Oil and gas industry can deliver net-zero promises, with tweaks

Although the UK’s offshore oil and gas industry has committed to cutting operational emissions in half by 2030 and achieving net-zero production by 2050, operators will have to make leaps forward in technology, policy, and investment to reach these goals, according to WoodMac.

The UK Continental Shelf (UKCS) has been a bedrock of the UK economy for half a century. More than 45 billion boe have been produced from the region to date, contributing more than £350 billion ($478 billion) in tax revenue.

Energy intelligence group WoodMackenzie said in its latest report published on Tuesday that an estimated 6.8 billion boe still remains, under current cost and pricing assumptions.

So, while there will be a natural depletion of the oil and gas industry over time – offset by growth in offshore renewables, hydrogen, and CCUS – it still has a key role to play as the energy ecosystem evolves.

Whilst oil and gas dominate the UK’s energy mix, production operations are responsible for around 3 per cent of UK greenhouse gas emissions. The industry has reduced its carbon intensity by 15 per cent since 2013, thanks to efforts to upgrade and optimise operations through technologies such as digital optimisation and predictive analytics.

According to WoodMac, the oil and gas industry can deliver on its net-zero commitments with an increased focus on four key areas – platform electrification, mitigation of flaring and venting, mitigation of methane leaks, and subsea systems.

What’s powering the platforms?

By far the biggest impact will come from tackling the power source for offshore installations. Three-quarters of CO2 offshore comes from combustion equipment that either provides platforms with electricity or drives mechanical loads, such as compressors.

Taking low-carbon electricity from renewables, replacing gas turbines with electric motors, or switching to alternative fuels such as hydrogen or ammonia in gas turbines would be key, WoodMac stated.

It does not come without challenges as subsea cabling costs between £1 million and £2 million per kilometre and many platforms are more than 200 kilometres from shore. So, electrification does make a material impact on emissions but it must be noted will only be viable if the savings in operating costs and increased production compensate for the required investment.

Several electrification initiatives, focusing on onshore power are either underway or in the planning phase. More advanced electrification projects using offshore wind power can make substantial cuts to capital expenses. These will need greater industry collaboration to establish offshore grids.

Changing habits on flaring and venting

Just over a quarter of the CO2 equivalent emissions from UK upstream production comes from two routine offshore practices: flaring and venting. Venting is mostly the result of an emergency pressure release while flaring is the most economical – but carbon-intensive – means of disposing of low-value associated natural gas.

Norway provides a good working example of this approach. It introduced a total ban on non-emergency flaring in 1971, requiring producers to present gas utilisation plans before developing fields, and setting up a carbon tax and trading scheme. In the UK, the reduction of flaring and venting consents is seen as a key means of managing down related emissions.

Not just CO2 – mitigating methane is even more urgent

Methane is estimated to have a global warming potential 28 times higher than CO2 over 100 years. Leaks from pipelines, compressor stations, storage tanks, and other parts of the process mean that oil and gas operations alone accounted for 82 million tonnes of methane in 2019.

Leak detection and repair programmes for pipelines and storage tanks are already common practice for operators. The next step requires faster and more accurate leak-detection technology as well as the integration of sensor systems in pipelines or remotely operated underwater vehicles (ROVs) and unmanned aerial vehicles (UAVs).

Rolling out detection systems in harsh environmental conditions might be difficult, but WoodMac claims that innovations – such as dynamic modelling and fibre-optic leak detection – could be the answer.

Subsea – the final frontier

Subsea production systems are more energy-efficient than fixed platforms or FPSOs. According to WoodMac, the UKCS has led the way in subsea innovation since the 1960s and now has an opportunity to tap underexploited small pools and unlock low-carbon production of expensive resources.

The ‘final frontier’ of technology development for subsea developments is creating standalone subsea factories. Electrically powered operations such as single and multi-phase boosting, gas compression, gas-to-liquid or liquid-to-liquid separation, and well as water re-injection have a high decarbonisation potential.

The technology has still to demonstrate long-term reliability and comes with a high price tag. Collaborations between operators like Equinor, BP, Total, and Shell – all four of which set plans to become net-zero by 2050 at the latest – and technology developers like Aker Solutions, MAN, TechnipFMC, One Subsea, ABB, and Siemens are likely to result in more robust designs that could be commercial in the mid-term.

The path to net-zero oil and gas production

Sustained effort is needed to meet decarbonisation targets. The implementation of revolutionary solutions has been hampered by the overall maturity of the basin and limited availability of capital due to low oil prices. Some solutions may have to be set aside due to high technology hurdles, while others will need government support or industry collaboration.

Focused, strategic investment will be vital to ensure the oil and gas industry plays its role in the evolution of a decarbonised, integrated energy system on the UKCS”, WoodMac said.

Source link