Scenario Thinking Oil Industry

Introduction

In this paper on scenario thinking we take a look at the Energy Industry. The focus is mainly on the petroleum segment, containing gas and oil. From this point of view we consider possible scenarios for the future of the petroleum industry in 2030.

At first, important events and changes which occurred the past fifteen years are shown and analyzed shortly. In module 2, the driving forces will be expanded and will be positioned in an uncertainty-impact matrix. Module 3 will provide four possible scenarios, based on combinations of the level of cooperation versus competition among countries and companies and the level of renewable (green) energy versus petroleum based energy. Moreover, the remaining driving forces will be distributed amongst the scenarios as well. In module 4, a detailed impression of two radically different scenarios is given.

Module 1 – The value of scenario thinking

The most important events over the last 15 years are shown in the timeline given below. The size of the circle indicates the degree of impact on the petroleum industry. The green circles and lines represent the driving forces which are predetermined and will play a key role in the years to come.[pic 1]

Figure 1 - Timeline with major evets and changes and major driving forces (green)

In 2001 China showed a significant growth in energy consumption and the demand and consumption kept growing in subsequent years. This predetermined factor keeps playing a role in the future, because the Chinese population keeps growing and accumulating more wealth, leading to higher consumption. 2006 was the year a breakthrough occurred for the in-stream tidal generator, a renewable source of energy with large potential for the future. It is an endless “headwater” of energy since planet earth provides a lot of coastlines and the tides occur on a daily basis. The same goes for wind energy (2008) and solar panels (2013/2014). They have the potential of becoming earth’s substitution for the petroleum industry. However, major uncertainties exist. The geopolitical concerns mentioned in 2006 keep posing a threat because of the uncertainty unrest in oil-rich area creates. The threat of this unrest will stay in the future. The last interesting predetermined driving force occurred in 2013, when the ITER (nuclear, non-polluting energy) project was started, stating it will be able to produce an endless flow of energy.

Module 2 – The Scenario Process

In this module we will address the driving forces, in addition to the ones discussed in module 1, that are relevant for the petroleum industry. An outside-in approach will be used when identifying driving forces from the contextual environment using the PESTEL-approach. The following six aspects will be assessed: political, economic, social, technological, environmental, and legal factors. After identifying the driving forces from the contextual environment, we will move inwards and elaborate on the driving forces from the business environment. The following factors of the petroleum industry will be considered: competitors, suppliers, customers, employees and market developments. Once all driving forces are identified, an uncertainty-impact matrix will be constructed.

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