02 Dec Assessing the viability and cost of carbon neutral oil and gas platforms
Global energy sector leader Jan Egil Brændeland discusses carbon neutral oil and gas offshore platforms and the carbon footprint of the sector.
McDermott have teamed up with consulting and electrical equipment multinational Schneider Electric. Their collective remit is to design carbon neutral offshore platforms for the upstream oil and gas market sector.
Assessing viability of carbon neutral oil and gas platforms
A statement released by the three companies says that they will research and develop a proof of concept. This will be based on an offshore platform, and the joint study on the viability and design will be released as a report on Net Zero Facilities – Upstream before the end of 2020.
The study includes a definition of the available technologies to reduce emissions. These are ranked by:
- Maturity of the technology available.
- Investment costs.
- Impact on emissions reduction.
- How much it allows operators to make an informed decision when prioritising the journey towards reducing emissions.
The three companies involved in the venture provide a mix of digital innovation, thought leadership and experience. In the statement, the group says: “By combining our strengths, we will deliver solutions that enable our customers to accelerate the industry-shared goal of reducing carbon impact throughout the production chain.”
How much of the industry’s carbon footprint is caused by upstream?
According to the International Energy Agency (IEA), Upstream is responsible for 15% of the whole oil and gas carbon footprint. The industry is in a transitional period between hydrocarbons and sustainable forms of energy generation. However, fossil fuels will still be needed for the foreseeable future, and one of the industry sector’s priorities now must be to decarbonise the production of hydrocarbons.
One of the most exciting elements of this joint venture is that we will see how much can be achieved with the current level of technologies. We will also discover the kinds of new technologies that are either in the pipeline or must be developed. Furthermore, the project will also identify a pricing structure that will ensure that net-zero platforms are viable for producers.
When the partners have developed a sufficient proof of concept, along with the information listed above, it will be adapted to work in every region and across every project. This will mean environmental policies and infrastructure of each region will be included in the carbon pricing.
The project’s overall goal is to identify real-life, achievable and cost-effective methods for reaching carbon neutrality. A decision-quality framework will be applied to the following:
- Digital transformation of operations and design.
- Remote operation.
- Methods for engineered offsetting.
- Power import.
- Power electrification.
- Methods to integrate with hydrogen networks.
- Renewable micro-grids.
- Integrated energy storage.
- Removal of flare systems.
- Facility control and monitoring.
Measuring the carbon footprint of offshore production
This project is a welcome step forward in the challenge facing oil and gas producers. All major operators are researching how they can realistically reduce carbon dioxide releases in power generation and offshore production.
Major oil brands have announced plans of varying depth to cut their emissions. For example, Equinor (formerly Statoil) released its plan for cutting carbon intensity by 50% by 2050. Lundin Petroleum has announced a branding change along with its own targets for carbon neutrality – removing the reference to ‘petroleum’ is aimed at reflecting the commitment to energy transition. BP also announced its own targets to become net-zero by 2050.
These significant commitments from the industry are a result of a combination of global consumer pressure and changing data regarding climate change. The IEA issued a report named ‘Energy Transitions’ which says that every stakeholder has to play a part in the offshore sector’s journey towards decarbonisation.
Data from the IEA shows that the amount of carbon dioxide emitted into the atmosphere in 2018 was the highest for three million years. The level remained the same in 2019. Understanding the true level of carbon impact on fossil fuel production is, of course, essential to properly assess how best to combat it.
Understanding the carbon footprint of the offshore industry
There are a number of parts that fit together to make up the offshore industry’s carbon footprint. It’s imperative that each one of these parts is understood by consumers, governments, regulators and producers. Only then will the true carbon footprint properly recognised in a meaningful way.
The International Petroleum Industry Environment Conservation Association (IPIECA) gives full guidance on how the offshore industry should report carbon emissions. It was set up by the UN in 1974 and incorporates its carbon reduction and sustainability goals. However, it’s not detailed enough to work at project level in terms of managing carbon. This means operators and producers must actively look into each aspect of every project:
- Construction phase
This is probably the most carbon intensive phase due to construction, transport, materials used, accommodation and office costs.
- Operation phase
This phase is the longest and it’s difficult to easily estimate the carbon footprint.
This must be included in the estimate for the carbon footprint of the project.
- How the product is used
While this is simple with combusted gas, it’s more complicated with oil. For example, the carbon could be contained within a plastic rather than a fuel.
The offshore industry must clearly show its carbon impact across the life cycle of every kind of project and how it’s moving to mitigate it. Projects like this joint venture between major players in the industry is a positive sign for an industry that must change as quickly as possible.
Read Jan Egil’s previous article where he discusses decarbonisation and the cost of the carbon footprint of the offshore industry