WoodMac: 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.

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.

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.

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 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.

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.