Jan 20, 2025 (MarketLine via COMTEX) --
A range of technologies are required to mitigate upstream and downstream emissions and secure the future of the global oil and gas sector.
The oil and gas industry is responsible for approximately half of all energy-related emissions, presenting a complex landscape for the sector to tackle.
Scope 1 emissions are released directly by an oil and gas organisation from owned and controlled sources, while Scope 2 covers indirect emissions from production, processing, and transportation.
Most emissions are from sold products or Scope 3 aEUR" the result of activities from assets not owned or controlled by the reporting organisation, but that the organisation indirectly affects in its value chain. This includes the use of oil and gas for power generation, heating, vehicle fuel, and industrial processes.
Upstream emissions are closely linked to production and processing, whereas downstream activities account for roughly 70-90% of lifecycle emissions from oil products and 60-85% from natural gas?, as per the International Energy Agency (IEA).
Common strategies are emerging in the form of renewable energy, carbon capture, and electrification, with potential for the oil and gas industry to pioneer advancements in these technologies to the benefit of the global energy transition.
However, effective measurement systems and the impact on bottom lines pose significant barriers to realising an industry-wide mitigation of emissions.
Tracking oil and gas emissionsBefore emissions can be addressed, they must be accurately detected and measured. At the core of this challenge is the greenhouse gas (GHG) methane, which is 21 times more potent than carbon dioxide (CO2). It is often a byproduct of leaks and flaring in oil production, processing, and distribution and comes directly from gas.
The IEA identifies methane as the aEURoesingle most important measure that contributes to the overall fall in emissions from oil and gas operationsaEUR but also highlights that aEURoeglobal methane emissions are underreported by 70%aEUR.
The scale of such underreporting is being gradually uncovered by the increased use of aerial, satellite, and infrared imaging which have improved accuracy alongside traditional point-source and multiplication measurements.
The UKaEUR(TM)s North Sea Transition Authority (NSTA) tells Offshore Technology that emissions can be accurately measured by a aEURoecombination of direct measurement, using meters attached to flares and vents, and modelling [and] several operators are verifying these estimates using drone monitoring surveys.aEUR
Offshore TechnologyaEUR(TM)s parent company GlobalData singles out methane as aEURoelow-hanging fruitaEUR for emissions reduction across the oil and gas industry. The GHG has a short-term life of seven to 12 years in the atmosphere, offering potential for near-term abatement progress.
Jim Lenton, global sector lead of upstream, midstream and liquified natural gas at Australian engineering and professional services company Worley, highlights BP as an example of an organisation aEURoemaking investments in retrofitting technology to measure what it is emitting from its existing assets for more accuracy.aEUR
To reduce wasteful emissions, the World Bank suggests that oil and gas operators should focus their efforts on eliminating all non-emergency flaring of natural gases under its Zero Routine Flaring Initiative 2030.
Such progress is further aided by the United Nations Environment Programme (UNEP)aEUR(TM)s Oil & Gas Methane Partnership 2.0, which is the only comprehensive, measurement-based international reporting framework for the sector.
Paul Bansil, director at science, technology, and engineering at solutions provider KBR, points out that in a aEURoecomplex global supply chain and sales context, the issue of limiting emissions is perhaps more one of consistency and clarity, rather than accuracy of measurement.aEUR
Assigning responsibility once emissions are measured differs between Scope 1, 2, and 3. Jared Sharp, project lead at the Transition Pathway Initiative, explains: aEURoeA company's Scope 1 and 2 emissions reporting and targets will be more ambitious than their Scope 3 emissions, because they are directly responsible for those. But culpability is difficult, though there has been movement to include upstream producers more.aEUR
Electrifying oil and gas emissions reductionTo reduce emissions, oil and gas companies are switching to lower-carbon sources of energy. A fundamental enabler for this is electrification, which involves the conversion or replacement of equipment and facilities that run on fuel with electricity.
Making this change is vital as otherwise aEURoemechanical drivers and fired equipment aEUR~lock inaEUR(TM) emissions for the lifetime of an assetaEUR, according to the International Association of Oil and Gas Producers (IOGP).
Major industry players are investing in electrification, bridging the gaps between onshore and offshore infrastructure to address upstream emissions. Electricity can be sourced from onshore power grids, a neighbouring offshore facility for increased operational connectivity, or an electrification-ready asset on a remote facility.
On the Norwegian Continental Shelf (NCS), Equinor has electrified its oilfields and platforms with power from mainland Norway and offshore wind farms with the goal of reaching near-zero emissions by 2050.
Lenton underlines the technical and financial challenges in connecting oil and gas assets with power infrastructure. aEURoeWeaEUR(TM)ve seen movement in this space, but nothing in the Gulf of Mexico for example, where most facilities are about 5,000 feet deep. So, whatever you put in place is going to require something floating to power the facilities.aEUR
He proffers floating nuclear power for offshore assets as a promising path for decarbonisation, with the caveat that this would aEURoerequire big investment and take at least 10 years to execute.aEUR
Bansil asserts that no matter the technology used, the focus must be on aEURoecircularity and efficiency, or useful energy generated as a function of energy input.aEUR
Research from the NSTA highlights the role of emissions in building aEURoecommercial opportunitiesaEUR between renewable energy suppliers and the oil and gas sector, alongside electrificationaEUR(TM)s aEURoecritical preservation of the industryaEUR(TM)s social licence to operate.aEUR
Expansions in hydrogen and CCSEmissions from refineries are a key point of concern within an organisationaEUR(TM)s value chain. Developing electrolysis technology is limiting this impact through the production of green hydrogen, aiding the desulfurisation of crude oil without CO2 emissions.
Green hydrogen can then be integrated into natural gas grids and pipelines, utilised as industrial furnace fuel, converted into synthetic hydrocarbons, or used in fuel cells.
To further progress towards climate mitigation targets under the Paris Agreement, an estimated 2,000-plus large-scale carbon capture and storage (CCS) facilities must be deployed by 2050, and the oil and gas industry has a central role to play.
CCS offers an additional solution for low to negative emission intensity, capturing CO2 at its source before it is transported to storage locations. It can then be injected into depleting oil reservoirs, which can increase aEUR~enhanced oil recoveryaEUR(TM) (EOR), or support gas processing in LNG reservoirs.
According to the Global CCS Institute, the majority of CO2 that is currently used for EOR comes from naturally occurring deposits underground, so there is significant potential to aEURoereplace this with CO2 that is captured from large emissions sources or from the atmosphere.aEUR
GlobalData predicts that the number of active oil and gas CCS sites will increase from 66 in 2023 to 285 by the end of the decade, at a compound annual growth rate of 38%.
The International Institute for Sustainable Development points out that the economic viability of CCS for oil and gas operators aEURoecontinues to rely heavily on federal and provincial government financial support, in contrast to renewable technologies.aEUR
Is a net zero future for oil and gas feasible?The IEA forecasts that $600bn upfront spending is required by 2030 to achieve a full 50% reduction in the emissions intensity of oil and gas operations, which is 15% of the industryaEUR(TM)s windfall net income in 2022.
The largest oil and gas producing nations in the world are taking steps to reduce emissions. Most recently, Canada announced draft regulations to cap GHG emissions from the sector, aiming for a 35% reduction from 2019 levels by 2030.
For electrification, hydrocarbon, and CCS, Sharp asserts that aEURoetechnologies such as solar, wind and batteries have far outstripped the development and the cost of these. CCS in particular is wildly expensive. But weaEUR(TM)re still early on in the transition.aEUR
But oil and gas giants are increasingly recognising the benefits of investing in alternative technologies to diversify their portfolios and reduce transition risk if revenues from oil and gas fall. A prime example is Equinor, which has set a goal to invest more than 50% of its capital expenditure in renewables and low-carbon solutions by 2030.
Bansil asserts that there are aEURoenow various policy mechanisms coming into play, including international agreements and local regulatory requirements, which are effectively enshrining decarbonisation as a aEUR~licence to operateaEUR(TM), or a prerequisite for project finance. As 2050 gets closer, it would take a brave person to bet on these motivating factors easing off.aEUR
Any costs are worth it in the long term, claims Lenton. aEURoeOur industry tends to be a bit of a super tanker that takes a long time to do things. Ultimately, itaEUR(TM)s about picking those things that can be done. Companies want to retrofit and upgrade their power supplies with better technology to reduce emissions, as well as give themselves a longer life and overcome obsolescence.aEUR
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COMTEX_462021166/2227/2025-01-20T09:35:30
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