The last barrel

The 16 sustainable development goals proposed by the United Nations in 2015 continue to gain traction. The program is intended to help end extreme poverty, reduce inequality, and protect the planet. Adopted by 193 countries, the SDGs emerged from comprehensive negotiations and are intended to inspire people and companies to act across sectors, geographies and cultures to effect positive change by 2030. The E&P sector is charged with producing Affordable and Clean Energy (et.al.). There are a multitude of companies enacting various plans to meet the UN’s proposal. Of course, the biggie is to reduce global greenhouse emissions (Paris Agreement). The others are to: 1) increase renewable energy generation/use; 2) reduce overall energy consumption; and 3) increase the use of natural gas to generate power/electricity.

Equinor plans to reduce GHGs from its operated offshore fields and onshore plants in Norway by 40% by 2030, 70% by 2040 and to near zero by 2050. By 2030, annual reductions of 5 MMtons will be removed from the atmosphere, corresponding to 10% of Norway’s total CO₂ emissions. “Equinor has brought CO₂ emissions in the production process down to industry-leading levels. We are now launching a set of ambitions for forceful industrial action and substantial emission reductions in Norway,” says Equinor CEO Eldar Sætre. The company plans to invest 50 billion Norwegian kroner by 2030 to cut emissions to strengthen the company’s long-term competitiveness. In setting these ambitions goals, Equinor has assumed stable framework conditions and necessary investments in the electricity grid,” Sætre continued. Equinor is also pursuing and maturing opportunities within offshore wind, carbon capture and emissions-free hydrogen, based on natural gas. Setting these stretch-goals for emissions reduction  in Norway is an important step in aligning Equinor’s business with the Paris Agreement. Royal Dutch Shell has a similar target to Equinor, while Spain’s Repsol has pledged to eliminate all emissions from its operations and fuel sold to customers by 2050.

Canada’s Cenovus Energy proposed a goal of reaching net-zero emissions from its operations to improve the oil sand industry’s reputation and win over environmentally minded investors. Cenovus is aiming to achieve the net-zero feat by 2050, and also set targets of reducing its emissions per barrel of oil produced 30% by 2030 and keeping its absolute emissions flat in that timeframe. Both of those targets include direct emissions from its own operations, as well as the indirect emissions from the generation of energy that it uses at its facilities. The companies that produce crude from Canada’s oil sands, the world’s third-largest petroleum reserve, have been trying to revamp their public image as ecological offenders, as investors increasingly focus on firms’ environmental, social and governance performance. That reputation has led to fierce opposition and delays to pipelines that export oil sands crude, limiting the companies’ ability to boost production. To accomplish the goals, new technologies like carbon capture and sequestration, and the increased used of solvents—rather than energy-intensive steam—will be required, said Cenovus V.P. Al Reid. “When you talk about the longer-term, net-zero emissions target, we’ll need technologies we know can work, but aren’t economic at this time,” Reid concluded. Oil sands producers Canadian Natural Resources and MEG Energy also have set long-term, aspirational targets of achieving net-zero emissions from their operations.

Oilfield service sector. In December, Schlumberger announced its commitment to setting a science-based target to reduce its GHG emissions. The company submitted its plan to the Science Based Targets initiative (SBTi) and will outline its reduction target by 2021. This commitment is part of the company’s thought leadership and focus on environmental and social sustainability through its global stewardship program. “Schlumberger seeks to lead positive, measurable changes in GHG emissions within the industry to help reduce climate change,” said CEO Olivier Le Peuch. The application of our environmentally responsible technologies will help drive process efficiency and environmental footprint reduction.”  

Research initiative. Rice University has launched Carbon Hub, a major research initiative to create a zero-emissions future. Inaugurated by Shell with a $10-million commitment, Carbon Hub will partner with companies in an attempt to fundamentally change how the world uses hydrocarbons. Instead of burning them as fuel and releasing carbon dioxide, the plan is to split hydrocarbons to make clean-burning hydrogen fuel and solid carbon materials.

Are we moving too fast? BP’s outgoing CEO, Bob Dudley, warned that some major oil companies are moving too fast on investing in new technologies to counter climate change, because their failure could lead to financial ruin.“If you go too fast and don’t get it right, you can drive yourself out of business,” Dudley said in a Columbia Energy podcast in January. “Oil companies must retain a strong financial footing to be able to invest when game-changing technologies are developed. But technology has not yet been developed that will make a major movement on climate change.” I cannot imagine how we’re going to achieve the Paris accord without a price on carbon and making a major shift to natural gas.”

Also, “we also don’t want to shut down what we’re doing, or sell our assets and go all-in on renewables, and think that’s going to solve the problem. We’ve been working renewables a long time, and we are supportive of the industry,” continued Dudley. But in 2000, BP invested heavily in solar technology, only to write off much of the spending.“If we understand where the technologies are going and we invest, the best thing we can do strategically is have a strong balance sheet. When it becomes clear specific technologies are going to move quickly and be profitable, then we’ll be able to make that shift,” he explained. “Remember, the major public companies produce just 8% of the world’s oil. If we were all driven out of business, that oil will be produced by NOCs and other countries. We want to be leaders in this initiative, but we are not the epicenter of these issues.”

About the Authors

Craig Fleming

World Oil

Craig Fleming Craig.Fleming@WorldOil.com