Curbing the Climate Footprints of Oil and Gas

GIVEN HOW DRASTICALLY the emissions and potency of different oils and gases can vary and how prominent a market role less clean, unconventional varieties are likely to play, there is a clear need for creative solutions to combat climate change. And because hydrocarbons are not going away anytime soon, supply-side solutions by the oil and gas industry need to be part of the equation.

In the summer of 2012, I joined a group of energy experts from think tanks on a research trip to Fort McMurray in Alberta, Canada, to tour several oil sands operations. As we flew into the region, jet-black seas of solid petroleum coke (petcoke) unfolded beneath us.¹ The look of scorched Earth reinforced my climate concerns about this solid, residual byproduct of oil. Throughout our visit, my colleagues asked interesting questions on energy security. In contrast to their questions on political economy, I took a different—technical—approach aimed at fully accounting for all of the greenhouse gas (GHG) emissions in a barrel of bitumen.

Earlier that year, I had begun to investigate fuel-grade petcoke because I did not think that standard calculations of the lifecycle GHG emissions of extra-heavy oil did justice to the impact of this little-known, highly polluting, bottom-of-the-barrel petroleum byproduct.² In permit documents, it was claimed that the controversial new oil sands pipeline—Keystone XL—would have as much as 20 percent higher GHG emissions than conventional oil does.³ But this figure seemed low. It only considered a portion of the emissions, whether inadvertently or on purpose. The emissions of the petcoke byproduct the oil sands produce were omitted, even though petcoke’s combustion alone emits more GHG emissions than coal does, elevating oil sands’ lifecycle emissions.⁴

At the time, little Albertan petcoke was finding its way to market, given the long distance to mostly Asian end users and degraded nature of this fuel source. Nevertheless, oil sands operators were required by Alberta law to preserve their carpeted petcoke for future consumption, as something akin to a strategic petroleum reserve.⁵ In other words, none of this petcoke is considered permanently sequestered, even if it is used for reclamation.

The petcoke problem only got worse when fracking took off in North Dakota, after which light tight oil was mixed in to dilute Canadian bitumen (or dilbit). Instead of upgrading bitumen in Alberta and storing petcoke, dilbit slurries were shipped to US refineries, shifting the petcoke problem to Illinois, Indiana, and Texas, where it could be readily exported overseas to places with less stringent environmental protection measures than the United States. Consequently, US petcoke exports, which fluctuate from month to month, have increased 60 percent between January 2012 and 2020.⁶ While petcoke exports declined along with overall oil demands during the pandemic, they shot back up 30 percent between August 2020 and April 2021.⁷

Petcoke is one example of how easy it is for oil and gas sector emissions to hide in plain sight and go unattended. The power of lifecycle accounting is that it can assess each stage in the oil and gas value chain—production, processing, refining, shipping, and end uses. In this chapter, the Oil Climate Index + Gas (OCI+) is used to identify where the oil and gas sector’s GHG emissions are highest and how to reduce them. While there is no silver bullet to eliminate this large climate footprint, numerous opportunities exist to shrink the industry’s intensifying climate risks. This is a hopeful story. There are even more solutions available than we originally imagined.

Parsing Real-World Solutions

Most people do not have a clear sense of where GHG emissions come from. Consumers, especially motorists, have long been told that they are the main culprits of climate change. But full responsibility does not rest on the public’s shoulders. Figure 4.1 shows that, depending on the resource selected and the operations employed, up to half of total lifecycle GHG emissions in some oil and gas categories may be emitted by petroleum producers and refiners themselves. Supply-side oil and gas GHG emissions arise when producers, refiners, and shippers consume fossil fuels in their supply chains, leak GHGs systemwide, operate fields and equipment beyond their useful lifetimes, transfer properties or trade assets to negligent operators, and market dirty byproducts like petcoke and other heavy residual fuels.

FIGURE 4.1 Industry versus Consumer GHG Emissions for Select Oil and Gas Assets

Notes: High GHGs assume 20-year GWPs and low GHGs assume 100-year GWPs. The supply-side GHG numbers for average oil and gas use are sourced from the 2018 International Energy Agency report and the end-use GHGs are sourced from the US Treasury 2017. High-GHG oil and gas include petcoke and LNG shipping in supply-side estimates. Even lower supply-side GHGs using sequestered CO₂ EOR (with negative production GHGs) are not plotted. BOE, barrel of oil equivalent; GHG, greenhouse gas; LNG, liquefied natural gas.

Sources: Author’s estimates, Oil Climate Index + Gas Preview Web Tool, 2020, https://dxgordon.github.io/OCIPlus/; International Energy Agency, World Energy Outlook 2018, https://www.iea.org/reports/world-energy-outlook-2018/oil-and-gas-innovation; John Horowitz et al., “Methodology for Analyzing a Carbon Tax,” US Treasury, Office of Tax Analysis, Working Paper 115, January 2017, https://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/WP-115.pdf

The Origins of Demand-Side Strategies

Wearing a tan sweater, then-president Jimmy Carter gave his first fireside chat two weeks into his administration in February 1977.⁸ He stressed that, in response to the nation’s real energy problem and what he termed its “permanent” oil and gas shortage, Americans needed to make sacrifices to voluntarily conserve petroleum. If citizens just turned down their thermostats and took personal steps to reduce their oil and gas demands, Carter claimed that US energy savings would exceed total energy imports from foreign countries.

These were highly uncertain times for the oil and gas sector amid (temporarily) dwindling domestic supplies and unstable imports. Carter’s energy address—bookended by two supply shocks to global oil markets—convinced my generation to prioritize demand-side petroleum strategies like driving less, biking more, and purchasing more efficient cars.

Like others, I continued to pin my hopes on demand-side oil and gas solutions when climate concerns rose to the fore in the late 1980s.⁹ For example, in 1989, while working at the Lawrence Berkeley National Laboratory, I developed a novel demand-side policy that was the brainchild of my mentor, Dr. Arthur Rosenfeld, the “godfather of energy efficiency,”¹⁰ and his colleague Amory Lovins. Our idea was to offer a special kind of rebate (feebate) to consumers who bought fuel-efficient cars paid for by fees on those who bought inefficient models. This revenue-neutral, self-financing, incentive-based approach was an alternative to raising the gasoline tax, an unpopular disincentive that most politicians shunned.¹¹ The US Environmental Protection Agency (EPA) funded my research, and after a stint at the California Senate Office of Research, I helped craft the bill and find bipartisan cosponsors and sought to get the legislation passed in California. After our DRIVE+ feebates bill passed in the California legislature—but was vetoed by then-governor George Deukmejian—the effort spawned the adoption of similar bills in other states and countries.¹²

Many experts continue to focus on demand-side strategies for achieving the United Nations’ (UN) Sustainable Development Goals (SDGs). The UN, for example, calls for consumers to waste less; use energy efficiently; bike, walk, or use public transportation; recycle; plant trees; and avoid using plastic bags.¹³ The Intergovernmental Panel on Climate Change (IPCC) calls for exponentially lower oil and gas demand (87 percent and 74 percent, respectively) by 2050 to avert the imminent consequences of continued atmospheric warming.¹⁴

Demand-side strategies might have succeeded alone in reducing GHGs in a world where the supply of oil and gas was actually in terminal decline. But up until the 2020 pandemic, oil and gas demand was on the rise globally. Having hit a low in the second quarter of 2020, oil consumption is projected to increase over 20 percent, hitting an all-time high by the end of 2022.¹⁵ Global gas consumption is projected to rise as well. If such demand growth resumes, it will take complementary demand-side and supply-side strategies to reduce oil and gas sector emissions. In other words, it is not enough to battle back petroleum demands; abundant oil and gas availability calls for serious supply-side strategies to combat climate change.

Zeroing in on Supply-Side Strategies

The oil and gas industry has played its hand shrewdly, allowing countless governments and nongovernmental organizations (NGOs) to reiterate Carter’s core message that simply using less will solve the world’s energy (and climate) problems. The problem is that, over the past forty-plus years, global demand for oil and gas has continued to rise, not fall.

This calls for a change in approach. We can no longer wait for motorists to alter their travel behavior and vehicle purchase habits as long as the oil and gas industry sits on the sidelines. Drivers compose just part of the market. Countless consumers worldwide demand a multitude of petroleum products beyond gasoline, including those who fly (jet fuel); order packages for delivery (diesel); heat their homes (heating oil); run factories (fuel oil); generate electricity (natural gas); use cook stoves (liquefied petroleum gas [LPG]); do house renovations (roofs and insulation); pave roads (asphalt); and purchase everyday products like medicine, paint, and fertilizer (petrochemicals).

The oil and gas industry lies at the center of petroleum’s economic appeal and is crucial to reducing petroleum’s climate footprint. The International Energy Agency (IEA) recently underscored this way of thinking when it wrote, “Minimizing emissions from core oil and gas operations should be a first-order priority for all, whatever the transition pathway.”¹⁶ Furthermore, the IEA has identified cost-effective measures to reduce the emissions intensity of delivered oil and gas operations overall by 45 percent by 2030.¹⁷ Further, the IEA assumes three important facts. First, oil and gas are not going away as global populations grow and the worldwide economy expands. Second, oil and gas are integral to existing energy and economic systems. And third, the solution necessarily involves reducing oil- and gas-related GHG emissions in line with international targets.

While there are openings for GHG reductions throughout the oil and gas sector, different industry actors are better positioned to pursue some strategies than others. To be successful, industry actors need to match up with the climate solutions that best suit their strengths. In that spirit, the OCI+ can help identify ways forward for shrinking the petroleum industry’s climate footprint.

Table 4.1 reviews numerous industry strategies (with corresponding OCI+ estimates) that responsible parties can employ to reduce the intensity of GHG emissions—including ones for upstream producers; midstream refiners and processing facilities; and downstream shippers, traders, and retailers. Specific examples are detailed in subsequent sections regarding leading ways to mitigate GHG emissions each step of the way.

Table 4.1 Supply-Side GHG Mitigation Strategies by Industry Subsector

Oil and Gas Supply-Side Strategy	Upstream Companies	Midstream Companies	Downstream Companies	Est. Reduction in GHG Intensity (kilograms of CO2e/BOE)
Leading Upstream Strategies
Eliminate routine gas flaring and venting in production*	X			−210
Use renewable electricity in upstream inputs*	X			−70
Use only manmade (not natural) CO2 in EOR projects	X			−290
Pump and reuse water most efficiently	X			−50
Leading Midstream and Downstream Strategies
Employ green hydrogen in refining		X		−40
Lock up carbon in noncombustible end uses		X	X	−180
Sequester heavy residuals for reclamation and reuse		X	X	−90
Reduce GHG emissions from LNG conversion and shipping		X	X	−120
Leading Lifecycle Oil and Gas Strategies
Decommission legacy assets with highest GHG emissions	X	X	X	−460
Minimize fossil fuel inputs in all oil and gas operations*	X	X	X	> −140a
Employ leak-free equipment in all oil and gas operations*	X	X	X	−130
Operate permanent, leak-free CCS systems	X	X	X	b
Avoid operating in sensitive ecosystems	X	X	X	−170

^a Modeled substituting solar steam for natural gas, but the GHG reduction potential is larger when all fossil fuel inputs are minimized systemwide.

^b Wide range in GHG reductions depending on CCS specifications.

Notes: All values rounded. Strategies not additive because they apply only to individual BOEs of the particular resource modeled, except systemwide actions noted with *. Assumes GWP₂₀ applied (methane = 86), except for decommissioning, which uses GWP₁₀₀.

BOE, barrel of oil equivalent; CCS, carbon capture and storage; CO₂, carbon dioxide; CO₂e, carbon dioxide equivalent; EOR, enhanced oil recovery; GHG, greenhouse gas.

Source: Author’s estimations using OCI+ Preview Web Tool, https://dxgordon.github.io/OCIPlus/

Mitigating Upstream GHG Emissions

There are several promising strategies for cutting GHG emissions from upstream oil and gas production. Four representative examples include eliminating routine flaring and venting, preferentially using renewable alternatives to generate onsite electricity, using only manmade carbon dioxide (CO₂) in enhanced oil recovery (EOR) projects, and reusing and pumping produced water more efficiently.

Eliminate Routine Flaring and Venting

Flaring—the burning of unwanted gas—is an extremely carbon-intensive industry practice. This technique is employed upstream (and elsewhere in the supply chain) to provide backup safety protection if there is too much gas to safely handle and pressure builds up in the system, from wellheads, refineries, and elsewhere. Venting—the intentional release of gas—is a highly methane-intensive industry practice. Numerous devices are designed upstream and elsewhere systemwide through the supply chain to release gas from pipelines, storage tanks, valves, and other equipment, including pressure relief valves, tank hatches, and pressure-sensing (pneumatic) controllers.

Because CO₂ is a less potent GHG than methane, flaring poses less immediate climate risk than venting gas does. Nevertheless, flares are prone to overuse and are often poorly maintained, which can increase methane emissions and black carbon formation. While flaring and venting cannot be entirely eliminated, according to OCI+ calculations, strictly limiting routine flaring and venting in the production process can reduce lifecycle emission intensity by upward of an estimated 40 to 50 percent.¹⁸ This is the case offshore of Norway, where operators routinely reinject their gas rather than flaring or venting it.¹⁹

However, most oil and gas operators or governments do not routinely report the volumes and composition of gas that they flare and vent. Notably, a given country’s flaring and venting practices can shift markedly over time. Between 2014 and 2018, for example, the volumes of gas flared in Libya and Iran increased 62 and 42 percent, respectively, while Kazakhstan reduced its flaring volume by 49 percent, as reported by the Visible Infrared Imaging Radiometer Suite (VIIRS) satellite.²⁰ While volumes of vented gas are not verifiably reported at present, future detection and quantification could be made possible by the presence of more methane satellites, as discussed in chapter 3.

Companies alter their flaring and venting activities due to a variety of factors, including infrastructure, operational, economic, geopolitical, or regulatory situations.²¹ For example, when infrastructure is lacking and there is not sufficient pipeline takeaway capacity, operators may resort to flaring and venting their gas. Or in an attempt to maximize profits, old or malfunctioning equipment like inefficient flares or faulty pressure relief valves remain in place. Likewise, flaring and venting can run amok when local conditions are unstable and careful gas management is difficult due to ongoing disruptions.

Some of these situations, like when local conflicts upset operations, are out of companies’ direct control. Yet cleaner alternatives to flaring and venting do exist. For example, Chevron replaced old, inefficient flares located off the shores of Angola with modern flares; began shipping gas onshore for treatment; and then sent it on to a gas-to-liquid (GTL) plant for marketing.²² Even in places where gas collection equipment is not available, flaring is not the only recourse. In such cases, mobile storage devices can be deployed to gather, move, and empty gas contents into permanent gathering systems. North Dakota operators, for instance, have used mobile storage when no pipelines were available.²³ New efforts are underway to store excess gas underground until it can be used onsite or someone wants to buy it.²⁴

Another solution involves using the captured natural gas to power microturbines. Small, stationary, onsite power-generating sources can supply onsite electricity, provide local power, or supply regional electric utility grids.²⁵ Microgrid technologies can handle gases with wide-ranging compositions, such as wet gas that is rich in ethane or sour gas from high-sulfur fields. That said, microturbines that use these off-spec gases need emission controls to further reduce local air and climate pollutants.

In practice, eliminating routine flaring and venting can make companies money over time, but there is often resistance to spending manpower and laying out capital up front. The onus is often on policymakers to require cleaner solutions. The success of the VIIRS satellite to identify and quantify emissions from flares around the globe highlights the need to monitor, report, and verify whether operators are following best practices or not. This is one of the motivations for deploying a host of new methane and other GHG satellites to identify and promote policymaking.

Use Renewable Electricity Upstream

Drilling, extraction, and surface processing equipment require a lot of energy for heat, steam, and power. Although fossil fuels like diesel, natural gas, and even petcoke have long supplied upstream energy, renewable alternatives are increasingly available. This consideration is even more relevant because many operations are remotely located and renewable energy could be a more reliable option than unreliable power grids.

Norwegian oil and gas platforms in the North Sea, for example, are retooling to be powered by electricity generated onshore from hydropower. This means that natural gas can be reinjected instead of used to generate power, which reduces its lifecycle emission intensity by an estimated 15 percent, according to OCI+ calculations.²⁶ Renewables and low-GHG electricity could also be employed for other uses beyond upstream activities throughout the oil and gas supply chain. Other examples are discussed in more detail later.

Use Only Manmade CO₂ for EOR

EOR operations using CO₂, discussed in chapter 2, are a common way to increase oil mobility and facilitate extraction.²⁷ In 2017, there were nearly 100 EOR projects employing CO₂ worldwide, which produced an estimated 1.6 million barrels per day of oil.²⁸

This practice has been around for decades. Fifty years ago, the first such commercial EOR project in West Texas recovered CO₂ from the exhaust of regional plants that were processing natural gas.²⁹ While the pilot program was technically successful and environmentally beneficial, by the late 1970s, it was replaced by pipelines that gathered CO₂ from natural underground sources in Colorado and New Mexico. Today, using natural CO₂ for EOR is the norm, and natural sources of CO₂ are more commonly used than industrial sources. Existing infrastructure in place to use natural CO₂ makes it cheap and easy to maintain the status quo. Dozens of companies are engaged worldwide in CO₂ EOR, but only a handful of them aspire to be climate leaders and may wholly convert their practice to use manmade CO₂, as discussed later. This is regrettable because the source of CO₂ matters considerably for climate change. After all, the OCI+ estimates that using manmade CO₂ can reduce lifecycle GHG intensity by an estimated 50 percent.³⁰

Collecting and burying manmade CO₂ from waste flue gases or direct air capture can result in net-negative GHG emissions, while dislodging naturally stored CO₂ buried in subsurface reservoirs increases GHG levels.³¹ The former can have major climate benefits. Take the United Arab Emirates, for example, where the Abu Dhabi National Oil Company (ADNOC) currently captures nearly 1 million metric tonnes of CO₂ annually from its Emirates Steel facility, compresses and dehydrates it, and sends it by pipeline for EOR operations at the Murban Bab and Rumaitha oilfields.³² ADNOC’s practice actually decreases CO₂ levels in the atmosphere, while ExxonMobil is essentially removing naturally stored CO₂ and then redepositing it, which does not decrease GHG levels.

Contrast ADNOC’s use of captured manmade carbon, for example, with ExxonMobil’s LaBarge Gas Field in Wyoming that contains 65 percent CO₂ and 21 percent methane (some of the lowest hydrocarbon content of any natural gas produced worldwide).³³ Since 1986, ExxonMobil has produced LaBarge’s highly acidic gas, stripped off its CO₂, reinjected it for EOR, and pumped any excess CO₂ underground. The EPA has implemented a monitoring, reporting, and verifying (MRV) plan to try to prevent CO₂ emissions from leaking and being vented.³⁴ (Admittedly, it is unlikely that ExxonMobil would produce unprofitable LaBarge gas at all if its profitable EOR operations were not located nearby.)

Even though EOR requires significant fossil fuel inputs, if done efficiently using industrial (manmade) sources of CO₂, EOR not only reduces GHG levels but also could spur market uptake of large-scale carbon capture and storage (CCS) by permanently storing CO₂ deep underground in geological formations.³⁵

Reuse and Pump Produced Water More Efficiently

Water exists naturally in oil and gas reservoirs at varying volumes and with different characteristics, depending on geologic conditions. Moreover, some hydrocarbon extraction techniques involve injecting water, which further affects the amount and quality of produced water. Once it is brought to the surface, water must be separated from oil and gas for hydrocarbons to be further processed. Pumping all of this water during oil and gas extraction is also ripe for ecofriendly reforms. Fracking in West Texas’s Permian Basin not only produces oil and gas but also generates an OCI+-estimated 9 million barrels of water per day, enough to fill nearly 320,000 Olympic swimming pools a year.³⁶ While different basins’ water contents vary widely, there are many other waterlogged oil and gas fields worldwide that contain upward of 100 barrels of water for every barrel of oil.³⁷ In fact, the US petroleum industry produces more water than oil, condensates, or gas.³⁸ Entrained water is undesirable in part because it weighs down each barrel of oil and it requires extra energy to lift, separate, and reinject (if regulations allow).³⁹ Pumping water very efficiently can reduce total lifecycle emission intensity by an estimated 8 percent, according to the OCI+.⁴⁰

If produced water cannot be reinjected into the reservoir, contaminants like dissolved salt, grease, and radioactive elements need to be removed before it can be recycled or reused as potable water.⁴¹ However, when such water is reinjected, pumping large volumes of produced water back underground appears to be linked to earthquakes in some places that had never previously experienced them.⁴² This is thought to be the case because reinjecting wastewater increases the pressure exerted on rocks in the reservoir. If faults exist, this can exacerbate underground instability, leading to earthquakes.⁴³

The prevalence with which watery oil and gas are produced is on the rise, so avoiding assets with high water content may not always be practical. As the industry ventures into more complex formations and proliferates unconventional techniques like fracking, and even as conventional wells age, greater volumes and varying-quality water will be produced.⁴⁴ Moreover, efforts are underway to reclaim valuable impurities in produced water to make it profitable. For example, produced water in some shale formations contains lithium, which some producers seek to market for manufacturing rechargeable batteries.⁴⁵ Such breakthroughs could further increase future volumes of produced water and drive up GHG emissions. This trend underscores a pressing need to first install high-efficiency pumps and employ renewable electricity instead of diesel fuel to run treatment equipment.

Mitigating Midstream and Downstream GHG Emissions

There are also many novel ways to cut GHG emissions from gas processing, oil refining, and shipping. Five of the most promising methods include employing green hydrogen, paying a premium for low-GHG crudes, locking up carbon in noncombustible end uses, sequestering heavy residuals for reclamation and reuse, and reducing GHG emissions from liquefied natural gas (LNG) conversion and shipping.

Employ Green Hydrogen in Refining

Refinery operations have not changed much in the past century and are long overdue for a revamp.⁴⁶ But refineries are the workhorse of the industry, churning out millions of barrels of petroleum product each day for constant consumption. They cannot afford downtime to renovate. And if they do, competitors will pick up the slack, yielding profits to other companies. Refineries also operate on low-cost margins (with high volumes), which means that capital expenditures to existing facilities are actively avoided.

Although revamps are not free or easy, refineries can cut their GHG emissions by over half by installing new technology to cogenerate electricity using waste heat, capture carbon from flue gases, and replace steam methane reforming (SMR) with renewable hydrogen.⁴⁷ Emissions savings can add up quickly given that the industry refines roughly 100 million barrels of oil globally each day.⁴⁸

Low-carbon hydrogen production carries a lot of potential for mitigating high GHG emissions since refineries consume a lot of hydrogen. Not only can green hydrogen reduce lifecycle emission intensity by an estimated 8 percent in nearly every refinery but also this shift would provide a bridge to a low-carbon hydrogen economy.⁴⁹ As discussed in chapter 2, hydrogen is currently produced by SMR.⁵⁰ This outdated, GHG-intensive process has been propped up by abundant supplies of natural gas.⁵¹ In refineries that continue to use SMR to generate hydrogen and employ coking to crack oil molecules apart, CCS technologies could further reduce the lifecycle GHG emissions of oil and gas, as discussed in more detail later.

Lock Up Carbon in Noncombustible End Uses

Finding more ecofriendly ways to repackage various byproducts of petroleum refining is another promising avenue for lowering GHG emissions. This task calls to mind a memorable line from the 1967 film The Graduate: “There’s a great future in plastics.”⁵² Fast forward half a century, and today petrochemicals are essential ingredients in all high-tech products and most consumables in everyday life, including plastics, batteries, insulation, and more. Fed by fracking, a practice that has unleashed a bounty of light oils and wet gas, petrochemical businesses are expanding worldwide and finding new uses for condensates and natural gas liquids (NGLs). For over a century, refining has sought to take conventional oil and break it down (using heat, steam, and pressure) into various petroleum fuels. The proliferation of unconventional oil and gas holds out the promise of reconfiguring processes to turn hydrocarbons into durable stuff rather than fuels.

Some ways of packaging such petroleum byproducts carry less of a climate footprint than others. When refined into LPG and gasoline, NGLs are burned as fuels with outsized GHG emissions. But NGLs, natural gas, and even petcoke can also be converted into various noncombustible, durable products, and when they are, their estimated emission intensity can be reduced by some 40 percent, according to the OCI+.⁵³ Take petcoke, for example, which can conceivably be processed into activated carbon to purify water rather than burned as a high-GHG, degraded fuel for electric power.

When it comes to plastics, there is a growing array of types, each with their own lifecycle GHG lifetimes. The more disposable the plastic and the fewer its use, the greater the likelihood of its disposal and disintegration into microplastic particles that pollute the air, land, and water. Although petrochemicals tend to lock in GHGs, some do so more permanently than others. Building insulation, clothing, and paints, for example, tend to have longer lives. Disposable plastic straws, bags, and water bottles, on the other hand, have larger GHG footprints and raise other environmental concerns because they are only used once and produce additional emissions when they are later dumped or burned as garbage.⁵⁴ The climate footprints of plastics are even larger when extra methane is leaked along their supply chains. On the other hand, petrochemicals in paint or insulation have long lifetimes, and if their associated methane emissions are minimized, so are their climate effects.

Sequester Heavy Residuals for Reclamation and Reuse

Reducing the climate effects of especially harmful byproducts of heavy oils like petcoke is a high priority. Residual byproducts (like petcoke) always seem to accompany oil and gas, and some of these residuals are of higher quality (with lesser climate impacts) than others. Since petroleum flows in such large volumes, residuals build up quickly, making it difficult to safely dispose of undesirable buildups. Markets handle these castoffs by setting prices low enough that someone, somewhere will buy them. But not everything should simply be burned, especially substances that impose undue environmental harm like the excess carbon being wrung from the world’s heaviest oils.

As for petcoke, although it is too polluting to be burned in wealthy Western countries, it is often exported to less affluent nations and blended with coal to generate dirty power.⁵⁵ Combusting petcoke emits CO₂, black carbon, particulate matter (PM), and sulfur oxides, which pollute local air, break down into toxic organic aerosols, and raise average global temperatures. Petcoke also contains toxic heavy metals like vanadium and nickel. Keeping a lid on all these harmful effects by permanently sequestering all of the petcoke a barrel of Canadian oil sands produces would, based on OCI+ projections, reduce this resource’s GHG emissions by a level nearly equivalent to a barrel of conventional oil.⁵⁶

Alberta’s high-sulfur bitumen makes an especially damaging form of fuel-grade petcoke.⁵⁷ Other heavy oil suppliers and refiners in Venezuela, California, and Texas also market fuel-grade petcoke.⁵⁸ Global reserves of extra-heavy oil and bitumen are so large that the best long-term solution would be to either develop in situ production techniques that keep the carbon in the ground and produce only gas or renovate refineries to add green hydrogen rather than coke heavy oil and eliminate petcoke altogether.

Reduce GHG Emissions from LNG Conversion and Shipping

Trimming the emissions generated by LNG would be another step in the right direction. While oil travels around the globe, gas has historically remained closer to home for local and regional end uses.⁵⁹ In 2000, roughly 80 percent of natural gas was consumed locally where it was produced, and the rest traveled to select destinations via regional pipelines.⁶⁰ But gas volumes are increasing in regions that cannot use it all, are stuck with unreliable regional pipeline infrastructure, or can obtain higher prices elsewhere. These market forces create incentives to ship gas farther, even across oceans.

But the climate footprint of LNG is quite substantial. In 2018, 430 billion cubic meters (44 percent of total international gas trade) was liquefied in the form of LNG and moved by ocean tankers.⁶¹ This trend has major implications for climate change. Pipelines are still required to move gas to coastal areas where it is then liquefied and kept very cold while in transit—an energy- and climate-intensive operation. Moreover, regasifying LNG upon arrival and moving it to its ultimate destination via pipelines (or trucks) further elevate risks of methane leakage.

Whether LNG is shipped over short distances (Algeria to Spain) or 100 times farther (Norway to China), the GHG emissions associated with liquefaction dominate its climate footprint.⁶² By comparison, compressed pipeline gas has an estimated lifecycle emission intensity that is 20 percent lower than that of LNG shipped by ocean vessel.⁶³ While climate safety may dictate that gas remain a regional fuel, the prospects of more compressed pipeline gas are dim because pipelines are fixed and limit whom gas can be marketed to. Dirtier LNG, on the other hand, offers flexible, long-distance trade that markets can arbitrage with the goal of raising gas prices.

Mitigating GHG Levels throughout the Supply Chain

There are ways to cut supply-side GHGs that apply equally as well to all industry operations regardless of whether companies produce, process, refine, or transport oil and gas. Four promising approaches that should be pursued include decommissioning high-GHG-producing legacy assets, minimizing fossil fuel inputs in oil and gas operations, employing leak-free equipment, and avoiding operations in sensitive ecosystems.

Decommission Legacy Assets with the Highest GHG Emissions

Once-plentiful petroleum resources in long-used fields, plays, and formations can deplete over time, and the consequences can be considerable. Just because oil and gas keep trickling out does not mean that the energy benefits of such resources always outweigh their climate costs, especially as time goes on. Emissions tend to increase as resource deposits are depleted, as the characteristics of a field change, and as equipment ages.⁶⁴

Aside from the host of other variables that affect petroleum’s climate footprint, there is another: the age of (and remaining deposits left in) the field it is taken from. Take the case of Brent—the internationally recognized oil basket that benchmarks the pricing for around 70 percent of all global crudes.⁶⁵ This namesake UK oil field in the North Sea has seen better days. It no longer produces the light, sweet oil that made it famous. Today, Brent produces four times more gas and NGLs than oil,⁶⁶ and its gas quality has degraded so much that producing a barrel of Brent gas emits excessive volumes of CO₂ and methane. Decommissioning the Brent site and replacing it with a new, low-emitting gas asset would reduce lifecycle climate intensity by over 50 percent, according to the OCI+’s findings.⁶⁷

Other aging oil and gas fields worldwide can have similar climate tolls as their deposits deplete. Brent is a prime example of why emissions must be tracked on an ongoing basis. Accurate accounting requires temporal data collection and periodic reassessments to update findings on climate intensities and GHG inventories. Updated records on GHG emissions should be factored into deciding when the lifecycle of a given site’s oil and gas assets should end and should inform when fields are shut down and attending facilities are decommissioned—processes for which adequate funds should be set aside at the outset.⁶⁸

Minimize Fossil Fuel Inputs in All Oil and Gas Operations

As previously mentioned, petroleum companies shoulder high energy costs and generate substantial GHG emissions from fossil fuels even before their end products go to market. Such vertical integration, whereby a company owns and supports its own supply chain, is a testament to the highly profitable genius of John D. Rockefeller. But this lucrative model imposes heavy negative externalities, a burden that is poised to grow even more as unconventional hydrocarbons are unearthed.

In response, the oil and gas industry can substitute alternative sources of renewable energy in place of its hydrocarbon inputs. For example, concentrated solar arrays are being installed in petroleum patches to generate steam to extract heavy oil in places like California and the Middle East.⁶⁹ Utilizing solar energy instead of natural gas saves money and cuts the emissions intensity of production.⁷⁰

The industry can leverage renewable energy even more in additional production and refining operations.⁷¹ Not only would doing so cut lifecycle emission intensity by over 20 percent, based on OCI+ projections, but also such investments could help cross-train the industry’s workforce to install and maintain equipment for solar, wind, and other renewable energy sources.⁷² Such technology reassignments also would infuse large sums of capital from the oil industry into renewables within their own operations, facilitating the transformation of twentieth-century petroleum companies into twenty-first-century energy companies.

Employ Leak-Free Equipment in All Oil and Gas Operations

Although oil and gas infrastructure is ideally designed to be composed of entirely closed systems, it can still unintentionally spring leaks. Aging, widespread, remote, complex, and costly infrastructure is not always economical to fix because these GHG emissions are not priced into the company’s bottom line. In other words, the valves, seals, pumps, controls, and other equipment needed to plug up old infrastructure can cost more to fix and replace than the companies would recoup in product sales. The advent of fracking has exacerbated this problem because these operations are smaller and less capital intensive, and have shorter lifetimes because production is expected to decline more quickly than in large-scale oil and gas projects.

Preventing fugitive emissions now is a high priority in process design. Employing safer, leak-free equipment—such as that used in refineries where leaks can cause explosions and fires—could prevent the release of gases in both upstream and downstream oil and gas operations, saving an estimated 14 percent in lifecycle emissions intensity, according to the OCI+.⁷³ These efforts will be increasingly important if the fracking boom experienced in the United States and Canada picks up in other countries like Mexico, the United Kingdom, Poland, Russia, China, India, and Australia.

Beyond climate concerns, fracking operations are also being contested on other grounds, including water quality, air quality, truck traffic, soil contamination, agricultural damage, earthquakes, cancer morbidity, and other public health problems.⁷⁴ Fracking bans are on the rise.⁷⁵ And greater gas production from fracking also risks renewable energy uptake in electricity production, where gas competes head to head with solar and wind energy.⁷⁶

Still, fracking is drawing needed attention to the oil and gas industry’s sizable methane emissions. Some scientists believe that the recent spike in global methane emissions is coming from US oil and gas fracking.⁷⁷ Others estimate that, over the past decade, North America has contributed more than one-third of the total increase in global methane emissions.⁷⁸ Fortunately, compared to many other supply-side oil and gas climate strategies, reducing leaks (especially fugitive emissions) is feasible, affordable (sometimes even profitable), and only getting easier.⁷⁹

Operate Permanent, Leak-Free CCS Systems

CCS entails removing man-made CO₂ from the atmosphere or industrial waste streams and permanently storing it underground.⁸⁰ (Additional efforts are underway to find other uses (beyond underground storage) for the CO₂ that is removed.⁸¹ Repurposing one industry’s captured carbon and supplying it to others in efficient, ecofriendly ways is the goal of the circular economy.) CCS is part of a larger effort known as carbon dioxide removal (CDR), which includes biological carbon removal, direct air capture, and other technologies.⁸² CDR technologies, if applied successfully to achieve net-zero emissions (permanent reductions in atmospheric CO₂ levels), are thought to be a major backstop that will ultimately be needed to prevent catastrophic rises in global temperatures.⁸³

The resulting GHG savings can vary widely, depending on the resource in question and the operations involved. For example, comparing identical fields, one where manmade carbon is captured and the other where it is not, is estimated to cut total lifecycle GHG intensity in half, based on OCI+ data.⁸⁴ By contrast, if Saudi Arabia’s Ghawar Oil Field were to offset its own production GHG emissions, CCS would reduce its lifecycle emissions intensity only by an OCI+-estimated 4 percent.⁸⁵

The oil and gas industry already employs many CCS-related techniques from pump systems and pipelines to subsurface analysis and EOR using CO₂. Companies are conducting CCS pilot programs—using various techniques like reinjecting gas in offshore production, CCS-equipped refining, and CCS by cement and fertilizer plants. Although CCS has gotten a lot of recent attention, these practices date back decades and have been bolstered by government research and development and investments.⁸⁶

Oil companies are not only funding CCS demonstrations but also working on other climate (geo)engineering techniques. The petroleum industry thinks these technologies can offset oil and gas GHG emissions and extend the lifetime of its operations. If a global price on carbon materializes, the industry could also profit handsomely from CCS. In other words, CDR and other geoengineering efforts⁸⁷ could become industrial policy that is largely the purview of the oil and gas sector.

Avoid Operating in Sensitive Ecosystems

As they say in real estate, three things matter most: location, location, location.⁸⁸ Likewise, the particular location of oil and gas development matters because certain natural ecosystems are at higher risk of damaging the climate. Biomes like the Arctic and rainforests carry high climate risks when dirt paths give way to wider paved roads, followed by electrical lines and traffic lights. Streams and rivers are dredged to accommodate barges. Coastlines are altered and dredged to build shipping terminals. And natural habitats are impacted when mangroves, wetlands, and swamps are lost.

Some oil and gas deposits are buried in ecosystems where the terrain—rainforests, boreal peat bogs, and permafrost-laden tundras—sequester GHG emissions. Removing petroleum resources amid rising global temperatures can disrupt sensitive ecosystems and release climate-forcing gases. Take Russia’s Yamal Peninsula, for example, which has a landscape pockmarked with craters that explosively open, venting CO₂ and methane.⁸⁹ Likewise, petroleum operations in the rainforests of the Amazon, Sumatra, and other similar places threaten sensitive ecosystems that boast more biodiversity than anywhere else on the planet.⁹⁰ Unlike the harsh environment in the Arctic where oil and gas development is difficult and the required infrastructure tends to be isolated, seasonal, and small scale, rainforests are wet and warm year-round, which allows developers to deforest broad areas of land.⁹¹

Typically, oil and gas drilling is estimated to have minimal climate impacts over the equipment’s lifetime.⁹² However, initial development in the Arctic or rainforests can carry large climate intensity penalties that are some twenty times greater than those in less sensitive ecosystems.⁹³ Avoiding sensitive ecosystems can reduce upstream emissions in these fragile locations by an estimated 0.3 tonnes for each barrel of oil equivalent (BOE) of oil and gas produced.⁹⁴ When methane and CO₂ releases are factored in, as permafrost melts and soil is disrupted, oil and gas operations in sensitive ecosystems could trigger feedback loops with large climate impacts.

Additional Supply-Side Strategies

Aside from the mitigation measures discussed previously, there are numerous other strategies to further reduce supply-side oil and gas GHG emissions. Table 4.2 presents a sampling of additional measures and identifies which oil and gas actors these changes would involve. It will take the full complement of supply-side strategies to meet the Paris Agreement’s goals to mitigate the effects of climate change.

Table 4.2 Other Supply-Side GHG Mitigation Strategies by Affected Actor

Oil and Gas Supply-Side Strategy	Upstream Companies	Midstream Companies	Downstream Companies	Government	Civil Society
Increase fracking efficiencies	X
Increase efficiencies of ultradeep drilling	X
Electrify processing equipment	X	X
Utilize excess gas in microturbines	X	X
Produce low-GHG synfuels from CCS		X	X
Minimize petrochemical super pollutants		X	X
Use lifecycle GHG shadow price to plan projects	X	X	X
Compensate employees for low-GHG performance	X	X	X
Prohibit venting of methane and CO2	X	X		X
Use underground in situ petroleum conversion	X	X		X
Generate steam with solar energy	X	X		X
Install cogeneration capacity	X	X		X
Collect and report standardized assays	X	X		X
Collect and report speciated gas compositions	X	X		X
Set carbon price (low-GHG oil/gas premium)		X		X
Require climate-operating best practices	X	X	X	X
Couple vehicle electrification with refining		X	X	X
Report GHGs on operating and equity basis	X	X	X		X
Update GHG reporting and use current GWPs	X	X	X	X	X
Transparently disclose/digitize data collection	X	X	X	X	X
Disclose climate risks caused by companies	X	X	X		X

CCS, carbon capture and storage; CO₂, carbon dioxide; GHG, greenhouse gas; GWPs, global warming potentials.

Sources: Author’s estimations. For additional strategies, see Figure 2 in Deborah Gordon and Stephen D. Ziman, “Petroleum Companies Need a Credible Climate Plan,” Carnegie Endowment for International Peace, November 2018, https://carnegieendowment.org/files/Gordon_Petro_Companies_Need_Climate_Plan_Nov2018.pdf

Cumulative Mitigation Potential of Supply-Side GHGs

Reductions in GHG emissions throughout the petroleum supply chain can contribute meaningfully to climate change mitigation goals. Studies cite potential emissions savings as great as 160 gigatonnes (Gt) carbon dioxide equivalent (CO₂e) from oil production,⁹⁵ plus 50 Gt of CO₂e from oil refining by 2050.⁹⁶ Factoring in gas (based on its relative consumption levels compared to those of oil) adds an estimated emissions savings of 100 Gt of CO₂e by 2050. Altogether, this would entail a total of possible emissions reductions from supply-side oil and gas operations amounting to over 300 Gt by 2050.

Compare these numbers to the total levels of global GHG emissions. By 2100, cumulative emissions from fossil fuel combustion and industrial processes worldwide (which have been accumulating since the preindustrial period in the mid-1800s) are projected to reach 2,700 Gt of CO₂e (see Figure 4.2). The IPCC, the UN-affiliated body tasked with formulating recommendations on climate mitigation measures, has called for emissions reductions of nearly 50 percent (from 2017 levels) by 2030 and carbon neutrality by 2050 to limit the earth’s average temperature rise to 1.5 degrees Celsius (°C).⁹⁷ Reaching this goal reportedly would require a reduction of approximately 1,900 Gt of CO₂ in all energy-related emissions by the end of the twenty-first century.⁹⁸

How much can the oil and gas sector itself contribute to this goal? Notably, experts’ ability to quantify the scale of emissions from supply-side oil and gas operations worldwide continues to evolve. Greater industry transparency can help experts and other stakeholders improve their knowledge and grasp solutions more readily. There is still work to be done on this front. Nevertheless, ample opportunities do exist for reducing the petroleum sector’s climate footprints. The OCI+ team as well as many other researchers, including experts at the IEA, are working to quantify the potential for reductions in the oil and gas sector’s supply-side GHG emissions.⁹⁹ It is estimated that the oil and gas industry could reduce its annual GHG emissions by some 4 Gt by 2025 and by nearly 9 Gt by 2040.¹⁰⁰ Table 4.3 provides more details.

Table 4.3 Oil and Gas Sector GHG Mitigation Strategies and Estimated Emissions Savings (2025 and 2040)

Mitigation Strategiesa	GHG Baseline (Gt)	Mitigation Potential (%)	GHGs Savedd (Gt)	Comments
Minimize methaneb (2025)	4.4	−45%	(1.9)	Masnadi, Science 2018
Minimize methaneb (2040)	6.8	−75%	(5.1)	IEA −50% at no net cost
Eliminate CO2 ventingc	0.2	−50%	(0.1)	Author estimates, OCI+
Renewables/electrificationc	2.6	−40%	(1.0)	Author estimates, OCI+
Reduce LNG emissionsc	0.4	−75%	(0.3)	Assume 2× by 2040
Industrywide CCS (2025)	2.9	−25%	(0.7)	Overlaps with electrify ops
EOR using CO2 (2020)			(0.2)	IEA WEO 2018 estimate
CDR, CCUS, and EOR using CO2			(2.4)	IEA estimate
No petcoke combustion (2025)	0.2	−100%	(0.2)	Oil & Gas Journal estimate
Renewable hydrogen (2040)	0.4	−100%	(0.4)	Relates to petcoke ban
2025 GHG Mitigation Potential			(3.7)	Sum 2025 strategies
2040 GHG Mitigation Potential			(8.6)	Sum 2040 strategies

CCS, carbon capture and storage; CCUS, carbon capture utilized but not stored; CDR, carbon dioxide removal; CO₂, carbon dioxide; EOR, enhanced oil recovery; GHG, greenhouse gas; GWP, global warming potential; IEA, International Energy Agency; LNG, liquefied natural gas; OCI+, Oil Climate Index + Gas; WEO, World Energy Outlook.

Sources: International Energy Agency, World Energy Outlook 2018, Chapter 11, https://www.iea.org/reports/world-energy-outlook-2018/oil-and-gas-innovation; OCI+ Preview, 2020, https://dxgordon.github.io/OCIPlus/; Oil & Gas Journal, 2018 Worldwide Refining Survey, https://www.ogj.com/ogj-survey-downloads; Masnadi, Science, 2018, https://science.sciencemag.org/content/361/6405/851.summary; Jing, Nature Climate Change, 2020, https://www.nature.com/articles/s41558-020-0775-3.

^a Certain mitigation strategies overlap, so to avoid double counting, they are not considered additive.

^b CO_2e from methane corrected for twenty-year GWP (=86).

^c These actions assume 2025 and 2040 timeframes.

^d Figures may not add up to 100% due to rounding errors.

As such, the potential mitigation potential of 9 Gt CO₂e in the oil and gas sector by 2040 corresponds closely with the IEA’s sustainable development scenario, which over the same timeframe calls for estimated cuts of 11 Gt of CO₂ from all oil and gas emissions sources.¹⁰¹ This mitigation potential represents a 35 percent reduction in projected 2040 oil and gas sector emissions.¹⁰²

Figure 4.2 gives a sense of how readily supply-side oil and gas GHG reductions may be able to help close the gap between business as usual and the IEA’s Sustainable Development Scenario (SDS) over the near term and the long term. Through 2100, measures undertaken by oil and gas suppliers are estimated to result in considerable cumulative emissions reductions, as represented by the shaded areas in the figure between the top black line (business as usual) and the bottom dotted line (SDS).¹⁰³ Efforts to accomplish the remainder of cumulative emissions reductions (depicted as the white space above the SDS curve) will be dependent on CDR technologies and demand-side strategies, especially coordinated efforts to support a long-term, comprehensive, clean energy transition.¹⁰⁴

FIGURE 4.2 Cumulative Oil and Gas GHG Reductions from Near-Term and Long-Term Supply-Side Measures

CO₂e, carbon dioxide equivalent; GHG, greenhouse gas; IEA, International Energy Agency; OCI+, Oil Climate Index + Gas. Sources: Author’s estimates using the OCI+. See Table 4.3 for assumptions.

Influencing Oil and Gas Supply-Side GHGs

The deployment of supply-side oil and gas measures to reduce emissions can produce rapid, durable GHG savings over the next few decades. Such measures are a high priority. They can buy time for longer-term supply-side mitigation measures to be developed, for demand for hydrocarbon-intensive products to shift, and for a worldwide energy transition to ramp up.¹⁰⁵

Tools like the OCI+ illuminate how stakeholders can successfully reduce the climate risks that oil and gas pose. The long list of tasks to be accomplished includes helping investors make realistic asset valuations and helping industry devise sound infrastructure plans, guiding policymakers to set standards and price GHGs accurately, and giving civil society actors the information they need to advocate for and offer incentives for industry to make wise energy choices. Specific supply-side mitigation efforts entail assessing corporate GHG emission reports that currently rely on self-reported data and methods that companies choose without sufficient third-party verification.¹⁰⁶ And the OCI+ can highlight when companies move to transfer their dirtiest assets to other, less responsible operators to wipe them off their books.¹⁰⁷ Supply-side mitigation efforts also involve projecting climate risks from future oil and gas investments so that infrastructure can be evaluated in terms of its climate fitness and so it can be stress-tested before capital commitments are made. The OCI+’s ability to help validate and project emissions levels will be instrumental as humans and the petroleum products they use push the earth closer to its climate warming limits.

Supply-side oil and gas GHG mitigation strategies present opportunities to target select industry assets controlled by thousands of companies rather than focusing mainly on the demands of billions of consumers worldwide. Oil and gas industry actors (a diverse group) are the topic of the next chapter. Success on one given front—one asset operated by one company in one country—may not be easily replicated globally. As such, it will be critical for experts and decision makers to use the OCI+ to assess and prioritize supply-side oil and gas mitigation measures while simultaneously advancing plans on demand-side measures that reduce oil and gas consumption. Evidence-based strategies offer a prudent way to shrink this key sector’s massive climate footprint.