Oil and gas field operations are increasingly being fueled by renewable energy, which NYSE-listed IHS Markit says is a "surprising source".
New analysis done by IHS shows that oil and gas companies are starting to use zero-carbon sources to reduce carbon emissions associated with their operations.
“There is a striking pace of growth over the past few years and a dynamic commercial environment for delivering renewable energy to oil and gas operations,” says IHS Markit upstream energy executive director Judson Jacobs.
He adds that energy efficiency efforts and reductions in flaring can “only do so much” to lower greenhouse-gas emissions. This means that some companies are turning to zero-carbon sources to power their upstream, midstream and downstream operations.
While the numbers are small, the company avers that they have been growing rapidly over just the past couple of years, as there had been fewer than 15 of these renewable energy projects from the early 2000s, when the industry first deployed such technologies, through 2017.
IHS's research shows that there are now more than 45 announced projects in its oil and gas field-based renewable energy database, with 13 announcements made in 2018 and 15 made in 2019.
Projects announced in 2018 and 2019 are expected to avert more than three-million metric tons of carbon dioxide emissions a year combined.
Deployments are occurring in both new developments and at existing assets, with solar the most prominent renewable technology, followed by hydropower and wind.
Several factors beyond emissions reduction are also driving the growing interest for renewables in oil and gas operations, Jacobs says, noting that “stakeholder pressure to reduce emissions is a factor” and that “it is also about steeply declining costs for renewables and the industry’s growing familiarity and experience with these technologies”.
According to Jacobs, there are also tangible improvements to operational performance that go along with using these technologies.
Field-based renewable installations are demonstrating reliability and electrification removes most energy generation equipment entirely, enabling fewer on-site personnel to operate it and smaller facility footprints, IHS says, noting that additional benefits include reduced maintenance expenses and the elimination of fuel deliveries to site.
While the company expects the number of field-based renewable energy projects to continue to accelerate in the coming years, it says “several challenges must be overcome before widespread adoption” can take place.
Some of these include the cost, relative to traditional energy generation sources, the development of supply chains in remote regions, and energy storage for intermittent renewable sources.
“North America and Europe, where renewables deployments have been most prolific to date, are still growing,” says IHS research analyst Minuri De Silva, who notes that other conducive regions such as the Middle East, Latin America and Asia are also poised for greater adoption as they address technical and commercial issues.
“The growth potential is significant.”