As part of efforts to reduce carbon emissions associated with operations, oil and gas operations are in the early stages of being fueled by renewable energy, according to global critical information provider IHS Markit.
Analysis by IHS Markit shows that while renewable energy is playing a minor role in oil and gas operations, it has been growing rapidly over the past few years. In the early 2000s — when the industry first deployed such technology — there had been fewer than 15 of these types of renewable energy projects up until 2017. Now, data from IHS Markit shows more than 45 projects have been announced in the oil and gas industry, with 13 announcements in 2018, and 15 last year.
“There is a striking pace of growth over the past few years and a dynamic commercial environment for delivering renewable energy to oil and gas operations,” said IHS Markit executive director of upstream energy Judson Jacobs. “Energy efficiency efforts and reductions in flaring can only do so much to lower greenhouse gas emissions, so some companies are turning to zero-carbon sources to power their upstream, midstream and downstream operations.”
Renewable energy projects announced in 2018 and 2019 are estimated to deter more than 3 million metric tons per year (mmt/y) of carbon dioxide (CO2) emissions combined. Conversely, projects from 2017 only averted up to 0.3 mmt/y of CO2 emissions.
Deployment of renewable technology is occurring in both existing assets, as well as new developments, though solar is proving to be the most prominent technology, followed by hydropower and wind. Companies’ greenhouse gas (GHG) emissions management strategies, which IHS Markit follows and analyzes, are driving the implementation of renewable energy.
“Stakeholder pressure to reduce emissions is a factor,” said Jacobs. “It is also about steeply declining costs for renewables and the industry’s growing familiarity and experience with these technologies. And there are tangible improvements to operational performance that go along with using them.”
Field-based renewable installations are exhibiting reliability. Additionally, drawing renewable-generated power directly from the grid — as to offshore Norwegian platforms — eliminates most energy generation equipment entirely. This allows for fewer on-site personnel needed to operate it, and additionally, smaller facility footprints. Maintenance expenses are also reduced, while fuel deliveries to the site are avoided.
The IHS Markit team estimates that the number of field-based renewable energy projects could continue to grow in years to come, though there are several challenges the industry will face before widespread adoption of such technologies. Cost relative to traditional energy generation sources, energy storage for intermittent renewable sources, and the development of supply chains in remote regions are all significant details that currently restrict further growth.
“North America and Europe, where renewables deployments have been most prolific to date, are still growing,” said IHS Markit research analyst Minuri De Silva. “And other conducive regions such as the Middle East, Latin America and Asia are also poised for greater adoption as they address technical and commercial issues. The growth potential is significant.”
International oil companies have been leading the way in the utilisation of field-based renewables. However, use has expanded to national oil companies, independent exploration and production firms, and even oilfield services firms in recent years.
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