Given io’s central London location, it will come as little surprise that the Extinction Rebellion demonstrations have featured prominently during recent lunchtime conversations. While ideas about the best way to remove a peaceful protester from a Docklands Light Railway (DLR) carriage probably didn’t generate our best examples of Powerful Thinking, other discussions got people thinking about “What is the role of an oil & gas consultancy in the energy transition?”
One of the three aims of Extinction Rebellion is that “The Government must enact legally binding policy measures to reduce carbon emissions to net zero by 2025 and to reduce consumption levels” [1]. This is a highly ambitious aim – most would say impossible, if we wish to maintain our current standards of living – but it is perhaps useful to compare this to commitments made in the context of the Paris Agreement on how to tackle climate change. In preparation for the COP21 Paris conference (2015), the UN Intergovernmental Panel on Climate Change (IPCC) found that for the rise in temperature to stay below 2°C, global greenhouse gas (GHG) emissions need to peak by 2020 at the latest, be reduced by at least 50% by 2050 compared to 1990 levels and be near zero or below by 2100 [2] Following the Paris Agreement, this will be achieved by requiring countries to set Nationally Determined Contributions (NDCs) to reduce carbon emissions. The EU’s first NDC is to reduce GHG emissions by at least 40% by 2030 compared to 1990; this is now a legal commitment [3] More recently, the EU has aimed to become the first major economy to go “climate neutral”, a goal it intends to achieve by 2050 [4]. Within the EU, Sweden has made a legal commitment to achieve net-zero emissions by 2045. The UK Committee on Climate Change has recently stated that it is possible to cut emissions to nearly zero by 2050; Scotland could achieve this by 2045, England and Northern Ireland by 2050 and Wales could reduce emissions by 95% by this time [5] [6]
The current big oil & gas projects on which io is working are likely to begin production around 2025, with design lives of 25 years or so. If history is anything to go by, these assets will be operating well beyond 2050. The carbon emissions from use of the products from these developments is beyond the scope of this article; ultimately the reduction in global carbon emissions will either reduce the demand for these products or strategies will be found to capture and store the carbon dioxide released from their use. This article focuses on what the oil & gas industry could do to reduce emissions from its own operations within the 2050 time frame and the options that io could present in the early phases of projects to influence the carbon intensity during the operating phase of the development. Other areas where the oil & gas industry could reduce emissions of GHGs are due to the energy consumed during the project phase, fugitive methane emissions during operation and carbon dioxide emissions from flaring but, again, these are subjects for another day.
Extracting oil & gas and delivering it to a location where it can be processed and sold is an energy intensive process. Whether this involves liquefying natural gas, pumping oil through hundreds of kilometres of export pipeline or compressing associated gas for re-injection into the subsurface, energy is required. Improving the energy efficiency of either the process as a whole or individual items of equipment can only achieve so much; oil & gas facilities are always likely to have a significant energy demand.
The traditional method of power generation for oil & gas production facilities is to use aero-derivative gas turbines which are powered by an off-take of fuel gas from the produced hydrocarbons and, in many cases, a back-up option to run on diesel to provide a base power supply during periods of production shutdown. Where large items of rotating equipment are required, it is common that these are driven directly by a gas turbine. During concept selection and development, this remains the default option. Use of a Combined Cycle Gas Turbine for power generation would reduce emissions by increasing efficiency but can only ever give a partial reduction in emissions and, when considering their additional cost, are unlikely to be adopted, particularly in offshore developments. Once a facility has been provided with gas turbines for power generation or to drive rotating equipment directly, there is a significant cost to change this. Projects developed in the coming years using gas turbine power generation are highly likely to still be using this technology come 2050.
One option to reduce emissions from facilities with gas turbines would be to capture and sequester the carbon dioxide that is released. However, this may be difficult as a retrofit option: the low concentration of CO2 in flue gas results in large equipment (particularly challenging for offshore facilities) and the energy required for regenerating the solvent used for CO2 capture reduces the energy available for the rest of the facility [7] Even where suitable technology for retrofit of equipment to capture the CO2 is available, the costs involved in sequestering CO2 at individual facility locations or transporting the CO2 to a central location for injection are likely to be prohibitive. Carbon Capture and Storage (CCS) is only likely to be feasible at scale and, while the emissions from oil & gas processing facilities are significant when grouped together, the emissions from individual facilities are unlikely to be sufficient to make CCS economic as a retrofit option for facilities with gas turbines.
The gas turbines could, of course, be replaced with other power generation options. If a local supply of fuel gas is available, utilising this via the Allam Cycle [8]may be a more efficient way to capture the CO2 generated in combustion, although this requires an air separation unit upstream of the turbine and does not eliminate the costs associated with CO2 transportation and injection. Another alternative would be to utilise turbines that are fuelled with hydrogen [9]That hydrogen could be ‘blue’ hydrogen, produced from fossil fuels but with the CO2 captured and sequestered, or ‘green’ hydrogen, produced by electrolysis powered by renewable energy. However, any facility being powered by hydrogen would need to be connected to a hydrogen distribution pipeline network.
Renewable sources of energy (wind, solar) are too diverse to supply power to all but the smallest, most limited offshore facilities as part of the facility itself. For onshore locations, a renewable power source combined with energy storage is feasible [10] although may require more conventional back-up power generation for periods where the renewable energy source fails to meet the full power demand.
For the majority of facilities, a practical way to decarbonise would be to take power from an external electricity network which, over time, can transition towards using low carbon sources of power provided by either renewable or CCS energy sources. For offshore developments, ‘Power-from-shore’ has been an option for new projects for several years, with advantages being reduction in manning requirements and increases in availability but, to date, this hasn’t been widely discussed as a route to a carbon free future. Electrification of today’s projects and supplying them with power from a remote location could play an important role in the transition to lower carbon emissions from oil & gas developments. This is analogous to the current trend towards electrification of transportation where there are already ambitious targets for moving to electric cars [11] and success stories for electrification of rail networks [12]
While there will be losses in the transmission of power over long distances, there may be some immediate benefits in terms of reducing carbon emissions. Gas turbines provided for individual facilities are likely to have an efficiency of around 40% whereas electricity generated for a large network is likely to come from combined-cycle gas turbines with 50% higher efficiency (typically 60%) and some electricity grids already have a reasonable portion of electricity generated by low carbon sources of energy.
Clearly, electrification does not, in itself, reduce carbon emissions; having electrified new developments, oil & gas production companies must then commit to purchase electricity from low carbon sources and, in some cases, perhaps become involved in low carbon power generation. Carbon accounting may not help here; electrification of new projects removes emissions from the ‘books’ of oil & gas producers. However, it would be highly cynical for production companies to claim that they have reduced their emissions by electrification of new projects while continuing to purchase electricity from sources emitting carbon dioxide.
As a consultancy working in the early phases of projects, io is in a position to present development options for future oil & gas projects that facilitate a transition to a low carbon future. A strong case can be made for concepts where facilities are completely electrified, with power obtained from a remote grid where it is much easier to take advantage of dispersed renewable energy sources or energy supplied from large-scale CCS projects. To return to the questions posed earlier in the article, perhaps io’s role in the energy transition should be to position future projects to take advantage of the change to low carbon power generation so that, in future, we won’t find climate change protesters glued to our trains.