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Oil and gas faces pressing need to decarbonise

27 October 2023

 

This report on carbon capture also includes: Bright outlook for carbon capture investment

Greenhouse gas (GHG) emissions generated by oil and gas operations – also known as Scope 1 and 2 emissions – accounted for 15 per cent of the total energy-related emissions worldwide in 2022.

A further 40 per cent of the energy-related emissions came from the consumption of oil and gas for power generation, heating, vehicle fuel and industrial processes, also known as Scope 3 emissions. 

Against this backdrop, developed countries are aiming to achieve net-zero emissions by 2050, while developing countries like China and India are aiming for 2060 and 2070, respectively. Such targets mean the carbon-intensive oil and gas industry has come under significant pressure to reduce its carbon footprint. 

However, increased investment and new regulations are needed to effectively drive carbon-cutting measures and lower emissions, according to a report by GlobalData.  

“To support global commitments towards climate change, countries and regulatory bodies have started introducing emissions trading systems or enhancing existing ones,” says Barbara Monterrubio, managing analyst for energy transition at GlobalData. “This is pushing companies to strengthen internal targets and diversify their portfolios into clean and sustainable products and technologies.”

Tackling emissions

Most national oil companies in the Gulf have announced net-zero emissions targets. Saudi Arabia aims to reach net zero by 2060 through the circular carbon economy approach, while Saudi Aramco aims to be carbon neutral by 2050.

Abu Dhabi National Oil Company (Adnoc) has adopted a plan to achieve net zero by 2045 and to reach zero methane emissions by 2030. The company’s methane intensity was about 0.07 per cent last year.

Adnoc also achieved GHG emission reductions of about 4 million tonnes in 2022 by using grid energy from solar and nuclear power to supply 100 per cent of its onshore operations, as well as about 1 million tonnes from energy-efficiency and flaring reduction projects.

Qatar has set a goal to reduce its GHG emissions by 25 per cent by 2030. State enterprise QatarEnergy has been tasked with achieving a net carbon intensity reduction of 15 per cent from upstream operations and about 25 per cent from its liquefied natural gas facilities by 2030. 

QatarEnergy also has targets of 0.2 per cent methane intensity by 2025 and zero routine flaring by 2030.

Bahrain’s state energy holding company Bapco Energies has listed its Scope 1 and 2 net emissions intensity reduction targets as 15 per cent by 2025, 25 per cent by 2030, 30 per cent by 2035, 50 per cent by 2040, 75 per cent by 2050 and net zero by 2060. It has committed to cut Scope 3 emissions within Bahrain by 30 per cent by 2035 and reach net zero by 2060.

“Switching to low carbon products is a long-term process, with many oil and gas majors in the early stages of their energy transition strategy,” says Monterrubio. “A combination of well-designed regulations as well as huge investments are needed to tackle emissions and support low-carbon industry.”

Ravindra Puranik, oil and gas analyst at GlobalData, adds: “Oil and gas companies are currently working to reduce Scope 1 and 2 emissions generated by their operations. Several leading companies have set themselves the target to reach operational net-zero emissions by 2050. 

“To achieve this, companies are focusing on adopting new technologies, such as low-carbon hydrogen and carbon capture and storage; and making other operational changes like building renewable energy and biofuels capacities.”

Carbon capture campaign

Carbon capture and storage (CCS) involves the separation of carbon dioxide from a gas stream in industrial processes through technologies such as chemical absorption or physical separation. The carbon dioxide is then transported and stored through injection into deep underground rock formations, usually at depths of 1 kilometre or more. 

Further to this, rather than simply storing the captured carbon dioxide, after transportation it can be used for a variety of industrial processes. This is referred to as carbon capture, utilisation and storage (CCUS). 

One application for captured carbon dioxide is enhanced oil recovery. Injecting the carbon dioxide into depleted oil reservoirs not only helps to push oil to the surface, but also keeps the carbon locked underground.

CCUS will be important in lowering emissions in sectors where a complete eradication is not possible. As one of the largest emitters of carbon dioxide, the oil and gas industry needs to be at the forefront of driving CCS and CCUS activities.

The International Energy Agency (IEA) estimates that in order to achieve net-zero emissions by 2050, CCUS capacity will have to increase more than 40 times by 2030. This will require capacity to increase by 50 per cent every year.

According to IEA data, there were a total of 13 CCUS projects planned or operational in the GCC region as of March 2023, with total capture capacity estimated at 20 million tonnes a year of carbon dioxide. The region’s energy producers account for the majority of these planned CCUS investments. 

Bright outlook for carbon capture investment

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Indrajit Sen

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