Analytics firm says oil and gas industry embracing plastics circular economy

Among the oil and gas industry’s conventional products, plastic is the most relevant to the circular economy, according to London-based data and analytics firm GlobalData, which adds that increasing demand for circular economy solutions in the oil and gas industry, especially regarding plastics, presents several long-term opportunities for companies.

GlobalData says companies can invest in the production of circular polymers, thereby making it easier to recycle plastics. Moreover, it adds that there is considerable scope to increase recycling capacities, allowing those companies to fulfill environmental, social and governance (ESG) goals by reducing virgin plastic production.

GlobalData’s recent report, “Circular Economy in Oil and Gas,” discusses the need for a circular economy in the oil and gas industry to address plastic pollution. It also highlights the role of major oil and gas companies, such as ExxonMobil, Shell and TotalEnergies in their efforts to establish a circular economy for plastic as a commodity.

“The use of plastics has skyrocketed in the last few decades and has accelerated plastic pollution in the soil and aquatic environments,” says Ravindra Puranik, oil and gas analyst at GlobalData. “As awareness about the ill effects of plastic use grows among consumers, several countries and some enterprises are taking steps to remedy the situation, while ensuring the economic activity remains unaffected.”

GlobalData says plastic is an essential commodity in today’s economy, and that overuse and mismanagement of plastic upon its end-of-life results in a “huge amount of waste,” leading to pollution. The data firm says this calls for efficient recycling of plastic scrap, noting that in 2019 less than 10 percent of the plastic scrap generated was recycled, compared to the 460 tons of the commodity produced that year.

“Several economies are taking steps to limit their plastic pollution and encourage circularity,” Puranik says. “The European Union has set specific targets to reduce the use of single-use plastic in its jurisdiction. Countries in other regions, such as Japan and Australia, have also set targets to eliminate plastic waste generation.”

The data firm says the ill effects of plastic scrap and the nonrenewable nature of fossil fuels used in its production has prompted efforts to achieve sustainability with plastics. This involves reducing plastic scrap from going to landfills, being incinerated and largely being mismanaged. There is a need to improve plastic scrap and facilitate recycling, extending its usable lifetime, GlobalData adds, and can alleviate demand pressure on virgin plastic that annually enters the market.

“Companies are working to find suitable alternatives to minimize the dependence on plastic made from conventional methods,” Puranik says. “The use of bioplastics is an emerging trend in the industry. Bioplastics are produced using alternative feedstock such as agricultural waste. Industry leaders such as BP, Shell and TotalEnergies have set themselves targets for plastic recycling. Companies are pursuing approaches such as mechanical recycling and chemical recycling, besides bioplastic production, to support their ESG commitments.”