Emissions from the upstream value chain in the GCC will increase by 20-30% in the next 10 years if no emission reduction initiatives are implemented, according to a new report by Boston Consulting Group (BCG).
Data from BCG’s proprietary decarbonisation tool show that total upstream value chain emissions from GCC based oil and gas (O&G) companies are equivalent to almost a third of the total emission contributions from the GCC.
Hydrocarbon combustion for own use-power generation and venting during gas processing stand out as being major sources of the emissions, says the report, titled ‘A Decarbonisation Roadmap for Upstream Oil and Gas.
Emissions from the GCC’s upstream value chain in the past have been typically lower than the global averages, however, with many other players taking strong decarbonisation measures, this advantage may soon erode.
The era in which O&G companies must demonstrate the carbon-neutral operational capacity of new portfolio assets looms ever-closer, and GCC operators must act now to establish sustainable decarbonisation strategies.
The report explains how firms can reduce their carbon footprint in response to pressure from stakeholders and regulators, build a stronger brand, and drive evolution across the industry.
“Utilising BCG’s decarbonisation tool, we provide a pathway to maintaining upstream emission at current levels for an estimated $40-$60 billion to be spent on carbon abatement technologies in the next decade. Moreover, our research identifies four decarbonisations levers across the upstream value chain that can be leveraged to achieve sustainability and meet carbon footprint reduction objectives,” said Cristiano Rizzi, Managing Director and Partner, BCG.
“In the design and sourcing phase of the value chain, GCC oil and gas firms can adopt robust principles and tools to asset operations. Different phases of the chain do warrant several considerations in their own right. However, when taking into account the enormous pressure companies will be under by the mid-2020s, action should be taken now due to the considerable exploration and development timeframes.”
*Exploration: The first decarbonisation lever within the upstream value chain that can accelerate change and sustainability, which entails concentrating on low-carbon intensive assets and leveraging available tax credits and offsets to boost emissions reduction and the attractiveness of potential investments;
*Prioritisation and Planning: The second lever, which involves lean asset design, utilising remote-control centres, and selecting sourcing vendors based on
their carbon profile. In the sourcing process, upstream players can also incentivise suppliers to reduce their emissions output and employ carbon as a critical metric in vendor evaluation and selection;
*Development and Execution: The third lever involves the reductions in cycle time and energy consumption, optimising ways to mobilise and demobilise operations crews, and enhancing ways to utilise and transport materials including sand, fluids, and chemicals; and
*Operations: The fourth and final decarbonisation lever, which is fundamental for oil and gas firms moving forward. In addition to the use of zero-carbon electricity, carbon capture, storage technology, and low-carbon-enhanced oil recovery techniques for heavy crudes, there will also be decarbonisation opportunities through improvements in energy efficiency and a reduction of flaring and methane leakages.
“The levers put forth in the report represents an effective and efficient decarbonisation model for oil and gas companies,” said Andreas Kyrilis, Managing Director and Partner, BCG.
“This approach has been developed with a strong emphasis on value-accretive decarbonisation and an incremental strategy tailored to each company’s constraints and opportunities. As measures to address climate change reshape the industry as we know it, firms must take proactive steps to ensure they compete and succeed in the decades ahead.” -- Tradearabia News Service