The projected role of natural gas in the SDS relies on rapid and major reductions in methane leaks

A wide variety of technologies and measures are available to reduce methane emissions from oil and gas operations. For example, existing devices such as pneumatic controllers that lead to a large level of vented emissions can be replaced with instrument air systems; vapour recovery units can be installed on crude oil and condensate storage tanks; and introducing frequent LDAR programmes can significantly cut the level of fugitive emissions.

We estimate that if all of these options were to be deployed across the oil and gas value chains, then around 75% of today’s 80 Mt of methane emissions from oil and gas operations could be avoided.

In addition, methane is a valuable product and in many cases can be sold once recovered. This means that deploying certain abatement technologies can result in overall savings if the value received for the methane sold is greater than the cost of the technology. Around 45% of current methane emissions could be avoided with measures that would have no net cost (at 2018 natural gas prices).

Increased attention to methane emissions has generated a number of voluntary national and international partnerships to help tackle the problem. However, there remains a large opportunity to reduce these emissions in a cost-effective way. There are many possible reasons why this could be the case. Governments and industry may lack information or awareness about the size or severity of the problem; the infrastructure or investment that is necessary to recover gas and pair it to a productive use may be lacking; or there may be competition for capital within companies with a variety of investment opportunities. In these cases, new or enhanced regulations can be very effective in reducing emissions further.

In the SDS, methane emissions would fall even without any explicit abatement measures or policies, simply because overall oil and gas consumption falls to 2040. However, relying on demand trends to eventually do the job of methane abatement would be a huge missed opportunity, both for efforts to mitigate climate change and also for those that seek to position gas as part of the solution to environmental challenges.

In the SDS, global oil and gas methane emissions in 2040 fall to less than

20 Mt. Without this major and rapid reduction in methane emissions, other emissions would need to fall further and faster in order to be compatible with any given target for stabilising global temperatures.

The measures introduced to reduce methane emissions in the SDS include all the measures that come at no net cost. However, they also include other measures that are technically viable but that would not pay for themselves via the value of the methane that is captured and subsequently sold.

Putting a price on methane emissions, whether within companies or as part of a regulatory approach, would be an important way to incentivise such measures. The level of this price would not need to be very high. For example, if it is assumed that one tonne of methane is equal to 30 tonnes of CO2 equivalent, then a GHG price of only USD 15/tCO2 would be sufficient to encourage operators to introduce abatement measures costing up to USD 8/MBtu.

Dollars per tonne CO

300

250

200

150

100

50

0

-50

North America

Middle East

Eurasia

Europe

Latin America

Asia Pacific

Africa

There are multiple ways in which increasingly cost-competitive renewables can contribute to oil and gas operations; the options below all contribute to reduced emissions but in a rising number of cases they can also reduce costs, particularly if there is a price put on carbon. There are three main avenues:

Electrifying upstream operations using renewable electricity. In some cases, operations can be electrified by purchasing electricity from the grid; this is already the case for certain upstream operations, notably some tight oil developments in the United States and the major new Johan Sverdrup field in Norway. The environmental impact of this approach depends on the emissions intensity of the grid-based electricity: it needs in our estimate to be less than 500 g CO2/kWh for there to be a real reduction in the overall scope 1 and 2 emissions intensity of operations.

However, many oil and gas operations are in practice in remote locations, far from cities or existing power plants, and are often in countries where the reliability of grid-based supply is not guaranteed.

They therefore typically opt to use natural gas to power small-scale (and often relatively inefficient) on-site generators.

An alternative approach is to integrate off-grid renewable energy sources into upstream facilities. Such initiatives are already becoming more widespread, including a 10 MW Sonatrach-Eni project to power an Algerian oil field with solar PV, inaugurated in late 2018, and the 2019 announcement by Equinor of a new 88 MW offshore wind facility to supply electricity to offshore platforms in the southern part of the Norwegian Sea.

We have estimated the potential size of this opportunity based on the costs and emissions savings of installing different sizes of hybrid solar

PV, wind and battery storage systems at new oil and gas facilities.

Based on this assessment, it is technically possible to reduce upstream emissions by over 500 Mt CO2 by installing decentralised renewable systems when new resources are first developed. Only a fraction of these would come with no net cost, but at USD 50/t CO2, around 250 Mt CO2 could be avoided.

Using low-carbon heat from renewables. Another possibility is to use solar thermal energy to generate heat for thermal EOR operations (known as solar-EOR). This is of particular interest in countries where solar is plentiful but gas is relatively scarce, such as Kuwait, Oman and the United Arab Emirates. In Oman, a 1 GW solar farm is under construction to provide steam for the extraction of around 20 kb/d of heavy oil.

Electrifying liquefaction operations with renewable electricity.

There is one electric LNG plant currently in operation (the Snøhvit LNG facility in Norway) and others under construction in North America.

There are some barriers to the widespread adoption of this approach, including the need for LNG projects to be located near a reliable source of low-emissions power, but this approach – combined with stringent controls placed on methane emissions – can bring benefits. We estimate that this “cleaner” LNG would provide a 40% reduction in GHG emissions from coal-to-gas switching (for production of heat), compared with a 30% reduction if these mitigation strategies were not in place.