Rising above the storm

The global energy sector faces a triple challenge during the next 20–40 years. Firstly, of course, it needs to switch to supplying low-carbon energy for society at large. However, more immediately, it must decarbonise its own systems and supply chains to achieve more sustainable operations. On top of that, companies need to be prepared for the impact of climate change on weather and sea levels, which could affect operating conditions – wind speeds may intensify and shift, affecting wind output, while low rivers can mean problems for nuclear and coal plants.

Towards zero-carbon operations

Sustainability is the new watchword – even in the upstream oil and gas sector, where companies are keen to cut the carbon emissions associated with extracting hydrocarbons. A great example is Equinor’s 440,000 bbl/d Johan Sverdrup development in the Norwegian sector of the North Sea, a close-to-zero-carbon operation; the hydrocarbon fuels traditionally used for power on the rigs have been replaced by green energy. All the power used at its four offshore platforms is supplied via an undersea cable from the Norwegian national grid, which relies largely on hydropower and other zero-carbon sources. The field will be a gateway for further connections from the grid to other fields in the area, including Edvard Grieg, Ivar Aasen and Gina Krog.

The same approach would only garner a portion of zero-carbon power (nuclear and renewables) if using the UK grid, unless the power was bought directly from a green supplier. A reduction could also be achieved by installing solar panels and even wind turbines on the rigs themselves, with localised renewables generation offering a sustainable design option. Platforms in both the southern North Sea and Norwegian sectors have already introduced zero-carbon power sources with conventional backup for stand-alone facilities.

Onshore energy companies are also opting for zero-carbon energy. Recent examples include Baker Hughes’ 10-year power purchase agreement with France’s EDF to power all its facilities in Texas from renewable sources such as wind and solar. The deal will allow Baker Hughes’ facilities in the state to obtain all their power from Apex Clean Energy’s White Mesa Wind Farm in west Texas and a solar farm owned by 7X Energy. Baker Hughes says the deal will reduce the equivalent of 1.2m metric tonnes of CO2 over the 10-year term and eliminate the equivalent of 12% of its global carbon emissions.

One UK company heavily involved in the sustainability drive is Balfour Beatty, which could be making a similar investment. According to Sustainability Manager Katherine Rusak, the company is preparing for a major programme, which will be announced in the new year.

Efficiency is key

As well as switching to renewable energy, those companies that operate more efficiently also tend to have lower emissions. Consultants McKinsey measured the link between the two factors. Operations benchmarks show that raising operational performance has a large impact on emissions – on average, a 10% increase in production efficiency delivers a 4% reduction in emission intensity. And 90% of known technological solutions to decarbonisation are within the grasp of operators at a cost of no more than US$50 per metric tonne of carbon.

McKinsey recommends three levers to reduce scope 1 (direct) and scope 2 (indirect) emissions from upstream oil and gas operations. As well as optimising operations (maximising stability and uptime reduces intermittent flaring and venting), sustainable design choices are now available for deployment and increasingly present a positive economic benefit. These include modular (often reusable) unmanned installations around a supporting hub, or linked to a remote operations centre, which cuts equipment and manning costs and emissions.

Thirdly, McKinsey recommends that producers start to ‘balance their portfolios across resources with a spread of emission intensity in anticipation of the risks from future policy scenarios and investor choices’.

The world’s largest oil company, Saudi Aramco, is concentrating on the first two, and prides itself on its low-carbon intensity of oil production, which it hopes will stand it in good stead relative to others when investors, regulators and the public make decisions on energy that take account of climatic threats. The low intensity partly reflects the low-cost nature of Saudi production, as well as efficiently run operations.

Adequate responses from the supply chain to the challenges of global warming will be crucial for a secure and reliable energy supply, including nuclear energy. All parts of the energy sector will need to change – heating, power and transport. Complete decarbonisation includes adoption of electric vehicle fleets, as well as solar panels, green power supply contracts, more efficient upstream operation, hydrogen and other decarbonised gases, and even LED lights.

Managing changing weather risks

In November 2019, the International Atomic Energy Agency released a report, Adapting the Energy Sector to Climate Change, which says that the increase in extreme weather events and sea levels associated with climate change are expected to have a considerable impact on the downstream energy supply chain.

For example, lower precipitation in some areas, and the resulting low water level in a river, may disrupt hydropower, or the operations of a coal plant if coal cannot be delivered by river. Drought may also affect water-cooled nuclear power plants, as it did in France in 2018, when several had to be shut down temporarily due to water shortages and overheating rivers. Case studies in the report identified hydro as an issue in Argentina, along with the location of transmission cables in Slovenia.  

In the UK, with its large onshore and rapidly growing offshore wind sectors, the primary concern is likely to be changing windspeeds. Average global onshore windspeeds had been falling up to 2010, possibly due to manmade factors such as windbreaks and high-rise buildings. Large numbers of big wind turbines could exacerbate this effect going forward: recently Denmark’s wind giant, Ørsted, announced findings that suggested that blockage (where wind slows down as it approaches turbines) and wake effect (where wind speeds drop between wind parks) were cutting average wind speeds.

However, according to a new study, the world is getting windier. Having analysed decades of weather data, scientists from Princeton University and Cardiff University claim that onshore windspeeds are now rising much faster than the declines of earlier decades, probably due to global warming – although there may be a geographical switch in wind speed concentrations too, which complicates any upside power generation potential from higher average speeds.

‘Our findings show the decadal changes in wind speed and argue the importance of the changes of wind speed in wind energy production over land. However, we have not examined wind speed over oceans, and we are uncertain about its associations to climate change. More studies are required to address these questions,’ said lead author Dr Zhenzhong Zeng, a professor at Princeton University.

Adjusting to the reality

Over the years, energy companies have responded to market and technological disruptions with innovation and resilience. With an accelerated energy transition, they must do so again. As the imperative of a net-zero emission future becomes even clearer and the costs of decarbonisation fall, energy companies will need to build sustainable supply chains and adapt plans to take account of any environmental changes. On the operational side, carbon capture, alongside more renewables and possibly hydrogen, will add to the low-carbon expansion areas, providing energy companies with new growing low-carbon markets. 

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