Energize Weekly, January 2, 2019
The oil and gas industry is a source of carbon emissions even before the fuels are burned—one that should be addressed even as fossil fuels remain in the world energy system for decades, according to the International Energy Agency (IEA).
The IEA’s “well-to-wheel” analysis of indirect or fugitive emissions is the first comprehensive global assessment for all the oil and gas consumed today, the agency said. It is part of the agency’s World Energy Outlook 2018.
The analysis calculates that indirect greenhouse gas (GHG) emissions—including methane and carbon dioxide—from oil and gas operations totaled 5,200 million tons carbon equivalent.
“These emissions—which do not include any emissions associated with the actual consumption of the fuel—amount to around 15 percent of the energy sector’s total GHG emissions,” the IEA said.
Efficiency in managing emissions varies widely among oil supply chains with 10 percent of the barrels of oil produced creating four times as many indirect emissions as the lowest 10 percent of production. The difference is largely driven by much larger methane fugitive emissions.
In the production and distribution of natural gas, indirect emissions account for 15 percent to 40 percent of the full life cycle. Still, 97 percent of the natural gas consumed has a lower life cycle carbon intensity than coal.
“Nevertheless, the aim for the future should be to focus on cost-effective ways to minimize the gap between gas and zero-carbon technologies rather than focus on the gap between coal and gas,” the IEA said.
Industry practices that have the biggest impact on indirection emissions include venting methane emissions from wells and tanks, venting carbon dioxide (CO2) that occurs naturally alongside natural gas and flaring of unwanted methane from wells.
“Tackling these sources of emissions offer some of the lowest-cost options to cutting energy-related emissions,” the IEA analysis said.
Other ways to reduce indirect emissions could include electrifying upstream and midstream operations; installing renewable-based systems in upstream and midstream operations; equipping carbon capture, utilization and storage units at large point sources of emissions; injecting CO2 in enhanced oil recovery operations; and using low-carbon hydrogen in place of hydrogen produced using natural gas.
The IEA noted that some companies are already factoring in a carbon price of $50 a ton when assessing new projects. If applied across the oil and gas supply chain, this evaluation tool would cut CO2 emissions more than 1,000 million tons of CO2 by 2040.
When such actions are combined with reductions in fugitive methane emissions, the total reduction in indirect emissions would be more than 2,500 million tons CO2 equivalent—almost half of current emissions.
“Countries and companies that can credibly demonstrate that they are taking action to reduce their indirect emissions could reasonably argue that these resources should be preferred over higher-emission options in a carbon-constrained world,” the IEA said. “It is crucial for the oil and gas industry to be proactive in limiting, in all ways possible, the environmental impact of oil and gas supply, and for policy makers to recognize this is a pivotal element of global energy transitions.”
