In 1859, the modern oil industry was born with the discovery of the first reservoir of viable petroleum in the US – and the world has never been the same since.
Oil, with its abundance and multi-faceted uses, has become the primary energy source for transportation and industry, as well as a key element in the petrochemical sector. Meanwhile, natural gas is a critical component of heating and power networks across vast swathes of the world.
But if they are to maintain their place in the heart of the energy mix, both will need to develop and adopt effective decarbonisation techniques for their upstream operations.
And despite the challenges, the pressure to become more environmentally friendly could present an attractive opportunity for those willing to innovate and invest.
Julien Perez, managing director, Oil & Gas Climate Initiative (OGCI) and the Oil & Gas Decarbonisation Charter (OGDC), tells Offshore Technology that “decarbonising the upstream sector is crucial to achieve global climate goals, particularly within the Paris Agreement.
Our member companies were the first in the oil and gas industry to agree collective targets to reduce our operated upstream methane and carbon intensity.”
Since 2017, members of the OGCI – a CEO-led initiative comprised of 12 of the world’s leading energy companies, producing around a third of global oil and gas – have collectively reduced their total operated upstream methane emissions by 55% and cut greenhouse gas emissions from flaring upstream by 47%.
GlobalData’s October 2024 report, ‘Decarbonizing Upstream Oil and Gas’, indicated that the top seven flaring countries contributed 67% to the total global gas flaring volume in 2023, during which they released approximately 381 million tonnes of carbon dioxide equivalents (CO2e). This included “a substantial amount of methane”, said the report, “equivalent to adding five million cars to the roads”.
The report from Offshore Technology’s parent company also stated that “electrification in the upstream sector will help to significantly reduce operational emissions, but it is still in the early phases of development within upstream oil and gas operations”.
However, the challenges in electrifying the upstream sector include establishing power lines from grids to remote locations and the cost of establishing captive renewable power generation compared to legacy methods, such as onsite diesel-based power generation.
Oil and condensates production is expected to peak in 2027 at 96.5 million barrels per day (mmbl/d), owing largely to steady production from OPEC+, said GlobalData. On the other hand, a recent IEA global oil demand forecast suggested that demand could in fact reach 115.4 mmbl/d by 2030.
Meanwhile, GlobalData predicts that gas production will peak in 2029 at 488.1 billion cubic feet per day (bcf/d), coming primarily from places such as the US, Russia, and the Middle East.
Donald Trump’s withdrawal of the US from the Paris Agreement has raised concerns among major US oil companies. The decision, aimed at boosting domestic energy production, contrasts with the industry’s investment plans for cleaner energy and global climate cooperation.
Marty Durbin, president of the US Chamber of Commerce’s Global Energy Institute, which represents US energy companies, said in the days following Trump’s announcement that “while we prefer that the US remain engaged in the UN climate process, the private sector is committed to developing the solutions necessary to meet the energy needs of a growing global economy, while addressing the climate challenge.”
Bethany Williams, a spokesperson for the American Petroleum Institute, which counts ExxonMobil and Chevron among its members, continues to affirm the group’s support for the Paris Agreement’s objectives.
Anne Bradbury, CEO of the American Exploration and Production Council (AXPC), representing US independent drillers, adds that it is “critical that any conversation about addressing climate change must be global in nature, and also recognise that America is the world leader in both energy production and emissions reductions.”
In the UK, decarbonising the upstream is “essential” for the future of the oil and gas industry, says the North Sea Transition Authority (NSTA), a company responsible for maximising the economic recovery of oil from the UK’s North Sea. For “production to continue in the North Sea, it must also continue to become cleaner.”
The “central obligation of NSTA’s strategy makes clear that industry must take the appropriate steps to assist the UK’s Secretary of State in meeting the net-zero target,” it adds.
Included in this process is “reducing, as far as reasonable in the circumstances, greenhouse gas emissions from sources such as flaring and venting and power generation, and supporting carbon capture and storage projects.”
Power generation is the largest contributor to greenhouse gas emissions from the UK Continental Shelf’s oil and gas production, making up 79% of British emissions in 2023. “All new oil and gas infrastructure must be designed taking into account low-carbon power options,” says the NSTA.
The body adds that investing in electrification and low-carbon power in existing infrastructure is required if UK industry is to make the significant reductions to emissions.
“Industry has done well in cutting production emissions by 28% between 2018 and 2023, with half of that achieved through active emissions reduction measures. And in the same period, it has seen a 49% reduction in flaring – due to mainly to more efficient operations, stricter controls and fines for unpermitted activity.”
Perez argues that the “most effective and cost-efficient way to decarbonise the upstream sector is by reducing methane emissions through improved detection and measurement systems. Advanced technologies, including satellites, drones, and sensors, make it easier to identify and address methane emissions.”
Perez cites OGCI’s Satellite Monitoring Campaign, which has delivered “tangible results”, detecting and abating methane emissions in regions such as Algeria, Iraq, and Kazakhstan.
“Work is now underway to include more operators and countries, including Central Asia, North Africa, and South America, doubling the scope of assets monitored, highlight the practical role of satellite technology in driving decarbonisation,” they add.
In its latest phase, the campaign helped operators in Algeria, Kazakhstan and Egypt eliminate methane plumes with a combined average rate of 3,200 kilograms per hour. Left unchecked, these plumes could amount to around one million tonnes of CO₂ equivalent annually, highlighting their potential to mitigate methane emissions at scale.
The main obstacle to effective and wide-spread decarbonisation is the high upfront cost of implementing new technologies and infrastructure, particularly in regions with less advanced systems.
Additional challenges include regulatory uncertainty and the lack of standardised emissions reporting.
However, initiatives led by OGCI, such as its role as Secretariat of the OGDC, are driving collaboration to address these barriers. More than 50 companies, including 11 OGCI members, have committed to OGDC’s ambition of net-zero emissions from operated assets by 2050, with upstream methane emissions reduced to near zero and routine flaring eliminated by 2030.
The OGCI methane intensity target of below 0.2% is now recognised as an industry standard of best practice, adds Perez.
There is no single solution or technology that will fully decarbonise the upstream, says the NSTA, but it cites the existing OGA Plan (the UK’s Oil and Gas Authority, established in 2015 and superceded by the NSTA in March 2022) as a good foundation to start from.
The plan sets out requirements in four areas: investment and efficiency, electrification and low-carbon power, inventory, and flaring and venting.
The NSTA’s Technology Survey & Insights Report 2024 also identifies several main technology areas that can play an important role in decarbonisation:
• Electrification – including changing to electric drives, importing power from shore and use of renewable power from adjacent offshore wind installations
• Equipment right-sizing and efficient operation for pumps, compressors and power generators
• Flare gas and vapour recovery systems – including liquid ring compressors and the use of eductors
• Enhanced emissions monitoring – including improved leak detection techniques, using drone and sensors deployed on autonomous vehicle to measure fugitives, and better online flare combustion efficiency measurement
• Alternative fuels as replacements for gas and diesel fired power generators
"The critical importance of decarbonising the upstream" was originally created and published by Offshore Technology, a GlobalData owned brand.
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