- Oil and gas industry under increasing pressure to cut carbon footprint and shift to lower carbon energy.
- Renewables like solar, wind, hydrogen, and biofuels seen as solutions for decarbonizing oil and gas.
- Challenges in integrating renewables include technical, operational, and economic hurdles.
The oil and gas industry is one of the largest contributors to global greenhouse gas emissions, accounting for about 15% of the total in 2020. As the world moves toward a net-zero emissions scenario by 2050, the industry is facing increasing pressure from governments, investors, customers, and society to reduce its carbon footprint and transition to a lower carbon energy system.
One of the ways that the oil and gas industry can respond to this challenge is by integrating renewable energy technologies in its operations and products. Renewable energy sources such as solar, wind, hydrogen, and biofuels can help the industry lower its emissions, diversify its energy portfolio, enhance its competitiveness, and demonstrate its environmental leadership.
However, integrating renewable energy in the oil and gas value chain is not a straightforward task. It requires overcoming technical, operational, and economic barriers that vary depending on the segment (upstream, midstream, or downstream) and the type of renewable technology. In this post, we will explore some of the current trends, opportunities, and challenges of renewable energy integration in each segment of the oil and gas industry.
Upstream: Renewable integration in oil and gas production
The upstream segment of the oil and gas industry involves exploration, drilling, and primary recovery of crude oil and natural gas from reservoirs. This segment is typically powered by diesel generators or natural gas turbines that emit significant amounts of CO2. Renewable energy technologies can help reduce these emissions by electrifying drilling rigs, pumps, compressors, and other equipment.
One of the most promising renewable technologies for upstream applications is solar photovoltaic (PV), which can provide reliable and cost effective power for remote locations with high solar irradiation. For example, BP has installed a 3 MW solar PV plant at its Khazzan gas field in Oman to power water pumps for enhanced oil recovery (EOR). Solar PV can also be combined with batteries or diesel generators to form hybrid systems that ensure uninterrupted power supply.
Another renewable that can be used in upstream operations is wind power, which can provide electricity for offshore platforms as well as onshore facilities. For instance, Equinor has deployed a floating wind farm near its Hywind Tampen oil field in Norway to reduce its reliance on gas turbines. Wind power can also be integrated with hydrogen production to create green hydrogen that can be used as a fuel or feedstock for enhanced oil recovery.
Biofuels can also benefit upstream operations. Biofuels are derived from organic matter such as crops, waste, or algae. They can replace diesel or gasoline as fuels for vehicles or generators used in exploration or production activities. For example, Shell has partnered with Brazilian biofuel producer Raízen to produce low carbon ethanol from sugarcane for its operations in Brazil.
Midstream: Renewable integration in oil and gas transportation
The midstream segment of the oil and gas industry involves transportation of crude oil and natural gas from production sites to refineries or processing plants. This segment relies mainly on pipelines that use compressors to maintain pressure and flow. These compressors are usually powered by natural gas or electricity from the grid that may have a high carbon intensity.
Renewable energy technologies can help reduce emissions from midstream operations by electrifying compressors or using waste heat recovery systems. For example, TotalEnergies has installed a 25 MW solar PV plant at its Badamyar gas field in Myanmar to power an electric compressor station. Solar PV can also be used to power cathodic protection systems that prevent corrosion in pipelines.
Another technology that can be applied in midstream operations is turboexpanders, which are devices that convert pressure into mechanical or electrical energy. Turboexpanders can be used to recover energy from natural gas streams that undergo pressure reduction at pipeline terminals or processing plants. For instance, Saudi Aramco has installed a turboexpander at its Hawiyah gas plant to generate electricity from waste pressure.
Downstream: Renewable integration in oil refining
The downstream segment of the oil and gas industry involves refining of crude oil into various products such as gasoline, diesel, jet fuel, or petrochemicals. This segment is one of the most energy intensive and emission intensive segments of the industry, as it requires large amounts of heat and power for distillation, cracking, reforming, and other processes.
Renewable energy technologies have the potential to reduce emissions from downstream operations by generating heat and power from renewable sources or producing low carbon fuels and feedstocks. For example, Chevron has installed a 29 MW solar thermal plant at its Lost Hills oil field in California to provide steam for EOR. Solar thermal can also be used to heat water or oil for refining processes.
Another renewable technology that can be used in downstream operations is hydrogen, which is a key input for hydrocracking, hydrotreating, and desulfurization processes. Hydrogen can be produced from renewable sources such as water electrolysis powered by solar or wind electricity, or biomass gasification. For example, Shell has built a 10 MW electrolyzer at its Rheinland refinery in Germany to produce green hydrogen from renewable power.
A third renewable technology that can enhance downstream operations is power cogeneration, where electricity and heat are produced simultaneously from a single source. Power cogeneration has the potential to enhance the energy efficiency and decrease emissions in refineries by utilizing waste heat or flue gas for electricity or steam generation. For instance, ExxonMobil has implemented a cogeneration facility at its Singapore refinery, leveraging natural gas and refinery gas to generate 440 MW of electricity and 1,100 tonnes of steam per hour.
The oil and gas industry is undergoing a major transformation as it faces the challenge of decarbonizing its operations and products. Renewable energy technologies offer potential solutions to help the industry achieve this goal, but they also pose technical, operational, and economic challenges that need to be addressed. The industry needs to adopt a strategic approach to renewable energy integration that considers the specific characteristics and requirements of each segment and technology. By doing so, the industry can not only reduce its emissions, but also enhance its competitiveness, diversify its portfolio, and demonstrate its leadership in the energy transition.
Career Opportunities
The transition to renewable energy is fueling a surge in green employment, with about 12.7 million individuals currently engaged in the global renewable energy industry. Solar photovoltaic holds the top position, followed by hydropower, biofuels, and wind power. By 2030, projections suggest that this trend could generate over 38 million jobs globally. While challenges remain, the move towards renewables offers promising career opportunities and supports the advancement of a sustainable energy landscape.