The oil and gas industry faces three key questions with regard to sustainability. Can we transform oil and gas into a cleaner, efficient source of energy with minimum or zero-net CO2 emissions? How do we use technology to transform our industry to a low-carbon-intensity industry to help in addressing the global climate change challenge, while extending the economic and social benefits of oil and gas to improve human lifestyle on earth? Can we scientifically and globally measure the sustainability performance of our industry with respect to the following four pillars: environmental impact, economic growth, social development, and lifestyle improvements?
These are very challenging questions facing our industry. Without addressing the environmental concerns related to our industry, we risk our ability to operate globally and hinder our ability to attract talent. I believe that with the best practices, the right strategy, adequate R&D investment, and the right technology deployment, our industry can and will achieve these goals. I have spoken in prior columns about the fact oil and gas will be part of the energy mix well into the future, and about the significant economic and social development our industry produces. Given global opinion, we have no choice except to develop and use technology to transform our industry to be a low-carbon industry with minimum environmental impact across the entire oil and gas value chain.
As I have met with oil ministers, CEOs, and executives around the world, I believe our industry is on the right track toward establishing the required infrastructure to achieve these goals in the mid-to-long term. If we look at our industry across the upstream, midstream, and downstream sectors, we see hundreds of best practices and advanced technologies that can be linked directly to our sustainability performance and its four pillars mentioned above. My February column focused on how technology was helping our transformation on the supply side. In this column I would like to look at how R&D and technology are improving our environmental performance.
The upstream sector (exploration, drilling, and production) requires large amounts of energy to extract oil and gas from reservoirs and transport it to surface facilities through subsurface tubing and gathering lines, often going through harsh environments, including subsea. This provides many opportunities for improved energy efficiency, which reduces costs and is therefore good business practice. Upstream is also a technology-intensive sector, where new technologies have been deployed, helping the sector to be more sustainable.
Advanced high-resolution seismic channel acquisition, processing technologies, and algorithms, interpreted with the help of high-performance supercomputers, have significantly lowered the exploration risk and decreased the number of dry holes drilled. Geo-steering technologies and the software infrastructure to support them have helped our industry to precisely place thousands of subsurface horizontal sections away from water and gas contacts. This, in turn, has significantly reduced the amount of energy needed to lift the produced hydrocarbons from those wells and maximize production. The end result is fewer wells required to meet the production target. Smart-well completions and downhole deep-sensing technology have helped us to better manage reservoirs fluids and keep the undesired fluids in the reservoir. This lowers the amount of energy needed to lift the hydrocarbons and reduces the volume of produced water to process, treat, and dispose at the surface.
Slimhole drilling and related production and logging technologies have generated a significant reduction in the materials, time, and energy used to drill oil and gas wells. The evolution of automated and intelligent drilling technologies is helping enhance safety and eliminate human error. Advanced predictive algorithms and artificial intelligence systems are helping to predict and avoid drilling problems hours before they can cause hazardous events such as blowouts, leaks, stuck pipes, or additional sidetracks. The latest advancements in hydraulic fracturing technology have made gas recovery from shale more feasible, increasing gas available for power generation. In many cases that gas is used in lieu of coal, which has a significant impact on global CO2 reduction. Increased reuse of produced and flowback water in fracturing, which results in reduced water demand by our industry, is another environmental benefit.
Finally, carbon capture, storage, and sequestration (CCSS) technology developed by our industry will play a significant role in the global climate response, possibly toward close to zero-net emission in the long term. CCSS technology offers the opportunity to capture CO2 from large industrial facilities (both within and outside our industry) and process, store, or sequester it in mature or depleted oil reservoirs for enhanced oil recovery objectives. The International Energy Agency (IEA) considers CCSS as part of a portfolio of actions to be taken by the oil and gas industry that can account for 14% of total energy-related CO2 reductions needed by 2060. Our industry is already beginning to use solar and wind energy to provide the required energy to seismic crews, drilling rigs, artificial lift pumps, and remote wellsite facilities, especially offshore. This usage is likely to grow. Upstream companies that deploy technologies such as those above will see energy efficiency benefits and help to reduce the carbon intensity of operations to explore, drill, and produce oil and gas resources.
In the midstream sector the energy efficiency of pumps, compressors, and other equipment at our facilities has increased significantly in the past decade. Flaring was significantly reduced after building the required infrastructure to capture the methane and process and use it for petrochemicals or power generation. Cogeneration technologies to generate power utilizing what used to be vented steam has resulted in significant energy savings. The use of advanced analytics to optimize energy consumption has proven to be very practical and rewarding. Drones operated by batteries are taking on increasing roles in the industry’s harsh inspection and maintenance operations, both offshore and onshore. This is improving the safety and reducing the environmental impact of these high-risk and harsh operations. Drones are also being deployed to help us mitigate greenhouse gas emissions by finding methane leaks quickly and expediting their repair within hours rather than days or weeks.
In the downstream sector, according to IPIECA, oil refining is an energy-intensive activity, accounting for about half of all the energy consumed by the oil and gas industry as a whole. Hence, enhancing the energy efficiency of oil refineries, terminals, and downstream complexes should be a strategic objective for our industry. Facility energy management systems allow us to optimize energy use in steam generation, electricity produced from captive power plants (cogen), energy consumption across all processing units, and further optimization of emissions across all facilities units. The average energy intensity of the refining industry has fallen (improved) by 13% since 1980 in OECD countries, according to IEA data. The evolving crude-to-chemicals programs undertaken by several international and national oil companies will be a game-changer in finding noncombustion uses for crude oil, eliminating the CO2 emissions that would be generated through burning it. For example, Saudi Aramco has signed a technology agreement and project to increase crude-to-chemicals, with a goal of increasing the conversion rate of each barrel from 15 to 50% by 2030.
In conclusion, there is a growing consensus within the oil and gas industry to address the four pillars of sustainability, with more focus on social development and environmental climate challenges along the industry supply chain. The game-changer technologies will be energy optimization, CCSS, crude-to-chemical, gas-to-power in lieu of coal, renewables use across the value chain, and power conservation (energy efficiency). Just deploying current best practices globally will take us far. More investment and R&D feeding into this long-term strategy is needed. The industry is investing more than $1 billion in the next 10 years through the Oil and Gas Climate Initiative, a 13-company CEO-led initiative, to expedite the technology development. I believe that our industry has a leading role in helping to achieve the Paris agreement. We can only remain a leading industry if we evolve in line with global economic, societal, and environmental expectations. The challenge in the future will be maintaining the positive direction of sustainability stewardship while meeting the increasing global demand for energy. The bigger challenge that the SPE Sustainable Development Technical Section is trying to address is to scientifically quantify sustainability stewardship performance globally. We need to show the world our accountability and pride in serving the global energy needs in a very sustainable and responsible manner.
To contact the SPE President, email president@spe.org. Follow him on Twitter: @neaimsa.
