Article summary
- The International Energy Agency (IEA) has provided five ways oil and gas companies and operators can reduce emissions going forward.
- The latest data from the IEA shows that the oil and gas industry was directly responsible for nearly 15% of energy greenhouse gas (GHG) emissions.
- Around $600 billion in upfront spending is required over the period to 2030 to achieve the full 50% reduction in the emissions intensity of oil and gas operations.
The International Energy Agency (IEA) has said oil and gas companies and operators need to reduce emissions from their operations. The agency stated this in its May 2023 Emissions from Oil and Gas Operations in Net Zero Transitions report.
According to the agency, its latest data show that the oil and gas industry is directly responsible for nearly 15% of energy greenhouse gas (GHG) emissions.
The IEA says these emissions are not just from production processes. The agency highlighted the fact that crude oil, oil products, and natural gas are transported, often over long distances, by both pipeline and ship, and these processes are also an important source of GHG emissions.
The IEA says a consistent approach is needed to monitor, report, and verify emissions from oil and gas activities. This should be based on robust measurements to improve the accuracy, availability, and transparency of emissions data. The agency recommends the following ways oil and gas companies and operators can reduce emissions in their operations: They include:
Tackling methane emissions
The IEA believes tackling emissions from oil and gas is one of the most viable and lowest-cost options to reduce total GHG emissions from any activity by 2030. According to the agency, around $600 billion in upfront spending is required over the period to 2030 to achieve the full 50% reduction in the emissions intensity of oil and gas operations.
This amount is 15% of the windfall net income the industry received in 2022. The IEA says that for the facilities implementing these measures, the average cost of producing oil and gas would increase by less than $2 per barrel of oil equivalent (boe).
Eliminating all non-emergency flaring
According to the IEA, stopping all non-emergency flaring is among the most readily implementable and cost-effective measures available in any sector of the economy to reduce GHG emissions. The IEA says around 140 billion cubic meters (bcm) of natural gas was flared in 2022, causing 260 metric tons (Mt) of CO2 emissions from the combustion of methane and natural gas liquids and 8 Mt of methane emissions.
As alternatives, the agency suggests bringing gas to consumers via a new or existing gas network, reinjecting gas to support reservoir pressure, converting gas to compressed natural gas (CNG) or liquefied natural gas (LNG), and using gas to generate power.
Electrifying upstream facilities with low-emissions electricity
More than half of global oil and gas production today lies within 10 km of an electricity grid, and 75% takes place in an area with good wind or solar resources. So, the energy at upstream facilities could therefore be provided by electricity from a centralized grid or generated in a decentralized renewable energy system.
According to the IEA, a large portion of the energy required at upstream facilities is used to power electrical equipment, with the electricity produced using small-scale onsite natural gas generators. But these are quite inefficient and also use some of the valuable products that could often be sold.
The agency suggests using more efficient equipment, such as swapping an open-cycle gas turbine for a combined cycle, which can save around 30% of the energy required. However, full electrification can lead to even greater efficiency improvements.
Equipping oil and gas processes with carbon capture utilization and storage (CCUS)
According to the IEA, carbon capture can be applied to natural gas processing, refining, bitumen upgrading, and liquefied natural gas liquefaction. But before this happens, government policies need to be introduced to boost the deployment of CCUS, through measures that mitigate risks for large-scale CO2 storage development, offer performance-based payments for proven CO2 avoidance, and create markets for low-emissions products.
In the report, the IEA stated that the oil and gas industry is involved in 90% of CO2 capture and storage capacity in operation around the world today. Meanwhile, more than 40% of CCUS investment since 2010 has been in projects directly related to the oil and gas value chains.
Expanding the use of low-emissions electrolysis hydrogen in refineries
The IEA says refineries are well suited for the deployment of low-emissions hydrogen because they can accommodate a new source of low-emission hydrogen without the need for new end-user equipment. Refineries are also often co-located with other industrial sources of hydrogen demand, which can share some project risks and diversify hydrogen supplies over time.
The IEA also believes refineries are often in locations that are well-suited for developing renewable electricity (such as offshore wind or solar PV) or CO2 storage that is essential for low-emission hydrogen and minimizes the need for new infrastructure to move electricity, hydrogen, or CO2.
