The United Nations (UN) has established 17 Sustainable Development Goals (SDGs), two of which present major challenges for the global oil and gas industry: ‘Affordable & Clean Energy’ (Goal 7), and ‘Climate Action’ (Goal 13). But by overhauling its business models and transforming the technologies it adopts, the industry can contribute materially to achieving both these targets.
According to the International Energy Agency’s (IEA) Sustainable Development Scenario Projection, while crude oil production will decrease over the years ahead, natural gas production and demand will continue to rise. Other analysts predict that renewable energy sources will occupy an increasing share of the energy mix, although oil and gas will still likely account for around 40% of the world’s primary energy supply up to 2050.
Reconciling affordable and clean energy with climate action is not a contradiction. The two are complementary, especially in the case of gas. In power generation, for instance, gas, as the cleanest burning of the fossil fuels, can emit half the carbon dioxide (CO2) of coal or even less with the application of carbon capture and storage (CCS). Gas-fueled power generation is also the ideal energy source to supplement and support renewables when the wind fails to blow or the sun is not shining.
Significant steps have been taken to de-carbonize operations through a renewed focus on CO2 and methane emissions, combustion, and generation. The Methane Guiding Principles, which eight companies signed in November 2017, have since been taken up by 10 further signatories, with 10 more organizations now pledging support. This is an essential part of addressing environmental and climate concerns while satisfying the growing need for affordable, accessible energy.
The industry needs to fully understand and grasp this challenge, because only then will energy be affordable and sustainable for all. And demonstrably efficient efforts to achieve such goals will help nullify the industry’s perceived image as ‘dirty’ and ‘lacking environmental integrity.’
From CCS to emission control, a wide variety of technologies are being developed and adopted to lower the industry’s carbon footprint. The UN’s Intergovernmental Panel on Climate Change sees CCS as a key technology to meet climate change goals, while the IEA ranks it among the top three ways to mitigate greenhouse gas emissions.
One particularly promising and potentially transformative technology involves hydrogen. More relevant to the upstream industry could be ‘blue’ hydrogen, which is the result of steam-reformed natural gas and linked to a plethora of CCS solutions. Such a combination would allow for industrial-scale volumes of carbon-neutral hydrogen and so lay the foundations for a future hydrogen-based economy. Pilot projects are showing the way in Leeds, Manchester, and Newcastle in the UK and in Eenshaven in the Netherlands.
The upstream industry is also active in methane mitigation. Although agriculture and waste generate much greater volumes of methane emissions, it is the oil industry’s output that attracts the most attention. Yet according to IPIECA, the oil and gas association for advancing environmental and social performance, methane emissions from E&P operations are in the range of just 0.5% of total production.
But there is also a commercial incentive to reduce methane emissions. For both environmental and commercial reasons, the industry is committed to reducing fugitive emissions associated with upstream operations. The International Association of Oil and Gas Producers (IOGP) is involved in data collection to more accurately assess emissions levels. To improve this process and achieve greater data consistency, the Methane Regulatory Comparison Project is looking at how methane emissions are measured in five countries.
The oil and gas sector is inherently driven to solve complex problems and the UN’s goals frame this challenge and the context within which the industry must operate to retain its license to operate. IOGP and SPE have leading roles to play in encouraging positive change and shifting society’s perceptions about our industry and the continuing need for oil and gas.
Innovation, technology, and commitment will be critical to successfully decarbonizing our products and improving the oil and gas industry’s relevance and reputation in the future energy mix. Pushing this challenge up the agenda will be a clear target at this year’s SPE Offshore Europe conference in Aberdeen from Sept. 3-6. This will be a global platform to accelerate action to reduce methane emissions and achieve climate change and clean air goals, while still efficiently meeting growing demand for natural gas. •
Phil Kirk, CEO of Chrysaor and chair of the Transformative Technologies keynote program session at SPE Offshore Europe 2019
Gordon Ballard, CEO of IOGP and co-chair of the Transformative Technologies keynote program session at SPE Offshore Europe 2019