net zero upstream facilities: can we afford not to?

The groundbreaking universal, legally binding global climate change agreement, adopted at the Paris climate conference in 2016, aims to keep the increase in global average temperature to well below 2°C (3.6°F) above pre-industrial levels; and to pursue efforts to limit the increase to 1.5°C (2.7°F). In the four years since the Paris Agreement was ratified, societal pressure has grown for all industries to take action to meet these targets. This has resulted in new sustainability targets being set by institutional investors, like BlackRock[1] who announced in January 2020 they would put sustainability at the heart of every investment decision[2], and energy companies, like Equinor, BP and Shell who have set a target of net zero by 2050 or sooner. The energy companies acknowledge there needs to be an energy transition, one where we transition to more renewable energy sources over the coming decades; however, this will require ongoing hydrocarbon production; and the International Energy Agency (IEA) tells us that 15% of energy related greenhouse gas emissions come from hydrocarbon production. If energy companies are to meet their net zero targets, the sector, collectively, needs to address this 15%.

“No energy company will be unaffected by clean energy transitions. Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.” 

Dr Fatih Birol, IEA Executive Director 

Taking the lead, McDermott, io consulting and Schneider Electric have collaborated to bring their combined expertise to solve this problem [please click here to see announcement]. In doing so, the team identified a methodology to develop Net Zero Upstream Facilities which, when applied to a reference case, identified more than 70% reduction in operational emissions. The methodology also includes a ground-breaking assessment of CAPEX emissions, that is embedded carbon in the materials and equipment, and the emissions associated with EPCI; when this was applied to the reference case, a >15% reduction was achieved. Economic evaluation shows this solution comes at a minimal increase in total expenditure, ~ 2%, and when the offsetting of the remaining emissions was considered, the solutions performed significantly better than the reference case. In fact, it would only take a carbon price of $13/tCO2e for the solution to match the economics of the reference case.

This was achieved by approaching an offshore compression facility reference case with io’s Decision Quality framework and systems thinking expertise, supplemented by deep domain expertise from McDermott and Schneider Electric. Working collaboratively, the team evaluated four alternative concepts to achieve the functionality of the reference case. Each concept was designed to test the limit of the solution space and ensure the evaluations were mutually exclusive and collectively exhaustive. This allowed the team to identify an alternative solution for the specific reference case; extrapolate this solution to other offshore compression facilities; and create a methodology that can be used to identify the emission reduction pathways for all upstream facilities – both offshore and onshore.

Analysis of the reference case identified that power was responsible for 94% of operational emissions, with 5% attributable to fugitives and the remaining coming from flaring and logistics. Each concept evaluated methods to decarbonise power and remove fugitive emissions. The solution identified power from shore, imported using a HVAC cable from a high renewable mix grid as the best means of decarbonising power. It was acknowledged that for some locations, with stable renewable energy industry, a “green” power purchase agreement (PPA) will be optimal. It was also acknowledged, at distances beyond 150Km, HVAC is technically challenging and alternative carbon free power, such as hydrogen or renewables, should be considered. The study also identified that 99% of fugitive emissions in the reference case was related to the LP compressor package, and that 89% of this 99% was due to dry compressor seals. By selecting a seal-less compressor technology, like the Baker Hughes Integrated Compressor Line, fugitive emissions were all but eliminated.

Simplifying the process to reduce the energy consumption reduces both the emission volume and intensity. This simplification also reduces embedded carbon, removes sources of emissions, and minimises operation and maintenance activities and the manning requirements. Digital technology has advanced such that many facilities can be designed to be unmanned, or with a greatly reduced level of attendance, which allows the reduction of logistic related emissions and removal of structures like the helideck and living quarters, reducing the embedded carbon. Less equipment also reduces the associated power demand for the facility, increasing the viability of renewable power sources. Finally, by utilising remote operations expertise of Schneider Electric, we reduce the likelihood and impact of non-routine events that may result in emissions.

 

For all concepts studied, the process system can be configured to eliminate the flare completely. While the calculations show a relatively small quantity of emissions derived from flaring (<0.01%), it is recommended that flare systems are designed out of facilities wherever possible due to their high visibility and public perception.

Sulphur hexafluoride (SF6) is used as the insulation gas in electrical switchgear; it is 23,900 times as potent a greenhouse gas as CO2. While there is minimal leakage during normal operations, SF6 is of concern due to its high potency and the handling of switchgear during the manufacturing and decommissioning process. It will require expert intervention to ensure no leakage, particularly during the end of life phase. Companies such as Schneider Electric have developed SF6-free MV Switchgear and it recommended the industry moves to these solutions to phase SF6 out of the industry.

 

 

In traditional developments, like the reference case studied, CAPEX emissions are a small fraction of the lifecycle emissions (<4%, depending on the assumed life of the facility). However, as operational emissions are reduced, CAPEX emissions become increasingly significant. Supply chain emissions from CAPEX projects may also factor into future “green” financing and offer the opportunity to transition a low carbon economy and any development of net zero facilities needs to consider the carbon embedded in the materials and equipment, and the emissions from EPCI. Embedded carbon is best removed through design, reduction of equipment and weight, but challenges remain to reduce the carbon footprint in this phase.

Marine vessel activity accounts for the majority of CAPEX emissions in the upstream offshore case. Current reduction measures are limited, and decarbonisation of this sector may take much longer than onshore activities. With the right government support and industry coordination, however, marine decarbonisation can be accelerated.

In terms of embedded carbon, the study revealed that many equipment suppliers are not yet calculating their embedded carbon, requiring proxies for equipment data not available. Further information on this methodology and the actions taken to reduce embedded carbon will be available through future articles.

 

 

Next time you discuss your work with your kids or neighbours; next time you report to your investors or stakeholders, do you want to tell them you missed an opportunity to reduce operational emissions by 70%, and reduce CAPEX emissions by 15% because of a marginal increase in total expenditure? To find out more about this work and how the Net Zero Facilities team can transform the carbon footprint of your assets, please contact:

[1] https://www.theguardian.com/business/2020/sep/17/blackrock-votes-against-49-companies-for-lack-of-climate-crisis-progress

[2] https://www.theguardian.com/business/2020/jan/14/blackrock-says-climate-crisis-will-now-guide-its-investments