Electrification of Upstream Oil and Gas Facilities Could Reduce Production Emissions by Over 80%, Report Finds

According to a new report by Rystad Energy, converting production facilities for upstream oil and gas so that they are powered by electricity fueled by renewable sources or natural gas that would have otherwise been burned and flared could eliminate more than 80 percent of the sector’s associated emissions.

In the Norwegian Continental Shelf, oil rigs and other assets that have been fully electrified emit 86 percent less carbon dioxide for each barrel of oil equivalent they produce — 1.2 kilograms, down from 8.4 kilograms before electrification, a press release from Rystad Energy said.

“As the world confronts the pressing issue of climate change, the oil and gas industry is under increasing pressure to minimize its carbon footprint and align its practices with global sustainability objectives. Where it’s possible and economically viable, electrification has great potential to lower the industry’s emissions while maintaining production output,” said Palzor Shenga, Rystad Energy’s vice president of upstream research, in the press release.

Norway — a country which gets most of its energy from hydroelectricity while also being one of the largest oil exporters on the planet — has the unique ability to tap into its abundant sources of renewable energy to greatly reduce its upstream greenhouse gas emissions.

It has been estimated by scientists that humans need to reduce greenhouse gas emissions by roughly 43 percent by 2030 as compared with 2019 levels to have a chance of keeping global heating to below two degrees Celsius above pre-industrial levels in accordance with the 2015 Paris Agreement, reported Reuters.

“Flaring, the practice of burning off excess natural gas that cannot be processed or sold, not only wastes a valuable resource but also emits substantial amounts of CO2 and methane into the environment. Flaring plays a major role in global emissions primarily due to the lack of economic incentives, regulatory frameworks or technical capabilities to develop gas markets and infrastructure,” Rystad said in the press release.

Approximately 140 billion cubic meters of gas were flared annually over the past decade, equal to about 319.7 million tons of carbon dioxide emissions each year.

“These volumes are primarily driven by major producers in North America, the Middle East and Africa. Hence, flaring avoidance can be an effective way of reducing upstream emissions for both electrified assets and assets with limited electrification potential,” the press release said.

Rystad pointed out that even partial electrification would cut emissions significantly.

“Premium energy basins (PEB) – a term coined by Rystad Energy to describe oil and gas basins with ample hydrocarbon reserves and the potential to incorporate environmentally friendly practices – could hold the key. We have identified 30 such basins worldwide, which collectively contribute more than 80% of the world’s oil and gas this year and will continue to do so until 2050. If PEB assets electrify and reduce emissions by 50%, a total of 5.5 gigatonnes of carbon dioxide (Gt of CO2) would be avoided by 2050,” the press release said. “Based on the accepted industry standard calculation, this CO2 reduction would equate to about 0.025 degrees Celsius of global warming avoided during the same period.”

Norway plans to slash its continental shelf emissions by 70 percent by 2040. Most of the nation’s big production sites are located near potential sources of renewable energy, which would facilitate the transition.

“Electrification requires careful planning, including the selection of optimal technologies, assessment of total costs and strategies to ensure a continuous energy supply, particularly in remote locations with limited grid access. Economic and financial viability must also be prioritized. A proactive approach to electrification can enhance operational efficiency and open new revenue streams through the sale of excess renewable energy,” Rystad said in the press release.