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UPSTREAM ELECTRIFICATION: A GAME CHANGER FOR CUTTING OIL AND GAS
EMISSIONS BY 80%  
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Ruth Milka
September 20, 2024
Nation of Change
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_ Electrifying oil and gas production facilities with renewable
energy could reduce emissions by over 80%, offering a path toward
climate goals and industry sustainability. But logistical and economic
hurdles remain _

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The global oil and gas industry, long criticized for its environmental
impact, could drastically reduce its carbon emissions by adopting
electrification at production facilities, according to a report from
Rystad Energy. The research shows that by powering oil rigs and
related assets with electricity generated from renewable sources or
natural gas otherwise burned off, emissions could drop by more than
80%. This shift presents a significant opportunity for the oil and gas
sector to contribute meaningfully to global climate goals, while
maintaining production levels.

The findings from Rystad Energy highlight the potential for
electrification to reshape oil and gas production, particularly in
regions like the Norwegian Continental Shelf. There, fully electrified
rigs emit 86% less carbon dioxide per barrel of oil equivalent
compared to those powered by traditional fossil fuels. This drastic
reduction underscores the potential of electrification to decarbonize
one of the world’s most polluting industries.

Electrification involves powering oil and gas production facilities
using electricity derived from cleaner energy sources, such as
renewables or natural gas that would otherwise be burned off through
flaring. Flaring—the practice of burning off excess natural gas—is
a significant contributor to global emissions, releasing approximately
320 million tonnes of carbon dioxide into the atmosphere annually.

Norway serves as a prime example of how electrification can reduce
emissions. Fully electrified assets on the Norwegian Continental Shelf
now emit just 1.2 kilograms of CO2 per barrel of oil equivalent, down
from 8.4 kilograms before electrification. According to Rystad
Energy’s vice president of upstream research, Palzor Shenga,
“Where it’s possible and economically viable, electrification has
great potential to lower the industry’s emissions while maintaining
production output.”

This model could be replicated in other regions, although logistical
challenges may make full electrification difficult in some parts of
the world. Even partial electrification, however, can lead to
significant reductions in emissions, particularly in “premium energy
basins” (PEBs) that combine ample hydrocarbon reserves with the
potential for environmentally friendly practices.

The urgency of reducing emissions is underscored by the broader
context of global climate goals. The 2015 Paris Agreement, which aims
to keep global warming well below 2 degrees Celsius above
pre-industrial levels, requires substantial cuts in greenhouse gas
emissions. Scientists estimate that the world needs to reduce
emissions by 43 percent by 2030 to stand a chance of meeting these
targets. The oil and gas sector, which has long been a significant
contributor to greenhouse gas emissions, must play a key role in
achieving these reductions.

Flaring is one of the primary sources of emissions in upstream oil and
gas production. Over the last decade, an estimated 140 billion cubic
meters of gas were flared annually, releasing vast amounts of CO2 and
methane into the atmosphere. This process not only wastes valuable
natural gas but also contributes significantly to global emissions,
particularly in major production regions such as North America, the
Middle East, and Africa.

Electrification offers a path to reduce emissions both by eliminating
flaring and by reducing the carbon intensity of oil and gas
production. Even if full electrification is not immediately feasible
in some areas, avoiding flaring through the use of cleaner energy
sources can make a substantial difference in the sector’s
environmental footprint.

Norway, despite being one of the world’s largest oil exporters, has
emerged as a leader in the electrification of upstream oil and gas
facilities. The country’s unique energy mix—predominantly
hydroelectric power—allows it to power its production facilities
with renewable energy, drastically reducing emissions.

Norway has set a goal of cutting emissions from its continental shelf
production sites by 70 percent by 2040. This ambitious target is
facilitated by the proximity of its oil and gas operations to
renewable energy sources, such as hydroelectric power plants. By
leveraging these resources, Norway has been able to electrify many of
its production facilities, setting an example for other countries to
follow.

Rystad Energy identifies Norway’s success as a model for other oil
and gas-producing nations, particularly those with access to renewable
energy. By incorporating electrification into their upstream
operations, countries can reduce their emissions while maintaining
production levels, aligning their practices with global climate
objectives.

While electrification presents a promising path to reducing emissions,
significant challenges remain. Not all oil and gas production sites
are located near renewable energy sources, making it difficult to
electrify facilities in remote or infrastructure-poor regions. In
areas like the Middle East and North Africa, where flaring is a major
issue, additional investment in energy infrastructure would be
required to support the transition to electrified operations.

Economic viability is another key consideration. Electrification
requires substantial upfront investment in new technologies and
infrastructure. Companies must carefully assess the costs of
electrification, balancing short-term financial concerns with the
long-term benefits of reduced emissions and improved operational
efficiency. Additionally, the continuous energy supply required for
oil and gas production—particularly in remote locations—poses a
logistical challenge that must be addressed in the planning stages.

Governments and companies alike will need to take a proactive approach
to overcome these hurdles. Financial incentives, regulatory
frameworks, and investment in renewable energy infrastructure will be
crucial in driving the electrification of oil and gas production
globally.

Electrifying oil and gas production is not only about reducing
emissions; it is also about aligning the industry with global climate
goals. According to Rystad Energy, electrifying assets in premium
energy basins could avoid 5.5 gigatonnes of CO2 emissions by 2050,
equivalent to preventing about 0.025 degrees Celsius of global warming
during the same period.

Given the scale of emissions from the oil and gas sector,
electrification offers a viable path forward to achieving net-zero
emissions by 2050, a target embraced by many of the world’s leading
oil companies. However, to meet these ambitious climate goals, global
collaboration and investment will be required. Governments must
implement policies that encourage electrification, while oil and gas
companies must commit to long-term sustainability efforts.

Palzor Shenga from Rystad Energy noted, “Where it’s possible and
economically viable, electrification has great potential to lower the
industry’s emissions while maintaining production output.”

_Ruth Milka started as an intern for NationofChange in 2015. Known for
her thoughtful and thorough approach, Ruth is committed to shedding
light on the intersection of environmental issues and their impact on
human communities. Her reporting consistently highlights the urgency
of environmental challenges while emphasizing the human stories at the
heart of these issues. Ruth’s work is driven by a passion for truth
and a dedication to informing the public about critical global matters
concerning the environment and human rights._

_At NationofChange, our mission is to help people create a more
compassionate, responsible, and value-driven world, powered by
communities that focus on positive solutions to social and economic
problems. We strive to accomplish this mission through FEARLESS
JOURNALISM combined with BOOTS-ON-THE-GROUND ACTIVISM in order to
create real-world, actionable strategies for change._

* Climate Change
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* oil and gas industry
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* electric power
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* Norway
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