A vision for the future of energy

What is McDermott's outlook for the future of energy?

The UN Sustainable Development Goals highlight the importance of climate action and energy access. This dual challenge—of both increasing energy demand and reducing emissions—presents significant opportunities for McDermott and our industry to create and deliver innovative energy infrastructure solutions. However, it requires collaboration across public and private sectors as we work together to identify new strategies to do business more sustainably.

McDermott recognizes that our people can greatly contribute to the energy transition and low-carbon economy. We have established aggressive targets for emissions reductions for the near and long term. Achieving them will not be easy, but the same talent and innovation that has delivered complex energy infrastructure projects in challenging environments for more than a hundred years is just as capable within today’s—and tomorrow’s—energy challenges.

LNG will play a major role in the future of global, sustainable energy—and we are one of the most experienced engineering and construction firms serving this essential market. Since our first LNG project in 1958, to the recently completed landmark LNG complexes in the US Gulf Coast and another underway in Mozambique, McDermott remains at the forefront of LNG technology and innovation. From our state-of-the-art LNG liquefaction facilities to cutting-edge LNG storage and distribution terminals, we design and build LNG facilities throughout the entire value chain, utilizing 60 years of LNG experience. At present, our organization is pioneering exiting new strategies to reduce the carbon footprint across the entire project lifecycle.

How is McDermott expanding its energy transition portfolio?

To help decarbonize energy infrastructure, McDermott has created an energy transition strategy with three pillars: Low carbon delivery; new energies; and circular economy.

1. Low carbon delivery

We are looking to build facilities of the future—low-carbon, digitally enabled energy infrastructure that delivers safe, reliable and efficient facilities on behalf of our customers in the upstream, downstream and LNG energy space.

Recently, we launched a collaborative initiative with Schneider Electric and io consulting to design a net zero offshore facility, focusing on three core elements of the lifecycle emissions of a facility: (1) embedded carbon in the permanent equipment and materials; (2) emissions from the EPCI phase; and (3) facility emissions during operations.

The study demonstrates that for a minimal expenditure increase, a low-carbon solution can significantly decrease operational emissions and begin to decarbonise the capex phase, defined as embedded carbon in key materials and construction and installation of the facility. This reduction is primarily achieved from renewable power sources and designing out fugitive emissions sources.

Low-carbon delivery also means measuring and monitoring our carbon footprint in EPCI projects we execute for clients and engaging our supply chain. Digital tools help us both monitor and reduce our carbon footprint; combined with the collective talent and expertise of our employees, we are continually identifying and implementing new avenues to unlock meaningful progress.

2. New Energies

Our core capabilities transfer directly to help the energy industry integrate new energy sources into the value chain while simultaneously supporting the decarbonisation of oil and gas facilities. McDermott, which has more than 40 years of experience in carbon management and gas processing, is presently expanding opportunities through recent awards such as a pre-FEED project to evaluate carbon capture opportunities for steel production in The Netherlands.

We also see hydrogen as playing a key role in the energy transition. We are witnessing a shift toward hydrogen enriched blends of Compressed Natural Gas (CNG); thereby, increasing the potential demand for hydrogen—which we anticipate will increase significantly by 2050.

Further, we are expanding our portfolio in offshore wind energy projects and developments, which in turn supports the opportunities for green hydrogen production. With McDermott’s more than 50 years of offshore and marine experience, we are ready to play a central part in building the offshore wind infrastructure in the world.

3. Circular economy

Decarbonisation is closely linked to the circular economy, which intentionally designs out waste. This is an emerging area for McDermott where we will leverage our petrochemical experience to contribute solutions to plastic lifecycle challenges and our refining expertise to design and build biofuel solutions or convert waste to energy. Our strategic agreement with Lummus Technologies provides a key opportunity for advancing cutting-edge circular economy solutions.

We have also established regional centers for sustainable solutions across the globe to drive, support and implement sustainable offerings for the industry at large.

What role can EPC have in energy transition?

EPC companies have a key role in realizing our clients’ and industry’s decarbonisation ambitions. EPC companies have the core and transferable skills necessary to effectively deliver the next generation of energy transition projects. EPC companies like McDermott also have legacies founded on safely delivering large industrial investments and developments. With diverse capabilities strategically allocated throughout the world, along with licence technology, the leading EPC companies throughout the industry are intricately tied to achieving energy transition success.

Here at McDermott, modularisation is making a significant impact in our sustainability efforts as well. We have successfully incorporated the use of modular designs in many of the EPC contracts we have executed. We have a robust, logical and proven approach to modularisation studies, ensuring feasibility and cost/schedule effectiveness—and, when applying our modularisation strategy during the earliest stages of a project, we are better equipped to reduce overall carbon emissions throughout the project’s capex phase. Low carbon modularisation strategies can also be replicated in sustainable energy projects, beyond oil and gas. McDermott has world-class fabrication facilities in all parts of the world to support the Energy Transition projects.

McDermott will typically work with clients to develop a contracting model and strategy that meets both the needs of the client and those of any execution alliance or consortium and its members. The contracting strategies range from a traditional EPC(IC) model consortium effort with innovative financing arrangements. The key to identifying the correct model is to ensure it is tailored to the needs of the project. Moreover, it is essential to align on value drivers for a project and collaborate early to build a lasting relationship that can promote enhanced project delivery. All parties must collaborate with a common goal and be correctly motivated to perform and deliver and accept the roles assigned for project execution.

In short: McDermott has proven capability and the available resources to execute large complex energy transition projects, with mature risk management processes and a strong ethics and social responsibility governance.

What are the major hurdles facing the energy industry when it comes to energy transition?

The key driver is the right price on carbon to support the business cases, whether tax credits, tax penalties or other mechanisms. Many countries have started putting these in place to provide the necessary incentives to drive the energy transition projects.

The transformation of the energy sector must involve engineering and construction companies with experience in complex energy projects. New challenges and opportunities have emerged to deliver low-carbon solutions at scale and at a competitive price while also reducing the facility’s carbon footprint. Ultimately, low-carbon energy infrastructure offers a pathway to achieve the Paris Agreement but requires participation across the energy value chain and from both public and private entities.

What technologies do you feel can help deliver the 1.5°C Paris target?

A: We will need a range of technologies to deliver on the Paris Agreement. McDermott has a wealth of experience with license technologies, through our strategic alliance with Lummus Technology/New Hope Technologies. Moreover, McDermott is also very familiar with other third-party licensed technology processes. McDermott has decades of experience with hydrogen and carbon capture plants and is well positioned to make further progress in these arenas. Our central energy transition technologies/capabilities are: (1) offshore and floating wind; (2) blue and green hydrogen; (3) carbon capture utilisation & storage (CCUS); (4) net zero facilities; and (5) circular economy. The net zero facilities referring not only to the final installed plant/facility, but also low carbon delivery for McDermott’s own fabrication and construction environmental footprint.

What are you doing in the hydrogen space?

We are leveraging decades of experience with the engineering and construction of hydrogen production facilities and our extensive experience with large-scale hydrogen storage projects for clients like NASA to promote solutions for both blue hydrogen via ATR/SMR processes with carbon capture and green hydrogen, which produces hydrogen via electrolysis using renewable energy.

McDermott has built over 200 hydrogen plants around the world. We are providing retrofitted carbon capture and storage solutions to contribute to the decarbonization of existing hydrogen producing facilities as well as new blue or green hydrogen facilities.

McDermott has been a member of the Hydrogen Council since January 2020 with the aim of supporting a massive scale up of hydrogen solutions to help decarbonize various sectors, including transport, buildings and heavy industry.

McDermott is also one of the founding members (along with Air Liquide, Anglo American, Bloom Energy, CF Industries, Chart Industries, Cummins Inc., Hyundai, Linde, Shell and Toyota) of Hydrogen Forward, an initiative focused on advancing hydrogen development in the United States.

What is your outlook for CCUS?

CCUS has massive opportunities ahead and is an important technology toward achieving a fully net zero world in 2050. Currently, McDermott is delivering a CCUS FEED for a large steel producer and this project award is a testimony to McDermott’s capabilities, skills and competencies in this field. Equally important is that we are working together with the client as one team in an integrated manner to arrive at the best technical and EPC delivery solution for the client.

How is McDermott meeting its own sustainability goals?

McDermott is committed to respecting people, the environment and communities in our global operations. Our sustainability program is based on four sustainability goals, which were developed through materiality assessment and mapping to the UN’s SDGs, incorporating ESG objectives and indicators. The Sustainability function sits in our strategy group with governance in an executive steering committee and is integrated into our operations through area performance goals and operational procedures. McDermott’s Sustainability Goals are: (1) develop sustainable solutions that support the energy transition; (2) contribute to sustainable economic growth; (3) reduce our operational environmental footprint; (4) promote workplace and community well-being.

To support our sustainability (ESG) goals, we have set up objectives for the short, medium and long term that include energy and emissions, water, community investment, diversity & inclusion and more. In 2020, we established our sustainability baseline data for energy, waste, water and social/governance performance to establish our targets. Specific KPIs are tracked in our sustainability reporting system with targets relating to:

• Growth of energy transition projects
• Our environmental footprint
• Supporting the delivery of sustainable economic growth to our host communities
• Workplace and community well-being