Simplifying the pathway to decarbonization for oil and gas operators
Despite ambitions to halve Green House Gas emissions by 2030 and achieve net zero emissions by 2050, the world’s demand for energy supply security means hydrocarbons will remain an integral part of the energy mix for the foreseeable future.
According to DNV’s Pathways to Net Zero report, to achieve net zero emissions in 2050, fossil fuel use needs to be reduced by about 80% from their current levels. Traditional hydrocarbon assets and oil and gas operators are looking at carbon reduction processes which will enable society to meet energy transition challenges. A bold action, but an essential one to show that oil and gas companies are serious about driving the transition forward.
The greenhouse gas classifications for emissions are categorized into three bundles called Scope 1, 2 and 3. Scope 1 is classified as direct emissions generated because of business operations; Scope 2 are indirect emissions produced via purchased energy, such as electricity; Scope 3 are indirect emissions not included in scope 2 and are linked to a company’s operations, are extremely complex and divided into 15 categories.
Focusing on Scope 1 emissions, this article investigates what operators can do today to follow a credible pathway to reduce carbon emissions.
Simple, actionable steps to reduce carbon emissions
In simplified terms, the first step is to explore potential carbon saving actions and provide a screening method to conduct asset or portfolio specific assessments. A Marginal Abatement Cost Curve (MACC) approach provides a systematic and transparent method for prioritizing and selecting CO2 reduction measures and energy improvement opportunities. This approach will demonstrate that the first steps towards decarbonizing an asset can occur with minimum capital expenditure and can actively reduce a carbon footprint, taking both time and budget into consideration.
This diagram shows CO2 reduction potential on the horizontal axis and the cost per tonne of CO2 averted on the vertical axis. Each measure is presented as an individual bar, with measures ordered from left to right, with the first the lowest cost measure per tonne of abated CO2
Following the asset assessment, a three-tiered Scope 1 reduction approach of reduce, remove and replace is followed.
The Reduce tier targets reductions in overall energy demand which can be achieved through design or behavioural changes rather than significant CAPEX investment or novel technology. This includes but is not limited to: Behavioural energy management; Energy efficient design; Building / Systems control/optimization; Power management and performance monitoring and Process control/optimization.
The Remove tier seeks to eliminate direct gaseous losses to the environment by ensuring robust maintenance regimes are in place to maintain hydrocarbon containment and minimize flaring, typical measures would include flare gas recovery and management. Other considerations include looking at fugitive emissions, reduction in venting and carbon capture and storage.
The Replace tier considers the replacement of conventional hydrocarbon driven power generation with low carbon alternatives, challenging existing design assumptions, such as power from shore (subsea distribution); power from offshore wind / renewable energy island or hub (subsea distribution) and the use of hydrogen and hydrogen fuel cells.
A credible pathway to decarbonization
The proposed pathway follows several steps, as demonstrated in the flow chart, starting with a clear mandate from the board.
Process Flow chart demonstrating a credible pathway to decarbonization.
The assets are filtered into existing and new build categories with considerations relevant to either pre-existing arrangements or a design consideration in the case of new build. In each scenario, the main output would be the creation of a carbon reduction plan with associated targets and budget. Based on the carbon reduction targets specified the measures are subsequently presented in these overarching tiers:
- Reduce overall energy usage
- Seek to Remove environmental losses
- Replace energy supply with low carbon alternatives
Based on the shortlisted carbon reduction measures, the next step would be to undertake a portfolio specific assessment on suitability. Using the flexibility of MACC methodology, the output provides a visualization of cost effective and non-cost-effective carbon reduction measures so that an implementation plan can be developed and executed. The process is underpinned by a continuous improvement loop.
Summary
Upstream Scope 1 emissions must be reduced to meet climate targets. Whilst some operators may have comprehensive and far-reaching decarbonization plans, others will not. To maximize engagement with these companies and the wider industry, collectively, we need to understand the sources of emissions, measure them, and modify our behaviour and systems to decarbonize.
To effectively allocate financial resources to decarbonization, one must assess the relative cost effectiveness of the deployment of several carbon abatement measures. Whilst some carbon abatement measures may not be considered viable for marginally economical fields, this does not mean other cost-effective measures are not available.
The suggested credible decarbonization pathway describes a simple process to develop and implement a decarbonization plan, it separates the cost-effective measures from those which are currently not financially economical. All operators must play their part, the energy transition is accessible to all and there is no time to wait.
Read the full paper here.