Dawn of a Carbon Constrained World: An OGI Perspective

Blog Post created by latikasharma on Oct 8, 2016

“In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.”


It is only by continuously striving to excel and learn from experience, observation and introspection that we become better versions of ourselves each passing day, and in the process, do our little bit towards making the world a better place.


The world is in dire need of environmental recuperation and remediation. At an international level, the United Nations Framework Convention on Climate Change (UNFCCC) negotiations in Paris last year (India was the 62nd country to sign the Paris agreement on 2nd October 2016) have delivered a clear objective to limit global warming due to human induced emissions to 2 degrees Celsius.The fear of climate change weighs heavily on our minds, and the world is doing all it can to reduce its carbon footprint and control excessive greenhouse effect and ozone depletion. The fore of our industries today is increasingly led by operations that allow us to design processes and products that are sustainable and naturally beneficially.


Question is, how might the Oil and Gas Industry take to this new carbon constrained world?


In the short term, I think every O&G Company will have to figure out how to produce oil competitively while reducing its carbon footprint as much as possible. OPEC reference case projections to 2030 show global energy demand increasing by around 1.7 per cent annually. It also highlights that fossil fuels will continue to provide more than 90 per cent of the world’s total commercial energy needs, with oil remaining the leading source in the global energy mix, although its share may decrease from 39 per cent to 36.5 per cent. This means that we need to concentrate more on improving the current energy industry and make it future-ready, rather than go for an all out shift to renewables entirely, which at this stage, is a pipe-dream anyway.


Technologies such as cogeneration, fluidized-bed combustion, integrated gas and gasification combined cycles, and supercritical steam cycle can help power stations achieve higher conversion efficiency. Combined-cycle generation units produce electricity and capture the waste heat energy, using it to generate more electricity or for process heat at a nearby facility. Improved traffic management and vehicle maintenance, modal shift and increasing vehicle efficiency, in addition to fuel switching, will also prove incredibly beneficial.

Concentrating more on conventional and unconventional gas over fuel oil also might be a good idea. Natural gas fired combined cycle generation units can be up to 60 - 90 percent energy efficient, whereas coal and oil generation units are typically only 30 to 35 percent efficient. In November 2015, Royal Dutch Shell’s purchase of BG Group made it the world’s largest liquefied natural gas trader. This deal and others reflect the fact that natural gas is a preferred fuel for power generation in the U.S. and many other parts of the world, especially as its price has dropped and made it more desirable than coal for cost and environmental reasons.


Another promising option is carbon capture and storage (CCS), applied to large stationary sources of CO2 emissions, such as power stations and industrial sites, which together account for over half the energy-related CO2 emissions. CCS is basically the idea that the fossil fuel industry could carry on forever because we can trap carbon dioxide first by capturing it with help of a wide range of technologies, then by compressing and transporting it and injecting it into deep underground stone rock formations. Currently over 60 percent of carbon dioxide emissions come from 8,000 large-scale stationary sources, such as coal- and gas-fired power plants and industrial sites — all of which could be subjected to CCS. 


This is not to say that CCS has no negative aspects, but combined with the fact that CCS methods are anyhow already in use in a process called enhanced oil recovery (EOR), which increases the amount of oil recovered in a field by 25 percent, I’d say it’s a promising technology to keep an eye on (and implement on large scale) in the future.


Hence, like it or not, change is coming. And though it might not come onto us all at once like a tsunami, the impact will be just as huge. Navigating change of this scale will require smart, strategic judgment on the part of O&G pioneers. They must tackle cost concerns in the short term, while preparing to respond to the future impact of inevitable external environmental pressures.


The focus should be on ensuring healthy economic growth, rapid social progress and environmental protection in a mutually-supportive manner. As we move from the capitalist, consumer-centred approach to a holistic development regime, we shall try all we can to redeem ourselves, and live a better, cleaner life in the new world.