- Jan 16, 2023 6:31 pm GMT
Todays TRADITIONAL SUPER BASINS of oil & gas will not meet the challenges of sustainability and achieving Net-Zero by 2050.
For the upstream industry to become more sustainable, it must focus on resources that are co-located with both plentiful clean electricity and CCS potential. These are the ENERGY SUPER BAINS; While the oil and gas industry’s past is rooted in its traditional super basins, its future will be energy super basins. These feature co-location of three essential elements:
- Abundant advantaged resources
- Access to low-cost renewables
- Hub-scale CCS opportunities
- Some traditional super basins will evolve into the energy super basins of the future.
- These will use renewables and CO2 sequestration to improve sustainability.
- Making disadvantaged barrels advantaged is a huge opportunity and will be a key investment theme.
- But other traditional super basins will be harder to decarbonise and face being left behind.
- These basins will see flight of capital and product that is hard to sell.
- The basins in Russia, Venezuela and Alaska may fall in this category.
3. Host governments may have opportunities to improve the outlook of a basin
KEY INSIGHTS NOT COVERED IN THE ARTICLE
- CCS is solution only for hard-to-abate industries (like Cement, refining, steel etc.), this industry has no other alternative currently.
- Only a small sub-set of oil and gas emissions can be offset using CCS (Removal project) and have low capture cost (highly pure CO2 from Natural gas processing)
- Other industries like power and chemicals must rely on total avoidance of fossil fuels; using Avoidance projects (Renewables like solar, wind etc) or Reduction projects. This will reduce most of the emissions.
- Although hub-scale CCS project is only way to reduce emissions by CCS commercially, there only handful of projects (30) currently in operation (removing on 40 mtpa or 0.04 Giga tonne/y ). This is minuscule, compared to 40 Giga tonne/y of emissions that are associated with fossil fuels and must be removed.
- The current pipeline of projects lock 1.0 Giga tonne/annum, most of these projects are only on drawing board, and many may not see fruition.
- The major oil companies, although have touted CCS and blue hydrogen as solution, the actual investment in these projects is very low.
- In USA, where most projects have been undertake, have been enabled by Federal 45Q credits ($50/tonne for pitting CO2 in Saline aquifer and $35/tonne for EOR. That too in low cost capture like Natural gas Processing (NGP)
- Unless Federal 45Q limits are raised ($100/tonne). The hard-to-abate industries will not be able to benefit.
- Time, enabling regulations, investment and corporate will to do is of essence.
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