Oil and gas field operations are beginning to be fueled by a surprising source – renewable energy, according to new research by IHS Markit.
Oil and gas companies are starting to utilise zero-carbon sources to reduce carbon emissions associated with operations, according to a new database and analysis of renewable energy projects.
Judson Jacobs, Executive Director – Upstream Energy, IHS Markit, said 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.
“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,” he said.
While the numbers are small, they have been growing rapidly over just the past couple of years.
There had been fewer than 15 of these renewable energy projects from the early 2000s (when the industry first deployed the technologies) through 2017. However, according to IHS Markit there are now more than 45 announced projects, with 13 announcements made in 2018 and 15 made in 2019.
Projects announced in 2018 and 2019 are expected to avert more than 3 million metric tonnes (MMT) of annual carbon dioxide emissions combined. By contrast, projects in only one prior year averted as much as 0.3 MMT.
Deployments are occurring in both new developments and existing assets, with solar the most prominent renewable technology, followed by hydropower and wind.
These deployments are part of companies’ broader greenhouse gas emissions management strategies. Several factors beyond emissions reduction are also driving the growing interest for renewables in oil and gas operations, notes Jacobs.
“Stakeholder pressure to reduce emissions is a factor,” he said. “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 demonstrating reliability. And electrification – drawing renewable-generated power directly from the grid, as to offshore platforms in Norway – removes most energy generation equipment entirely, enabling fewer on-site personnel needed to operate it and smaller facility footprints.
Additional benefits include reduced maintenance expenses and the elimination of fuel deliveries to site.
IHS Markit expects the number of field-based renewable energy projects to continue to accelerate in the coming years, yet it highlights that several challenges must be overcome before widespread adoption.
Cost relative to traditional energy generation sources, the development of supply chains in remote regions, and energy storage for intermittent renewable sources are all significant factors currently constraining growth.