The oil and gas industry has a new and urgent imperative to address climate change while meeting growing demand for energy today and into the future. Reducing human-made greenhouse gas (GHG) emissions generated across the whole oil and gas industry value chain—especially from releases of methane and from flaring—will play a pivotal role in this journey.
We sat down with Schlumberger’s Emissions Business Director Kahina Abdeli-Galinier to talk about the critical importance and implications for the industry of reducing its methane emissions, what’s driving the global efforts to reduce them, and what will ultimately be required to make this happen.
Why must the oil and gas industry act now to reduce its GHG emissions?
The world is transitioning to a lower carbon economy, and that transition is starting with the energy industry. Oil and gas obviously have a large role to play in that transition. One of the quickest wins to slow climate change is to reduce direct emissions—so called “Scope 1” emissions—associated with exploration and production. These emissions occur from the well pad to the refinery and make up about 10% of all anthropogenic GHG emissions. The emissions arise from processes that are not inherent to production—such as methane releases and flaring—meaning reducing them is more practical than other measures to slow global warming.
Methane is a particularly important target. It is the main component of natural gas and also a potent GHG. Over a 20-year period, one ton of emitted methane causes as much global warming as 84 tons of emitted carbon dioxide. The potency means that any methane emitted to the atmosphere causes climate-related economic damage at a price 10 times higher than the typical market price for selling that gas. Historical methane emissions are responsible for 0.5 C of the 1.1 C that our planet has already warmed, and the oil and gas industry is one of the largest sources of methane emissions today. On March 8th, the Oil and Gas Climate Initiative (OGCI) members announced an ambition to achieve zero methane emissions from oil and gas operations by 2030, demonstrating the commitment to act fast and act now.
Why is natural gas important for the transition to a lower carbon economy?
The natural gas industry has the opportunity to thrive in the next stages of the energy transition—rapidly growing economies need stable energy sources, and those demands cannot be fully met today by intermittent or readily available sources such as solar and wind power. Gas has an inherent advantage as the lowest-carbon source of stable power, with half the carbon dioxide footprint of coal. Unfortunately, today, gas has a much higher methane footprint than coal, eroding some of the climate advantage. By quickly reducing our methane emissions, we can cement gas’ role as the preferred source of low-carbon reliable energy, making gas a critical fuel during the transition to a zero-carbon economy.
What’s driving the industry toward emissions reduction?
Scientists and policymakers have prioritized methane reduction, and our industry faces immense pressure from many directions to comply.
Under voter pressure, government policy is tightening fast: mandatory leak detection and repair requirements, zero or low emission technology standards, and a ban on non-emergency flaring and venting are well established in North America and Europe and are emerging elsewhere.
Customers are weighing in as well. Recently, an LNG project intended to ship gas from Texas to France was blocked in France due to concerns about GHG emissions that would have occurred in Texas. Additionally, responsibly sourced gas standards are being developed to create a market where consumers can pay a premium for gas with low methane emissions.
Investors are also applying similar pressure. In 2021, 168 investors, managing over $6.23 trillion in oil and gas assets, signed a statement backing the need for methane reduction rules and called for more stringent Environmental Protection Agency (EPA) regulations.
In addition to methane, flaring is recognized as a large source of GHG emissions and the most criticized activity in the oil and gas industry due to its visibility. There are many causes of flaring, including emergencies where gas needs to be flared to ensure safe operating conditions. From an environmental perspective, the focus is on phasing out routine flaring, which occurs because the economic value of selling the associated gas is less than the cost of transporting it to market. Nearly 100 countries and companies have committed to a program organized by the World Bank aiming to achieve zero routine flaring by 2030.
Moreover, growing social consciousness on climate-related issues is resulting in the general public and employees putting more pressure than ever on the industry to take action.
What can operators do to manage their methane emissions?
Emissions management is a fast-evolving specialty. Many operators are still learning to handle it effectively and efficiently. Numerous tools and technologies for methane reduction are already available and understood but, as demand rises, vendors are innovating.