future-ready. This trajectory implies a reduction in traditional employment opportunities within the short term. However, that is on account of the evolution of industry operations, not a disappearance of energy demand. Industry experts expect jobs to re-emerge in greener fields, including CCUS-management projects, within the next two to three years, once cost savings are realised.


CTV News
28-05-2025
- CTV News
RRC Polytech unveils school bus converted from diesel to electric power
School buses could soon be running on greener energy thanks to new technology from RRC Polytech. School buses in Manitoba could soon be running on greener energy, thanks to a technology developed at RRC Polytech. The college showed off a school bus that had been converted from a diesel engine to an electric one with the help of a conversion kit developed at the college. Jojo Delos Reyes, a program manager at RRC Polytech, said the technology could help school divisions save money in the long run on maintenance. 'Right now, the cost of buying a new electric school bus is between $370,000 to about $430,000 Canadian, compared to buying a diesel counterpart, which is about $150,000,' he said. 'The conversion kit that we developed for this one is about the same price as a new diesel bus, but the benefit is maintenance cost is lower, and then emissions is lower.' RRC electric bus A school bus converted from diesel to electric power is seen at RRC Polytech campus in Winnipeg on May 27, 2025. (Scott Andersson/CTV News Winnipeg) RRC electric bus A school bus converted from diesel to electric power is seen at RRC Polytech campus in Winnipeg on May 27, 2025. (Scott Andersson/CTV News Winnipeg) The project is a partnership between RRC, Seven Oaks School Division and Noble Northern. The division provided a bus in 2023 to RRC's heavy equipment mechanic program to help convert the bus. Reyes said the conversion kit can also help school buses last longer, noting the average school bus has a lifespan of 12 years on the road. 'What we're trying to do here is we're trying to extend the life of a school bus chassis in order for it to be more beneficial,' he said. Reyes said the conversion kit will also reduce emissions of carbon dioxide by 21.6 tonnes per year, and reduce fuel costs by up to $11,000. The college is hoping governments will amend laws to make converting school buses easier for divisions.