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The global energy system through a prism of change: The oil & gas industry and the case of the Arctic
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.). (Sustainability and Industrial Dynamics)ORCID iD: 0000-0003-2876-0178
2020 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The energy industry as a whole and the oil & gas industry in particular is experiencing changes under the influence of a variety of trends and the changing needs of society. Current social, economic, environmental and climate challenges are raising sharp questions for the established principles of energy production and consumption, increasingly arguing for sustainable trajectories in the development of the global energy system. There are significant international efforts to improve energy sustainability, and powerful trends are being established. However, the change in the global energy system is happening at a slower pace.

The oil & gas industry has been a substantial part of the global energy system for decades. While it has significantly contributed to global development and enabled industrialization, it has also affected the environment. Currently, the role of the oil & gas industry is shifting, while it continues to satisfy more than half of global energy demand. Simultaneously, the relationship between the oil & gas industry and the sustainable development of the global energy system is largely overlooked. This thesis questions the validity of such neglect, and raises the importance of exploring sustainable development of the global energy system with its relationship to the oil & gas industry.

Through the perspectives of sustainability transitions and industrial dynamics domains, this thesis aims to explore the role of the ‘socio-technical regime’ in sustainability transitions of socio-technical systems. This thesis focuses on three particular aspects: (1) the factors of change in the regime; (2) the way the regime responds to these factors of change; and (3) the relationship between the sustainable development of the socio-technical system and the regime. This thesis is based on two interrelated studies, devoted to certain aspects of change within the oil & gas industry, and an in-depth investigation of the case of Arctic offshore oil and natural gas resources exploitation.

The thesis provides an insight into the critical aspects of change within the global energy system through analysis of the oil & gas industry, and reveals an understanding of how sustainable change in the global energy system can be facilitated. From a theoretical perspective, this thesis contributes to sustainable energy transitions and industrial dynamics literature on sustainable change of large socio-technical systems with an emphasis on the regime. Theoretical implications underline the need to revise the existing links and connections between socio-technical system levels in order to facilitate change, show the need for typologies of factors of change, and suggest more attention to qualities and capacities of regimes. Finally, this thesis employs system thinking and a multidisciplinary approach in energy related and sustainability transitions research.

From a practical perspective, this thesis provides analytical frameworks, tools and concepts to be useful for policy makers, strategy consultants, governmental organizations, and industry, as well as suggests some insights into the development and change in the global energy system.

Abstract [sv]

Energibranschen som helhet, och olje- och gasindustrin i synnerhet, upplever förändringar under påverkan av olika trender och samhällets förändrade behov. Nuvarande sociala, ekonomiska, miljömässiga och klimatrelaterade debatter utmanar de etablerade principerna för energiproduktion och konsumtion genom att argumentera för hållbarhet i utvecklingen av det globala energisystemet. Det finns betydande internationella ansträngningar för förbättrad hållbarhet, men förändringen i det globala energisystemet sker i långsam takt.

Olje- och gasindustrin har varit en väsentlig del av det globala energisystemet i årtionden. Även om den har bidragit märkbart till den globala utvecklingen och möjliggjort industrialiseringen, har den också påverkat miljön. För närvarande förändras olje- och gasindustrins roll medan den fortsätter att möta mer än hälften av det globala energibehovet. Samtidigt förbises förhållandet mellan olje- och gasindustrin och en hållbar utveckling av det globala energisystemet till stor del. Denna avhandling ifrågasätter giltigheten av sådan försummelse och belyser vikten av att utforska en hållbar utveckling av det globala energisystemet med dess relation till olje- och gasindustrin.

Genom perspektiven hållbarhetsövergångar och industriell dynamik syftar avhandlingen till att undersöka ‘socio-tekniska regimens’ roll i hållbarhets omvandling av socio-tekniska system. Avhandlingen fokuserar på tre särskilda aspekter: (1) faktorerna för förändring i regimen; (2) hur regimen svarar på dessa förändringsfaktorer; och (3) förhållandet mellan en hållbar utveckling av det socio-tekniska systemet och regimen. Avhandlingen är baserad på två sammanhängande studier, ägnade åt vissa aspekter av förändringar inom olje- och gasindustrin, och en djupgående undersökning av fallet med utnyttjande av olje- och naturgasresurser under den arktiska havsbotten.

Avhandlingen ger en inblick i de kritiska aspekterna av förändringar inom det globala energisystemet genom analys av olje- och gasindustrin och avslöjar en förståelse för hur hållbar förändring i det globala energisystemet kan underlättas. Ur ett teoretiskt perspektiv bidrar avhandlingen till hållbara energi och industriell dynamik om hållbar förändring av stora socio-tekniska system med tonvikt på regimen. Teoretiska implikationer understryker behovet av att revidera de befintliga länkarna och kopplingarna mellan socio-tekniska systemnivåer för att underlätta förändringar, visa behovet av typologier för förändringsfaktorer och föreslå mer uppmärksamhet till regimens kvaliteter och kapacitet. Slutligen använder avhandlingen systemtänkande och en tvärvetenskaplig strategi inom energirelaterad och hållbarhetsövergångs forskning.

Från ett praktiskt perspektiv tillhandahåller avhandlingen analytiska ramverk, verktyg och koncept som kan användas av beslutsfattare, strategikonsulter, statliga organisationer och industri, samt insikt i utvecklingen och förändringen i det globala energisystemet.

Place, publisher, year, edition, pages
Stockholm, Sweden: KTH Royal Institute of Technology, 2020. , p. 104
Series
TRITA-ITM-AVL ; 2020:7
Keywords [en]
global energy system; energy industry; oil & gas industry; Arctic offshore; change; transformation; sustainable energy transition; industrial dynamics; multi-level perspective; development blocks
Keywords [sv]
globalt energisystem; energibranschen; olje- och gasindustrin; Arctic offshore; förändring; omvandling; hållbar energiövergång; industriell dynamik; flernivå perspektiv; utvecklingsblock
National Category
Energy Systems Environmental Management Social Sciences Interdisciplinary
Research subject
Industrial Economics and Management
Identifiers
URN: urn:nbn:se:kth:diva-269117ISBN: 978-91-7873-476-4 (print)OAI: oai:DiVA.org:kth-269117DiVA, id: diva2:1411728
Public defence
2020-03-27, https://kth-se.zoom.us/meeting/register/v50vdeqrpjotNkbVQO7BZMQnzDMCEozhbQ, Stockholm, 09:00 (English)
Opponent
Supervisors
Note

Due to Corona it is not possible to attend this defense in person, instead attend via this link:

https://kth-se.zoom.us/meeting/register/v50vdeqrpjotNkbVQO7BZMQnzDMCEozhbQ 

Available from: 2020-03-06 Created: 2020-03-04 Last updated: 2020-03-26Bibliographically approved
List of papers
1. Structural Change in the Petroleum Industry
Open this publication in new window or tab >>Structural Change in the Petroleum Industry
2016 (English)In: A Dynamic Mind: Perspectives on Industrial Dynamics in Honour of Staffan Laestadius / [ed] Blomkvist P., Johansson P., Stockholm, Sweden: Division of Sustainability and Industrial Dynamics, INDEK, KTH , 2016, 1, p. 249-275Chapter in book (Refereed)
Abstract [en]

In this chapter, we aim to contribute to the understanding of industrial dynamics through a concept of development blocks introduced by Dahmén (1950/1970) applied to the case of thepetroleum industry (oil and natural gas). In pursuing that objective, we first aim to offer some insight into the current state of the energy sector and the petroleum industry by describing the development of the energy system from the 1800s to the present day to reveal the system’s structural changes. Second, we focus on the definition of the development block. We suggest a brief overview of relevant notions and the manner in which they function within the conceptual framework. Third, we apply the development block concept to the case of the petroleum industry. We want to explore the new structural tensions and transformation pressures in the petroleum industry that have occurred within the last transformation period. Finally, we elucidate the theoretical and empirical conclusions both in terms of the use of the concept of development blocks and of the dynamics of the petroleum industry by focusing on the latest industrial period; then, we suggest managerial and policy implications deriving from our investigation.

Place, publisher, year, edition, pages
Stockholm, Sweden: Division of Sustainability and Industrial Dynamics, INDEK, KTH, 2016 Edition: 1
National Category
Other Engineering and Technologies not elsewhere specified
Research subject
Industrial Economics and Management
Identifiers
urn:nbn:se:kth:diva-205639 (URN)978-91-7729-170-1 (ISBN)
Note

QC 20200305

Available from: 2020-03-04 Created: 2020-03-04 Last updated: 2020-03-05Bibliographically approved
2. Russian Natural Gas Exports: An Analysis of Challenges and Opportunities
Open this publication in new window or tab >>Russian Natural Gas Exports: An Analysis of Challenges and Opportunities
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This study provides a comprehensive, updated, and refined analysis of the challenges and opportunities for Russian natural gas exports based on the latest statistical data, recent academic publications, and media sources. The paper addresses the lack of continuity in studies within the topic since the recent changes are not reflected well enough in the current peer-reviewed literature. In order to understand the perspectives regarding Russian natural gas export in global natural gas markets, we consequently examine the current layout of the global natural gas markets, and challenges and opportunities for Russian natural gas exports. The analysis shows that the U.S. natural gas market is closed for Russian exports. In the European market, Russia is experiencing difficulties in increasing its export shares, or even maintaining current levels, owing to various macroeconomic and geopolitical challenges. Asian markets such as China, India, Japan, and South Korea, are the most promising destinations for future Russian natural gas exports. Despite strong geopolitical challenges and high competition globally, Russia should seek maintaining current export levels in the European market, while implementing a win-win export strategy, and secure its future export shares on the Asian markets. The results of the study can be used for scenario and planning purposes, and be useful for policy makers and industry practitioners.

Keywords
Natural gas; Export; Russia; Strategy; Markets
National Category
Energy Systems
Research subject
Industrial Economics and Management
Identifiers
urn:nbn:se:kth:diva-269113 (URN)
Note

Under review in an international peer-reviewed journal.

QC 20200306

Available from: 2020-03-04 Created: 2020-03-04 Last updated: 2020-03-06Bibliographically approved
3. Offshore Hydrocarbon Resources in the Arctic: From Cooperation to Confrontation in an Era of Geopolitical and Economic Turbulence?
Open this publication in new window or tab >>Offshore Hydrocarbon Resources in the Arctic: From Cooperation to Confrontation in an Era of Geopolitical and Economic Turbulence?
2016 (English)In: SWP Research Papers, ISSN 1863-1053, Vol. RP03, p. 1-30Article, review/survey (Refereed) Published
Abstract [en]

The Arctic region has been an area of low tension since the end of the Cold War. This observation is important because the run on hydrocarbons in the Arctic has not resulted in increased rivalries as expected. The outcomes have been international joint ventures in oil and gas project on the economic side and a strengthening of Arctic governance in the political realm. Since 2014, the situation has changed rapidly. Economic interests in hydrocarbon development are increasingly diverging between the five Arctic coastal states. The geopolitical situation between Russia and the West after the annexation of Crimea and military conflict in Ukraine affect the Arctic. There is the danger of falling back to old times when the Arctic was a highly strategic and militarised zone. The sanctions on Russian offshore oil development in the Arctic add to that. Potential long-lead effects of the sanctions, coinciding with relatively low oil prices, can seriously harm the long-term development of oil and gas fields in the Arctic. Joint energy projects had been a stabilising factor in the past.

The paper discusses the increasing levels of instability in both economics and politics in the Arctic and the mutually reinforcing effects on international politics. We come to the conclusion that a “loss of a cooperative spirit” can be observed. We argue that these dynamics challenge stable and predictable relations, which work against a sustainable Arctic development that takes the global commons, the environment and the climate into consideration.

From a German and EU perspective, there are far-reaching future implications for the security of energy supply, as two of its major suppliers, Norway and Russia, have their resource bases in the Arctic.

Place, publisher, year, edition, pages
Berlin, Germany: SWP Research Paper, 2016
Keywords
Arctic, offshore, hydrocarbon resources, oil, natural gas, geopolitics, cooperation
National Category
Economics and Business Political Science
Research subject
Industrial Engineering and Management
Identifiers
urn:nbn:se:kth:diva-184108 (URN)
Note

QC 20160516

Available from: 2016-03-24 Created: 2016-03-24 Last updated: 2020-03-04Bibliographically approved
4. Arctic Offshore Oil and Natural Gas Resources Exploitation: A Multi-level Perspective on the Cases of Norway and Russia
Open this publication in new window or tab >>Arctic Offshore Oil and Natural Gas Resources Exploitation: A Multi-level Perspective on the Cases of Norway and Russia
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The study focuses on the challenging complexity of sustainable transformation of the energy industry through the in-depth study of Arctic offshore oil and natural gas resources exploitation, providing two national examples of Norway and Russia. The study design and methodology are inspired by a multi-level perspective framework (MLP) to large socio-technical systems (LTS). The background and motives of the two countries for exploiting Arctic offshore oil and natural gas resources are investigated through a set of interviews. The MLP analysis shows that Norway and Russia act differently under the same landscape factors and adjust on the regime level according to their national goals, leading to the conclusion that the landscape level does not equally shape the regime level. Consequently, since the regime dominates the landscape, it complicates the transformational processes in the energy industry. The paper contributes to the sustainability transitions literature through a rarely investigated case of the oil & gas industry, and theoretical implications regarding the interactions between the regime and landscape levels of MLP, suggesting a different analytical perspective for scholars of Arctic studies.

Keywords
Arctic, offshore, energy, oil & gas industry, transformation, multi-level perspective
National Category
Energy Systems Environmental Management
Research subject
Industrial Economics and Management
Identifiers
urn:nbn:se:kth:diva-269115 (URN)
Note

the paper is undergoing a review in an international peer-reviewed journal

Available from: 2020-03-04 Created: 2020-03-04 Last updated: 2020-03-16Bibliographically approved
5. The role of the regime in energy system transformation: A case of the Arctic
Open this publication in new window or tab >>The role of the regime in energy system transformation: A case of the Arctic
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The study investigates the role of regime in the global energy system transformation towards sustainability within the context of ongoing extensive exploitation of conventional oil and natural gas resources illustrated by the case of the Arctic. The study design and methodology are inspired by a multi-level perspective (MLP) framework initially developed to describe the change processes (transformation and transition) in large technological systems (LTS). The Arctic case is investigated through a ‘salient – reverse salient’ approach also originating from the LTS analysis. The study is based on empirical data collected through two rounds of interviews supplemented by triangulation from literature sources. The analysis shows that the exploitation is ongoing, independently from global sustainability goals and strong landscape pressures. A lack of alignment between the different levels of the global energy system is observed, where not all the landscape pressures are penetrating equally down to the regime level. Regime salients dominate over other factors. Importantly, the study shows that there is a high degree of acknowledgment by the actors of inertia and dependency within the oil & gas industry. The study concludes that a deeper focus on the capacities and qualities of the regime can facilitate sustainability transitions. This paper suggests a more systematic view of transition studies, theoretical and methodological pluralism via combined frameworks, and enriches discussion through the investigation of a case from the rarely studied Arctic. Further, this study questions the validity of neglect of the oil & gas industry from the global energy system transformation process, and suggests ‘unlocking’ the regime through greater attention to its inertia and momentum, therefore revising the sustainability transitions’ theoretical frameworks and approaches.

Keywords
energy, change, large socio-technical systems, oil, natural gas, Arctic
National Category
Energy Systems Environmental Management
Research subject
Industrial Economics and Management
Identifiers
urn:nbn:se:kth:diva-269116 (URN)
Note

this is a working paper

Available from: 2020-03-04 Created: 2020-03-04 Last updated: 2020-03-16Bibliographically approved

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