The world can address greenhouse gases (GHG) emissions in a few different ways. The direct way is by reducing fossil fuel production, the main source of emissions at 75% of global GHG.
This is the approach in Europe, perhaps because its energy companies do not have the success of a shale revolution to maintain. Europe has several examples of integrating renewables into its future:
- Denmark, leading the world in wind power, recently stopped exploration for oil and gas and plans to close its oil production by 2050.
- BP has committed to be 40% invested in renewables by 2030 and is studying plans for a large blue hydrogen plant at Teesside in the U.K.
- TotalEnergies, headquartered in France, has invested $8 billion in renewables since 2016 (as of April 2021), including $2.5 billion in Adani Green Energy, where it shares a 50% partnership in the company’s solar power systems.
- By 2021, Shell in Germany will provide 10 megawatts (MW) of green hydrogen. In Ireland, Shell will be a 51% stakeholder in a 300-MW wind farm.
In the U.S., companies have adopted different and less-direct approaches, including greening of operations, cleaning up of gas flaring and methane leaks, and carbon capture and storage.
One indirect way for reducing GHG is by companies greening their own operations by using wind or solar electricity to pump frac jobs, for instance.
A frac pump has to inject frac fluid, mostly water and sand, under huge pressure, up to 10,000 pounds per square inch (psi), to crack up the rock deep underground to allow oil or gas easier inflow to the well. High-pressure, high-volume conventional diesel-fueled combustion engines are being replaced in some cases by e-frac systems where electric pumps are driven by gas turbine generators that use CNG, LNG or flared gas.
E-fracs are only 10% of the market now, but this stands to increase because of worldwide demand to lower GHG. GHG reductions are typically 50% by using e-fracs.
Cost savings exist in fuel and pump engine repairs, but upfront costs are higher than a new diesel system.
One oilfield services operator (OFS) reported a longer life for components of his electrical versus diesel system, including the electric motor, transformer and variable frequency drive (VFD) that replace engine and transmission in the diesel system—which has more moving parts and shorter maintenance intervals.
A diesel fleet typically needs 20 pump-trailers at the wellsite while an e-frac system requires eight.
A 95% reduction in frac pumping noise is an advantage too.
A report from DNV, an international accredited registrar and classification company, said the operations are 30% of an oil company’s GHG, while the sale of oil and gas products is 70%. Greening an operation’s footprint is a good thing to reduce GHG but it may not be enough—the dilemma for oil and gas companies is they are producing and selling high-carbon products as their core business.
Methane Leaks & Gas Flaring
A less-direct way to reduce GHG is by cleaning up methane leaks from wells, pipelines and processing facilities. To repeal rules installed in September 2020, the U.S. Senate in June 2021 passed a new bill to remove methane leaks as a cause of air pollution in oil and gas operations and allow the Environmental Protection Agency (EPA) to enact stricter methane regulations.
The following information is from an Environmental Defense Fund (EDF) report, updated in November 2020, on New Mexico, which is the third-highest oil-producing state after Texas and North Dakota:
- Methane emissions across New Mexico tally over 1.1 million metric tons per year—equivalent to the global warming caused by burning fuel in 21 million cars and trucks for a year.
- $271 million worth of natural gas is wasted every year in New Mexico by leaks and venting and flaring.
- Each year, $43 million is lost to New Mexico in state tax and royalty revenue.
In general, flaring (30%) is important, but methane leakage (70%) is more serious, partly because the methane leakages are unburned which means the methane gas has 21 times more atmospheric warming effect than flared gas that is burned to form CO2.
However, methane emissions are only 10% of all GHG emissions in the U.S. and less than half are due to methane leaks. So, if the oilfield cleanup gets it down to zero, this is a drop of only 5% of the total 73% fossil fuel contribution.
Pneumatic devices are used in dehydrators and separators to monitor and control gas or liquid levels and flows, as well as pressure in flash tanks. Usually powered by natural gas, there exist about 400,000 such devices in the U.S. production sector.
In a 2019 update of New Mexico data, the EDF reported that malfunctioning pneumatics contribute only 7% of methane leaks. The dominant leaks (63%) are called “abnormal emissions” that can include equipment malfunctions but also any other unaccounted-for gas leaks. These leaks have to be measured and cannot be predicted using standard equations for properly performing equipment.
Carbon Capture & Storage (CCS)
ExxonMobil is storing 9 million metric tons of CO2 each year, equal to 11 million car exhausts each year. The company plans to invest $3 billion for 20 new CCS facilities and even envisions a $100 billion consortium of oil and gas entities and government to capture then “bury” (inject carbon dioxide underground where it is contained by non-leaking rock layers then merges chemically with the rock) GHG under the Gulf of Mexico.
However, CCS is a non-direct approach because it does not stop the emission of GHG from fossil fuels. It just captures and buries the resulting GHG. However, CCS will be important for the net-zero concept because it is an escape hatch to get rid of any leftover fossil GHG. And it appears in the U.S. there will be lots of leftover GHG from continuing production of oil and gas.
Glance Into the Future
While the EU is leading by diversifying into renewables, companies in the U.S. seem to be avoiding the direct approach of cutting oil and gas production.
In the U.S., the appetite of legacy energy companies has largely stayed focused on what has always been their main meal: oil and gas production—including the shale revolution.
But the demand for oil and gas in the U.S. will likely fall if the Biden administration achieves its two goals of greening electricity and changing to electric vehicles. If supply follows demand, oil and gas could fall by 30% from now to 2035-2040.
Any of the dozens of oil and gas companies thriving in the Delaware Basin of southeast New Mexico could stop drilling new wells and instead invest in wind/solar systems in the windy Chihuahuan Desert. There is money to do it—the basin made roughly $24 billion/year at the wellhead in 2019 and makes even more now in 2021. The January 2021 federal moratorium on new oil and gas well leases on federal lands provides an opportunity and motivation to start diversifying down there.