With COP27 on the horizon, all eyes are on the oil and gas sector and our vital role in delivering safe, reliable energy with net zero emissions and playing a leading role in the energy transition. Both subjects are top of our agenda, and IOGP has been working with industry, helping operators to develop their action plans for the decarbonization of their facilities and products. Sharing knowledge and learnings from the industry journey so far and promoting standardization.
In a nutshell, the Paris goals are achievable with the technologies that exist today, but we need to acknowledge that the oil and gas sector has a key role in securing energy demand and that collaboration is needed across industry, governments, consumers, and society in general.
If we wait for silver bullet solutions we can miss the opportunities to make progress with what we already have. And as we sit and wait around for game-changing solutions to solve everything, it will ultimately lead to ‘game over’.
Take nuclear fusion, for example. Some see this as something of a holy grail in energy. But it is unlikely to be deployed at scale before 2050, and we can’t afford to wait that long.
That’s why technologies like CCUS and hydrogen are so important. They offer an opportunity to make a difference now, in our transition to a low-carbon system.
The IEA forecasts that the world needs to capture 4 GT of CO2 by 2030 and 7.6 GT CO2 by 2050, yet today we only capture 40 MPTA. Put simply, by 2030, which is only 8 years away, we need to store 100 times more CO2 globally than we have already! Achieving that goal is a very tall order.
IOGP has been supporting its members for some years on greenhouse gas reduction, which loosely shaped itself into a low-carbon agenda in 2020/21. However, in last year’s strategic review, our members made clear that they wanted us to be more ambitious, and we are now working on our four prioritized themes: carbon capture and storage (CCS), electrification, energy efficiency, and flaring and venting. Our work on hydrogen is also ramping up.
Globally, the industry’s CCUS progress is varied. In Europe, CCUS is a proven technology, but it has struggled to scale up despite past EU support and many now prefer to invest in renewables. We now need practical actions, such as an alliance with industrial partners to show that this is a way to keep industry – steel, fertilizer, cement – in Europe. We also need to address the wider value chain; especially CO2 capture and transport.
In Australia, we see a push for CCUS for oil and gas, but also for other industries, including coal and hydrogen, and the government has an AUD 250 million program to deploy CCUS at scale.
There is a critical role for governments in creating a framework to let, for example, CO2 captured in Singapore to be shipped to Australia for sequestration. But there are challenges, including some resistance to CO2 storage as a long-term process and, for regulators, the long-term liability of sequestration.
The US, the world’s second-largest CO2 emitter after China, is in the spotlight to demonstrate its commitment to its 2030 and 2050 pledges. The US Department of Energy has dedicated USD 10 billion to CCUS projects; in parallel, ExxonMobil’s proposal to build a $100 billion CCUS hub in Houston has attracted a coalition of 14 companies. These significant investments should give rise to diverse public-private partnerships (PPPs), fostering and enabling innovations in CCS.
IOGP’s Energy Transition directorate is also pursuing initiatives for working closer with other associations such as OGCI, API, SPE, etc., on CCS good practices in order to avoid duplication of efforts and maximize synergies.
Central and South America have a CO2 emission per capita that is already close to (and some even less than) the average global net zero 2030 pledge, or below three tonnes of CO2 per capita. Individual countries do have CCS projects, but their deployment effort is expected to be relatively less stringent compared to their northern neighbors.
Hydrogen is another key technology that requires mobilizing to ensure that the energy supply remains secure and affordable whilst we transition towards a lower carbon emissions future.
Many operators see hydrogen as a way to be part of the energy transition. But it’s not without its challenges. Hydrogen is the smallest molecule with the smallest element, so it can escape from places that larger molecules cannot. It’s also expensive, but because blue hydrogen is significantly cheaper than green, it could help to kickstart the hydrogen economy while the costs associated with green hydrogen are driven down.
Japan has been one of the first countries to adopt a really focused approach to developing a hydrogen economy. They released a hydrogen strategy in 2017 and recently announced an initiative to help other Association of Southeast Asian Nations members decarbonize and hydrogen is part of that.
Singapore’s green plan is also seeing it explore hydrogen’s role in its economy, while China’s latest five-year plan highlighted hydrogen. The Australian government is also promoting a blue hydrogen project, fuelled by the vast amounts of natural gas present here.
In Europe, IOGP has advocated for a rebalancing of the EU’s approach to hydrogen and for the inclusion of provisions to help accelerate and scale up the production of low-carbon hydrogen as a launchpad for the deployment of renewables-based green hydrogen.
To support our advocacy and provide EU policymakers with a clear view of hydrogen deployment pathways to help reach climate neutrality, we – with 15 other partners – published the Hydrogen for Europe study, a unique research work carried out by a research consortium bringing together IFPEN and SINTEF under the direction of Deloitte. Policymakers’ feedback to the study was, overall, extremely positive.
But, in order to deliver net zero, the real change that needs to occur is not in the technology itself, but in the ecosystem that supports it, and that’s where IOGP comes in.
Working with a global membership that develops a good practice that can be instantly deployed, we believe we provide the shortest and fastest route to the adoption of tech innovation and recommended practice on the energy frontline. To help these technologies deliver on their promise we’re following three principles.
- Commitment is key
For the industry at large to successfully decarbonize, the oil and gas industry needs to lead by example. It has both the technical expertise and financial strength to execute effectively but we need to commit to action.
Commitment from government and global regulatory bodies will also be just as important. Policy and regulatory support have a huge role to play, and will also help facilitate even more financial investment, which is needed for bigger infrastructure projects.
It is great to see operators move into action, showing the attitude we need to keep to our decarbonization roadmap.
- We must be willing to share and adopt best practices
There is a need for a cultural shift across all activities within the oil and gas industry in order to consider the low-carbon agenda in routine activities. Achieving this culture shift will involve sharing experiences and raising awareness of existing resources and tools to formulate best practices.
There are many long-lived organizations in the oil and gas industry with a great depth of experience. And while this brings some cooperation across the sector, it has also brought fixed practices. Yet for the industry to effectively progress, many need to be improved.
IOGP is working to facilitate improvement in practices in two ways.
Firstly, in developing the energy transition framework which builds on the foundational work done by IOGP’s member companies and outlines crucial first steps for the energy transition, based on four disciplines:
- Carbon capture transportation storage
- Flaring and venting
- Energy efficiency
Secondly, we have launched several task forces with a range of engineering and operational subject experts in the four key disciplines. These task forces consolidated a list of lessons learned from early low-carbon projects and are currently drafting recommended practices and technical guidelines for operators in the design, execution, and operation of low-carbon investment.
- Standardization and knowledge sharing are crucial
One of the key challenges to the decarbonization of oil and gas operations is the lack of Standardization. This is a gap that IOGP is trying to fill, and we are running workshops and events that can help the network of oil and gas producers focus on consistent consumption targets, approaches to low-carbon projects, and broader best practices.
However, IOGP can only do so much. It is up to the attendees and to the industry to share this knowledge across their networks and to ensure they become industry standards.
One recent workshop saw intense discussion and produced an action plan for the energy transition and the oil and gas road to net zero that will be pursued over the coming months.
Any good project needs clear milestones to mark progress against. For the oil and gas industry, this means ensuring decarbonization projects are consistently mapping out the trajectory of emissions reductions to ensure they are working towards clear targets.
With the collaboration, knowledge sharing, and willingness to implement Standardization we have seen to date, we are hopeful that by the time we convene in Egypt for COP27, the industry will have much progress to celebrate.