New research from Rystad Energy suggests that converting oil and gas production facilities to use electricity from renewable sources or natural gas that would have been flared could reduce emissions by over 80%. In Norway, fully electrified rigs and other assets on the Norwegian Continental Shelf now emit just 1.2 kilograms of carbon dioxide per barrel of oil equivalent (CO2e per boe), which is an 86% decrease from the 8.4 kg of CO2e per boe emitted before electrification.
Norway’s unique position as a major oil and gas producer with abundant renewable energy resources, especially hydroelectric power, allows it to significantly cut greenhouse gas emissions from upstream production. The country has been proactive in refitting its assets to run on clean power and aims to reduce emissions from the continental shelf by 70% by 2040. Its production sites are strategically located near renewable energy sources, making the transition from fossil fuels easier.
While other producing countries may face logistical challenges in converting assets, such as distance from the mainland and limited power grid infrastructure, even partial electrification can lead to significant emission reductions. Rystad Energy has identified 30 premium energy basins (PEBs) worldwide that contribute over 80% of the world’s oil and gas production this year and are expected to do so until 2050. If these PEBs were to electrify and reduce emissions by 50%, it could prevent 5.5 gigatonnes of CO2 by 2050, which could avoid approximately 0.025 degrees Celsius of global warming.
Palzor Shenga, Vice President of Upstream Research at Rystad Energy, states that electrification has great potential to lower the industry’s emissions while maintaining production output, where it is possible and economically viable.
Electrification requires careful planning, including selecting the right technologies, assessing costs, and ensuring a continuous energy supply, especially in remote locations. Economic and financial viability must be a priority. A proactive approach to electrification can improve operational efficiency and potentially create new revenue streams through the sale of excess renewable energy.
Rystad Energy’s analysis of the potential for emission reduction in top PEBs shows that the 28 PEBs identified in the report could save about 1.3 billion tonnes of CO2 between 2025 and 2030. The top 10 PEBs account for over 80% of these savings, with the Middle Eastern Rub al Khali and Central Arabian basins leading the way. Widespread adoption of electrification in these onshore basins could be facilitated by drawing power from a clean onshore grid.
Flaring, the practice of burning off excess natural gas, not only wastes a valuable resource but also contributes to CO2 and methane emissions. Globally, about 140 billion cubic meters of gas has been flared annually over the last decade, resulting in approximately 290 million tonnes of CO2e emissions per year. This is mainly due to major producers in North America, the Middle East, and Africa. Therefore, reducing flaring can be an effective way to lower upstream emissions for both electrified assets and those with limited electrification potential.