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Tariq Siddiqui's picture
COO, Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
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  • Jan 17, 2023
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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:

  1.  Abundant advantaged resources
  2. Access to low-cost renewables
  3. Hub-scale CCS opportunities
  1. Some traditional super basins will evolve into the energy super basins of the future.
    1. These will use renewables and CO2 sequestration to improve sustainability.
    2. Making disadvantaged barrels advantaged is a huge opportunity and will be a key investment theme.
  2. 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

  1. CCS is solution only for hard-to-abate industries (like Cement, refining, steel etc.), this industry has no other alternative currently.
  2. 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)
  3. 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. 
  4. 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.
  5. 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.
  6. The major oil companies, although have touted CCS and blue hydrogen as solution, the actual investment in these projects is very low.
  7. 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)
  8. Unless Federal 45Q limits are raised ($100/tonne). The hard-to-abate industries will not be able to benefit.
  9. Time, enabling regulations, investment and corporate will to do is of essence.

 

 

 

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