KEYFACT Energy
Barny Brennan
Provision of consultancy services, specialising in Oil and Gas and the Energy Transition
How do we minimise carbon emissions associated with the production of oil and gas?
This was the subject of a webinar held 14th September 2021, which I hosted on behalf of the Net Zero Committee of the London Section of the SPE. We had three excellent speakers and panellists representing different aspects of the industry from the producer, to the developer, to the supply chain. The session had a UK focus but the lessons can be applied more universally.
My introduction to the the session looked at historic and forecast UK oil demand and production (figure below) and aimed to make the point that whatever the future oil demand is, we should be supplying that demand in a way that minimises CO2 emissions.
The UK has targets, set in law, to be Net Zero by 2050. The Committee on Climate Change (CCC) recognise that - even whilst meeting this target - there will still be an ongoing demand for oil for decades to come. As oil industry professionals it is important to recognise that the oil that we produce to meet that demand can have high or low associated emissions, and we need to understand the actions we can take to minimise the carbon intensity of oil and gas production. The carbon intensity of production can vary from country to country depending on regulations, it can vary from field to field depending on extraction and transport techniques, and it can vary over field life dependent (amongst other things) on the quantity of unwanted fluids (typically water) produced in association with the oil.
On a country basis, the graph illustrates that the UK will still be a net importer of oil, even whilst meeting the CCC Net Zero Balanced Pathway. The required imports increase if the CCC demand curve is adjusted to include the approximately 7 MMt pa of non-fuel use petroleum. Imports will increase further if new UK developments such as Cambo do not go ahead as assumed. It does not follow that importing oil and gas will raise the carbon intensity of the fossil fuels we use in the UK, but it does make it more likely with some imports coming from relatively poorly regulated regimes. A strong case can therefore be made for promoting domestic oil production where a robust regulatory framework is already forcing operators into emission reductions.
Inevitably some fields will produce at a significantly higher carbon intensity than other fields. When companies consider their net zero strategies, if it is achieved by divesting the high intensity assets then it is likely that this simply shifts the emissions on to another company. A common theme is to take ownership of - and responsibility for - the emissions that are created, whether this be done on a country basis by prioritising domestic production over imports, or on a company basis by decarbonising the highest intensity assets rather than divesting them.
One very interesting theme that came out of the presentations and subsequent discussions was the different approaches to decarbonising existing production assets compared to new developments. New developments can design facilities and reservoir management with low carbon emissions as a priority. In fact, it was noted that in the UK, given the regulatory regime and the ESG focus of the financial markets, it would be extremely difficult to bring a field into production without it being low emissions.
Mature assets present a different problem. The main building blocks are already in place and brownfield modifications may be complex and expensive. This does not mean that such modifications can’t be done but the return on investment for late field life projects may make them hard to sanction. A further challenge for mature fields is that they may be handling large volumes of water and relatively small volumes of oil, potentially resulting in the carbon intensity of production (the amount of CO2 per barrel of oil produced) being relatively high. This then raises the challenging question of how to balance the economic benefit of deferring decommissioning with the requirement to meet net zero targets through minimising high carbon intensity production. In these circumstances - if aging infrastructure permits - the solution could potentially be repurposing of assets for things like carbon capture and storage or hydrogen production and storage – both ideas that were covered during the session.
There are many challenges in decarbonising oil and gas production, but the session highlighted that the technology and engineering skills do exist to make a real difference. With more and more companies stating net zero strategies, we can consider it a call to arms as oil industry professionals to deploy a mindset of “how can I use the skills I have to minimise the carbon intensity of the oil we produce?”.