Oil- and gas-derived power currently make up more than half of the world’s primary energy consumption, while 95% of transport energy comes from petroleum-based liquids. As a result, oil and gas-related activities—from pore to pump to power stations, and internal combustion engines—account for 42% of global carbon emissions.
As the world aims for net-zero emissions by 2050, renewable resources alone will not be able to support global energy demand. And as we seek a more sustainable model for power provision and fuel production, global demand will necessitate that oil and gas form part of the energy mix for decades to come, albeit in decreasing measure.
In the run-up to 2050, and with the goal of keeping to the maximum 1.5 degC global temperature rise prescribed by the 2015 Paris Agreement, it is essential that oil and gas is delivered to businesses and consumers with the lowest possible carbon output. Digital tech will play a central role in that journey.
Reducing emissions: The low-hanging fruit
One of the foremost priorities for the energy sector is to reduce Scope 1 greenhouse gas (GHG) emissions—those produced as a direct consequence of exploration and production activities. Fortunately, there are several ways in which this can be accomplished with relative ease.
The largest single source of those Scope 1 emissions in the oil and gas sector is methane gas, which is 80 times more potent over a 20-year time frame than carbon dioxide (CO2) and the second largest contributor to global warming overall. Curtailing methane is highly actionable, as most of the gas is released from so-called “super emitting” facilities.
With sensitive and frequent monitoring of these installations via a range of innovative, digital solutions—from satellites to lasers to drones—methane can be detected, and leaks mitigated. Given the short atmospheric lifetime of methane, rigorous control measures like these could eliminate the energy industry’s primary GHG output from the atmosphere inside a generation.
Using renewable energy to power the electrification of offshore facilities will completely change the game.
Digital solutions are also helping to characterize and control carbon released in the Scope 1 emissions bracket. Enabling a real-time understanding of equipment performance and usage, companies can measure, plan, and act to efficiently limit and remove waste gases.
Another way the industry can minimize emissions is by removing hydrocarbon use from production activities. Currently, around 5% of daily offshore oil production is used to power platforms, equating to 16 terawatt-hours per year and 200 million metric tons of CO2 per annum. Leveraging wind and solar resources for offshore electrification of facilities—as we see in Equinor’s Hywind Tampen project, and the Innovation and Targeted Oil & Gas process in offshore Scotland—will be a game changer for the wider industry.
Exponential scope (3) for change
While there are relatively straightforward fixes to some sources of emissions, others present an altogether more difficult proposition. Scope 3 emissions, for example, are defined as GHGs that are not produced directly by companies or the assets owned or controlled by them, but that are emitted upstream and downstream throughout an organization's value chain. This encompasses activities from the end use of sold products to employees commuting and can represent 65–95% of a company’s carbon footprint.
The potential scale of the web of emissions radiating out from companies is one issue—measuring them is another. Traceability of emitting sources both up and down the value chain would be a complex task to fulfill for small-to-mid-sized companies with compact supply chains, but the onus is magnified manyfold for larger corporations with globe-spanning footprints. Organizations of all sizes are therefore faced with the seemingly insurmountable task of accounting for the footprint of every one of their potentially thousands of suppliers (and their products) should they wish to address these complex emissions sources.
Once the sources of emissions have been identified and measured, the next requirement is to analyze and audit the enormous volume of Scope 3 data flowing into companies. This entrains notable challenges for data handling—in terms of storage and processing—as well as the dissemination of corroborated metrics to third parties like shareholders and regulators.
Digital tech is at the center of how companies look to automate data collection, founded on accurate calculation and reporting of organizational, asset, and product-based emissions with transparency and credibility.
A change in energy mindset and behaviors
Along with tech advancement, the energy transition is a story of mindset and behavioral change, in which several forces are now pulling in the same direction to deliver on an accelerated decarbonization agenda. Investors are making it increasingly clear that access to capital should be linked to credible GHG reduction strategies that are transparent, measurable, and near term. At the same time, consumers are demanding lower-carbon solutions, with a majority supporting steps for widescale decarbonization of national economies.
International bodies are ever more focused on ensuring robust emissions measurements are being made across the full value chain and are taking steps through Conference of the Parties (COP) meetings, along with the United Nations Framework Convention on Climate Change, to regularly update the reach and remit of emissions regulation.
From small companies to entire countries, organizations are setting up their products and projects with clear and visible emissions reduction.
This change in mindset is driving energy businesses of all sizes—from national and international oil companies to independents—to ensure they are decarbonizing their current products and that future value streams have strong emissions-limiting credentials.
At the state level, oil and gas-rich nations that derive most of their government revenues from hydrocarbon production are looking to digital tools to assess and “design out” emissions from their current systems—not to mention diversify their energy offerings.
Countries are looking to move away from natural gas as a primary fuel and decarbonize it for delivery to markets as low-emission blue hydrogen. Using this method, hydrogen is produced from natural gas using a process called steam reforming, generating hydrogen and CO2 as byproducts—the latter of which is then sequestered in the process. Alternatively, the same nations may choose to harness their renewable energy potential to create green hydrogen as an income stream, using electrolysis to split water into its constituent parts, thereby creating emission-free gas.
The energy transition as business transformation
As the economies of the world transition to a lower-carbon future, infrastructure and industry are being transformed to service a more diverse energy mix. In this interim phase, digital solutions play a key role in defining the performance and optimization of extant assets, and how to retrofit these to be powered by renewables.
At the same time, new infrastructure that will form the bedrock of the net-zero energy landscape, such as carbon capture, utilization, and sequestration (CCUS) hubs, are being planned and executed using a range of applications that have been integral in the development of oil and gas resources for decades. Contemporary CCUS assets are being designed with the same suite of tools that geoscientists and petrochemical engineers employ to map out and make decisions on conventional subsurface assets.
For example, when assessing a potential underground CO2 storage site, engineers need to understand several factors—total storage capacity, variables that might impact that total storage capacity and how widely they may differ, the minimum and maximum storage space available and associated uncertainty, and where to place injection wells to optimize capacity. Whether it is the modeling of the storage site, pipeline transportation, corrosion management, or final fluid injection, digital tech enables businesses to run thousands of scenarios and possible outcomes in minutes, thereby ensuring better-informed decisions are made at every step.
Sustainable economies of scale for oil and gas
For the energy transition to have a meaningful impact in arresting global warming, the industry must solve the perennial issues of scale and economic viability—and it must do it at pace. If the world is to attain the targets set in the 2015 Paris Agreement, efforts in this field must be hastened and expanded by orders of magnitude. Calculations show that offshore wind capacity needs to increase by 800% between now and 2030 to achieve the outputs required by Paris Agreement targets; in the same time frame, geothermal generation will have to triple.
Regarding carbon-negative tech, CCUS activity must rise from the current level of 50 million metric tons of CO2 sequestered per annum to 6 billion metric tons—a 120-fold increase needed by 2050. Velocity and volume are of the essence in the race to net zero. And in every scenario, digital tech plays a huge part in achieving both.
Digital tech enables our industry to complete larger transition projects in less time.
Utilizing a combination of artificial intelligence (AI), automation, and integration tools, decarbonization strategies can be accelerated to speeds unimagined when the Paris Agreement was adopted. All these innovative solutions can be road tested using digital twins to evaluate performance before major investments are made.
Applying AI techniques to time-consuming tasks—for which geoscientists and engineers would traditionally spend months gathering and interpreting data—can now be done in hours, quickening the decision-making process and freeing up thousands of staff-hours.
Automating workflows delivers the same benefits, removing the need for human input on repetitive tasks that eat into productive time. Integrating these workflows across domains further streamlines processes, reducing (or removing) the need to source and send information between data hubs, enabling experts to spend more time on analysis and less time on administrative tasks.
Stacking several digital use cases together across a single project ultimately adds up to greater efficiency and efficacy in terms of planning, design, and execution. As a result, progressively larger transition projects can be turned around in a shorter time frame.
There is no doubt that oil and gas will be part of the global energy mix for the foreseeable future. Equally, it is undeniable that massive emissions reductions can be achieved with the right tools—the breakthrough the energy sector needs is to make sustainable fuel and power generation economically viable, scalable, and swift.
Digital tech will be the driving force behind this and a defining factor that will ensure the transition to net zero—from methane reduction to scaling CCUS—is not a piecemeal evolution, but an all-encompassing revolution.
