The Oil and Gas Industry’s Quest for Emissions Reduction
The oil and gas sector is responsible for nearly half of all energy-related emissions, presenting a complex challenge for the industry to address. To tackle this issue, it’s essential to understand the different types of emissions: Scope 1, which comes from owned and controlled sources; Scope 2, which covers indirect emissions from production, processing, and transportation; and Scope 3, which results from activities outside of the reporting organisation’s control, such as the use of oil and gas for power generation, heating, and industrial processes.
Upstream and Downstream Emissions
Upstream emissions are closely tied to production and processing, while downstream activities account for a significant portion of lifecycle emissions from oil products and natural gas. According to the International Energy Agency (IEA), downstream activities contribute to roughly 70-90% of lifecycle emissions from oil products and 60-85% from natural gas.
The Role of Renewable Energy, Carbon Capture, and Electrification
To mitigate emissions, the oil and gas industry is turning to renewable energy, carbon capture, and electrification. These technologies have the potential to significantly reduce emissions and pave the way for a global energy transition. However, effective measurement systems and the impact on bottom lines pose significant barriers to realising an industry-wide reduction in emissions.
The Challenge of Measuring Emissions
Before emissions can be addressed, they must be accurately detected and measured. The greenhouse gas methane, which is 21 times more potent than carbon dioxide, is a significant contributor to emissions from oil and gas operations. The IEA identifies methane as the “single most important measure that contributes to the overall fall in emissions from oil and gas operations,” but notes that global methane emissions are underreported by 70%.
Accurate Measurement and Detection
The scale of 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 UK’s North Sea Transition Authority (NSTA) suggests that emissions can be accurately measured by a combination of direct measurement, using meters attached to flares and vents, and modelling.
Methane Reduction: A Key Opportunity
Methane reduction offers a significant opportunity for near-term abatement progress, given its short-term life of seven to 12 years in the atmosphere. The World Bank suggests that oil and gas operators should focus on eliminating all non-emergency flaring of natural gases under its Zero Routine Flaring Initiative 2030.
Electrification: A Fundamental Enabler
Electrification, which involves the conversion or replacement of equipment and facilities that run on fuel with electricity, is a fundamental enabler for reducing emissions. Major industry players are investing in electrification, bridging the gaps between onshore and offshore infrastructure to address upstream emissions.
Carbon Capture and Storage: A Critical Solution
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. CCS offers an additional solution for low to negative emission intensity, capturing CO₂ at its source before it is transported to storage locations.
Industry Leaders Take Action
The largest oil and gas producing nations in the world are taking steps to reduce emissions. Canada has announced draft regulations to cap GHG emissions from the sector, aiming for a 35% reduction from 2019 levels by 2030. 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 Brave New World
As the industry moves towards a low-carbon future, it’s clear that any costs are worth it in the long term. 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. The oil and gas industry’s quest for emissions reduction is a complex and challenging journey, but one that is essential for the future of our planet.
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