Counting the cost of the carbon footprint of the offshore industry

Upstream oil and gas is responsible for 15% of the entire industry’s carbon footprint, according to the International Energy Agency (IEA). And pressure is growing from consumers, scientists and producers themselves to take practical, visible steps towards decarbonisation.

The world is in a transitional phase between fossil fuels and sustainable energy. However, announcing targets of net-zero carbon too soon could ultimately damage the industry’s reputation. Fossil fuels will be in use for decades to come, which means the sector’s priorities must now be to decarbonise the production of fossil fuels. On this note, I was encouraged to see a recent announcement regarding the design and development of carbon-neutral oil and gas platforms.

Joint venture to assess the viability of carbon neutral offshore platforms

In October, US engineering company McDermott announced a joint venture with io consulting and Schneider Electric to design carbon neutral offshore platforms for the upstream sector. A statement released by the joint venture explains that they are researching and developing a proof of concept.

A report on the viability and design of these platforms will be released before the end of the year as a report on Net Zero Facilities — Upstream. The study covers the tech currently available for the reduction of carbon emissions. Current tech is ranked as follows:

1. Its maturity.

2. Investment costs.

3. Its potential impact on reducing emissions.

4. How much it would allow operators to make a properly informed decision on reducing emissions.

This insight into the current technologies and their real-life potential will be invaluable to the industry. The report will also give upstream a clear picture of the tech that is being developed, along with a comprehensive and realistic pricing structure for producers and operators.

Once the proof of concept is finalised, the project will also consider how it would feasibly work across different regions and projects. The joint venture’s overall remit is to identify practical, realistic and achievable methods for the sector to achieve carbon neutrality. To do so, a decision-quality framework will be applied to:

1. Digital transformation of design and operations.

2. Remote operation of platforms.

3. How to offset the impact of engineering.

4. Power import and electrification.

5. Integration with hydrogen networks.

6. Facility monitoring and control.

7. Removal of flare systems.

All stakeholders must work together to assess carbon dioxide emissions
While this project is noteworthy for its practical applications for the whole industry, all major operators are also looking into reducing carbon dioxide emissions across offshore production and power generation.

Major brands have been busy announcing their plans to cut emissions in 2020. For example, Equinor says it will cut carbon intensity in half by 2050. Lundin Petroleum says it will rebrand and lose the word ‘petroleum’ to cement its commitment to its own carbon neutral targets. BP also announced recently that it will be net zero by 2050.

These are significant commitments, but without a clear and practical understanding of exactly how this will happen, there is a danger that the public will see this as greenwashing. At the start of this year, the IEA made it clear in its Energy Transitions report that every stakeholder must play a part in the offshore industry’s move towards decarbonisation.

The IEA’s data shows that 2018 and 2019 represent the years with the highest amount of carbon dioxide emissions in three million years. And understanding exactly how offshore contributes to this is crucial in the fight to reverse this trend.

Accurate assessment of the offshore sector’s carbon footprint is key
The offshore sector’s carbon footprint comprises a number of separate parts. Each of these must be fully understood by producers, operators, regulators, consumers and governments to come to meaningful emissions targets.

The International Petroleum Industry Environment Conservation Association (IPECA) has guidelines on reporting carbon emissions. However, these were launched in at the direction of the UN in 1974 and are not detailed enough to work for every separate project and region. Operators and producers must assess each project on a case by case basis and include the following:

1. Emissions from the construction phase, which is one of the most intensive in terms of materials, sourcing and transporting, construction, personnel costs etc.

2. Emissions from the longest phase, which is the operational phase. This may be years or decades and comes with more challenges for accurate estimates of carbon emissions.

3. The decommissioning phase should be included.

4. Exactly how the product is used. This might be simple with gas but is more complex with oil due to its multifaceted uses aside from fuel.

Upstream oil and gas must quickly find ways to accurately understand its carbon emission impact and explain how exactly this will be mitigated. Projects such as the joint venture described at the beginning are positive signs that steps are being taken on this crucial journey to net-zero.