Lundin Energy announced this week that it has sold the industry’s first certified order of carbon-neutral crude to Spanish refiner Saras.
The shipment of 600,000 bbl marks a major milestone for the Swedish operator which has set a goal to make its entire production base carbon neutral by 2025—this includes Scope 1 and 2 emissions, but not Scope 3 emissions that account for the CO2 released in the combustion of its oil and gas products.
Lundin operates exclusively in Norwegian waters and said the crude shipment came from its Edvard Grieg field, located about 111 miles offshore Stavanger, and was deemed carbon-neutral thanks to a “nature-based carbon-capture” project that accounted for 2,302 metric tons of CO2 emissions.
Lundin recently launched a $35-million plan to plant 8 million trees by 2025. That initiative, which began in Spain, but will include other countries, is ultimately expected to sequester 2.6 million metric tons of CO2.
In the fourth quarter of 2020, Lundin produced about 185,000 BOED (90% oil) and is aiming to top 200,000 BOED by 2023. The Edvard Grieg field produces around 98,000 BOED and is part owned by OMV (20%) and Wintershall DEA (15%).
Lundin’s organic approach to carbon capture was independently verified by Intertek Group. The London-based certification firm qualified Edvard Grieg’s production as low-carbon for the full life of the field and said each BOE represents 3.8 kg of CO2. Lundin highlighted that the figure is 5 times less than the global average.
“The provenance of a barrel and how it is produced is increasingly important, as society and industry require lower-carbon feedstocks to achieve emission reduction targets and meet the goals of the Paris Agreement,” Nick Walker, president and CEO of Lundin Energy, said in a statement. He added that the recent sale represents “a proof point of where the crude market is heading.”
Lundin’s carbon footprint is set to shrink further as the company marches toward its net-zero target. In addition to its offsetting effort, Lundin will be aided by a major electrification project that is taking shape offshore Norway.
The multioperator project is expected to extend an offshore grid to the Edvard Grieg platform next year. Power will come from onshore hydroelectric stations which Lundin said will displace 200,000 metric tons of CO2 annually. Other steps include a mandate to start contracting only those supply vessels that use hybrid-battery systems.
The corporate ambition is to achieve a 55% drawdown of absolute Scope 1 and 2 emissions by 2023 (from 2019 baseline levels). Lundin's remaining 45% of "hard-to-abate" emissions, and its Scope 3 emissions, will be offset through future planting programs.
Dueling Net-Zero Claims
Lundin is not alone in staking a “world’s first” claim on carbon-neutral oil exports which are fast becoming a market differentiator for the world's producers.
In January, Houston-based Occidental Petroleum (Oxy) said it made the industry’s first deal to sell 2 million bbl of net-zero oil that it produced from fields in Texas. The oil was shipped to Reliance Industries in India.
Oxy, through its low-carbon division, said verified carbon credits were purchased from a variety of offset projects. “The volume of offsets applied against the cargo are sufficient to cover the expected GHG [greenhouse-gas] emissions from the entire crude life cycle, including oil extraction, transport, storage, shipping, refining, subsequent use, and combustion,” the company added in a statement.
Like Lundin, Oxy said the shipment was just the first of many to come. But instead of using biomass-based capture, Oxy is focusing its decarbonization strategy around direct-air-capture technology and geologic sequestration.
