Dr Shambhu Sajith, Assistant Professor, UPES Online.

 How are oil & gas companies rethinking their operational strategies to prioritize carbon emissions reduction?

Climate change has taken mainstream dialogue in the oil and gas companies. Oil and gas majors have emphasized reaching net zero targets by 2040. In terms of reducing Scope 1 and 2 emissions, companies have started investing in renewable energy technologies to reduce emissions and be part of their efforts to be climate-friendly. However, renewables are not the only solution; oil and gas companies have rich experience in increasing their oil and gas output through fracking – the technological know-how and experience can be used for Carbon Capture and Storage technologies. ExxonMobil and Chevron are flag bearers in CCUS; the investments in large-scale initiatives such as the Gorgon CO2 injection project in Australia, speak volumes and guide our attention to where the industry is heading.

One major issue faced in the gas sector is compacting methane leaks. Methane – 80 times more potent than CO2 – can fasten climate change. With today's technologies, it is challenging to track the leaks. Shell and Equinor use drones and satellites to monitor methane leaks from their operation. The presence of oil and gas majors in offshore wind energy auctions shows increased interest in offshore oil wells to electrify their operations from fossil fuel use. BP and Ørsted have partnered to develop offshore wind projects that could provide renewable energy solutions to offshore oil exploration.

What role do emerging technologies, such as carbon capture and storage (CCS) or hydrogen, play in reducing emissions in the oil & gas sector?

CCUS and H2 are vital in reducing the emissions – capturing carbon at the source helps oil and gas companies increase their spending on exploration while limiting the environmental impacts. Oil and gas companies have existing technologies which might suit CCUS. Green Hydrogen forms less than 1% of H2 generated and stored; gas is the cheapest option to obtain H2, and adding CCS to it forms blue H2, and this will enhance the profitability of the oil and gas companies since it diversified their portfolio and opened up new revenue streams. Cutting emissions will be the priority for oil and gas companies – CCUS and H2 are options worth exploring to build sustainability in operations.

How are companies integrating renewable energy sources (e.g., wind, solar) into their operations to reduce reliance on traditional hydrocarbons?

Oil and gas companies have opted for renewables to reduce Scope 1 and Scope 2 emissions. Solar energy is the cheapest form of energy source in most countries now. Solar energy is abundant in oil-rich countries. Substituting the electricity use from fossil fuels with solar energy has been found to reduce costs and increase efficiency. Wind energy has had a cost decline of 23% in the last decade, making it another clean energy option. Hybrid renewable energy solutions have also made their way into the priority list of oil and gas companies. The complementarity between solar and wind will increase the chances of reducing the intermittency challenges associated with renewables.

What are the challenges and opportunities for oil & gas companies in transitioning to cleaner energy sources like biofuels or green hydrogen?

Cost is the primary challenge for the adoption of any renewable energy sources. Advanced biofuels often require expensive feedstocks and processing techniques. Green H2 is new to the industry, and its lack of adoption makes it risky. New technologies mean new infrastructure and expertise, which traditional oil and gas companies lack. Hydrogen requires specialised storage tanks due to low density and high flammability. It is also a challenge to integrate the new energy sources into operation. The regulatory hurdles are challenging to clear since multiple stakeholders are involved in the energy sector. Biofuels often meet stringent sustainability criteria.

Besides the obvious reduction of emissions and meeting climate targets, biofuels and hydrogen can open doors for additional revenue streams. Collaboration with clean tech manufacturers would make oil and gas companies' presence in the market much more competent, sharing know-how and technologies. The US Inflation Reduction Act passed by the Biden Administration provided subsidies and tax breaks for renewable energy technologies, which is an opportunity that should not be missed and oil and gas companies would keep using these incentives to drive down costs and increase efficiency.

How important are partnerships between oil & gas companies and clean tech startups or government initiatives in driving emissions reduction?

Innovation in the energy sector is never-ending, and staying afloat in the industry by experimenting, innovating, and pouring in research and development funding is essential. Partnering with startups would bring more opportunities to oil and gas majors. Startups bring agility and innovation, often developing breakthrough technologies like carbon capture, energy efficiency, and renewable energy integration. Chevron partnered with Carbon Clean, a clean tech startup, to develop compact carbon capture technologies for industrial applications. Often, the adoption of new technologies comes with additional risks. Co-funding projects spread financial, environmental, social, and political risks, creating more room for developing and testing new technologies. ExxonMobil partnered with Global Thermostat to pilot advanced carbon capture systems, a prominent example.

What specific processes or operational changes are being implemented to improve energy efficiency and reduce emissions at extraction, refining, and transportation stages?

At the extraction stage, it is evident that renewable energy technologies should be employed to reduce Scope 1 and 2 emissions. The adoption of digitalisation and automation has been found to increase efficiency. They use real-time data to simulate and optimise extraction processes, minimising energy use and emissions. CCUS is vital for reducing emissions, while it is the backbone for injecting CO2 back into the wells for enhanced oil recovery. It will be a matter of time before oil and gas companies master CCUS and make the emission-free extraction process viable.

At the refining stage, conventional boilers and furnaces should be replaced with advanced heat exchangers and high-efficiency heaters, and waste heat from one refining process should be utilised to power another. Reducing energy waste is found to be effective. Shell's refineries use waste heat recovery systems for power generation, and TotalEnergies has modernised its refineries to minimise heat loss and energy consumption. Wind and solar energy will continue to play major roles in the refining stage, along with Green H2 and Blue H2, which provide valuable storage options for intermittent energy sources.

We have seen tanker quality improve at the transportation stage, emitting less CO2, SO2, and NOx. Fleets have become hybrid, and there are many more inroads of H2 and electric ones. Maersk is trialling biofuel blends for its tanker fleet. AI and big data analytics have optimised the transportation process. Shell employs AI-driven software to optimise tanker routes and reduce idle time.

(The views expressed in interviews are personal, not necessarily of the organisations represented)

Dr Shambhu Sajith, Assistant Professor, UPES Online, is a Researcher specialising in Renewable Energy, adept in addressing challenges, exploring opportunities, and analysing policy and geopolitics. He has authored numerous peer reviewed research articles in reputed journals. Author of the Palgrave Macmillan book in Springer SDG series – Cooperative Sustainable Development: A Geo-strategic Band-Aid for Energy Security, he holds a Ph.D from the University of Petroleum and Energy Studies, focusing on the impact of climate change-induced catastrophes on offshore wind energy from an insurance perspective. Dr Shambhu is currently working as an Assistant Professor at UPES Online, UPES, Dehradun.