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Climate Action 2012-2013

ENERGY AND POWER

ENERGY AND POWER TACKLING CLIMATE CHANGE IN THE OIL AND GAS INDUSTRY By Brian Sullivan, Executive Director, IPIECA The challenges of climate change need to be addressed now, and the oil and gas industry is ready to play its role, while also supplying essential energy that the world needs for economic and social development. The energy industries will continue to minimise greenhouse gas (GHG) emissions, and are constantly seeking to use energy more efficiently throughout their operations, as well as working with end users to improve efficiency in the use of energy products. Finding ways to use energy more efficiently can make a major contribution to moving the world onto a more sustainable energy path. ENERGY OUTLOOK The world’s prosperity depends on reliable, available and affordable energy. A key challenge is how to meet the world’s growing energy needs in economically, environmentally and socially responsible ways. Global energy policies are promoting low-carbon energy technologies, and the use of modern renewables will almost triple by 2035 to about 14 per cent of total supply. However, renewables cannot satisfy global demand growth, so consumption of both oil and gas is set to continue to grow for the foreseeable future. This is one of the projections in the most recent World Energy Outlook produced by the International Energy Agency (IEA) see Figure 1. The IEA predicts that world primary energy demand will grow by anywhere between 20 per cent and 40 per cent between 2009 and 2035, driven principally by growing income and population in emerging economies. These projections are based on the IEA’s ‘450 Scenario’ – where policies aim to hold the world temperature rise to 2°C (resulting in greater energy efficiency), and its ‘New Policies Scenario’ (which includes planned but not implemented national policies), estimated to hold the temperature rise to 3.5°C. In both scenarios, oil and gas are predicted to meet around half of the world’s energy needs in 2035 – down slightly from current levels – with oil remaining the largest contributor to the energy mix. ACTION ON CLIMATE CHANGE Oil and gas companies work hard to meet the world’s growing energy needs while reducing their environmental and social impacts. Actions differ from company to company, frequently 76

ENERGY AND POWER incorporating steps such as: Accurate monitoring and reporting of GHG emissions along the value chain; Reduction in GHG emissions intensity in operations through more efficient use of energy (see box), reduced flaring, advances in drilling and production techniques, investment in co-generation facilities and the use of natural gas for electricity generation; Research, development and deployment of carbon capture and storage (CCS) technology, typically alongside enhanced oil recovery (EOR). EOR improves the economics of CCS and can facilitate the commercial deployment of CCS; Development of conventional fossil fuel reserves and other sources such as gas from shale and crude oil from oil sands using increasing knowledge to extract these resources efficiently; Investment in renewable energy and other low emission technologies including hydrogen, biofuels and fuel cells, and cleaner fuels such as liquefied natural gas (LNG). Technological innovation will play a central role in the energy industry’s ability to increase supply, improve efficiency and reduce emissions; Consumer education to use energy more efficiently. An example is EUROPIA’s ‘Save more than fuel’ campaign that provides drivers with tips to improve their fuel efficiency, saving them money while cutting GHG emissions. COMPANY FOCUS ON ENERGY SAVINGS Finding ways to use energy more efficiently can make a major contribution to moving the world onto a more sustainable energy path. Oil and gas companies have a strong financial incentive to save energy, because of the large share of energy in the overall cost of operating their facilities. Efficient energy use reduces costs along the whole supply chain and makes energy more affordable to consumers (see box). In fact, the industry manages to keep energy consumption from the production and supply of a standard gasoline or diesel product to less than 18 per cent of that delivered throughout their life. Efficiency per unit of output, a broader term that includes all petrochemicals produced, is greater still. Investments in energy efficiency are not always reflected fully in the wider trends for energy 3% 16% 11% Coal Oil Gas Nuclear 8% 21% 16% 25% Hydro Biomass Other renewables Figure 1. World primary energy demand in 2035 under a 450 parts per million CO 2 -equivalent scenario (IEA World Energy Outlook 2011) Source: World Energy Outlook, IEA, 2011 PRODUCTION EFFICIENCY: SAVING ENERGY ALONG THE SUPPLY CHAIN Industry efforts to improve the efficiency of oil and gas supply processes, combat waste and reduce emissions include: Energy systems management, involving the use of information technology to analyse and control energy consumption in production and refining processes; More efficient exploration, through improved drilling success rates thanks to advances in seismic surveying and analysis, and drilling techniques; Co-generation of heat and power and the recovery of waste heat from production units using heat exchangers; Reduced flaring and venting of associated gas, through investment in gas processing and distribution; Improved process operations and equipment, such as more efficient pumps and compressor turbines; and High pressure pipelines, which require less energy input per unit of oil or gas transported per kilometre. climateactionprogramme.org 77