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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Premium energy basins provide oil and gas as well as upstream decarbonisation opportunities
11/9/2024
News
A select few basins hold the potential for upstream players to decarbonise while continuing to meet oil and gas demand, reports Rystad Energy. However, the race to decarbonise hinges on three crucial factors: accelerating investment, overcoming geographical challenges and modifying existing infrastructure. These changes are essential for unlocking the full potential of these basins and for upstream players to achieve their decarbonisation targets.
Despite the accelerating energy transition, oil and gas will remain central to the global energy mix for the foreseeable future as the key hydrocarbon sources continue to satisfy global primary energy demand, which is projected to exceed 650 EJ in the coming years. Indeed, Rystad Energy estimates that by 2030, more than 75% of total demand will still be met by fossil fuels, with emissions climbing as a result. A significant portion of these emissions will originate from upstream activities, particularly hydrocarbon extraction and gas flaring. Approximately three-quarters of these emissions will be linked to the hydrocarbon extraction process, while the remaining quarter will result from gas flaring. The market analyst expects this to contribute around 1.1bn tCO2e annually over the next few years.
‘This underscores the continuing importance of hydrocarbons, while also highlighting the need for oil and gas companies to build sustainable portfolios and reduce their Scope 1 and Scope 2 emissions to meet medium and long-term targets,’ says Rystad. ‘As upstream organisations work to transform into integrated energy players and decarbonise their operations, it is crucial not only to achieve transition goals but also to minimise the carbon footprint of upstream activities, with extraction of these resources accounting for more than 800mn tCO2e every year.’
As investors and governments intensify their focus on carbon-reduction goals, identifying basins that can help lower the overall emissions impact is becoming increasingly important. Premium energy basins (PEB) – a term coined by Rystad Energy – are defined as being rich in hydrocarbon reserves and offering decarbonisation potential. ‘They provide an ideal platform for addressing emission challenges by combining substantial hydrocarbon volumes with opportunities for incorporating low-carbon solutions to reduce overall emissions,’ says the market analyst.
Rystad analysed PEBs based on their availability of remaining hydrocarbon resources, development cost, emissions and the availability of new energy sources such as wind and solar, together with their suitability for carbon storage.
It reports that the Central Arabian and Rub Al Khali basins stand out as carbon-efficient, resource-rich basins with significant potential. ‘These Middle Eastern basins are at the forefront of PEBs and play a pivotal role in global conventional discovered volumes, especially as global discoveries decline and exploration activity peaks. Separately, these basins also score highly in terms of renewable potential, with both offering more than 6.2 GW combined of installed and upcoming solar capacity,’ it says.
Since 2015, these two basins have contributed approximately 40bn boe in newly discovered volumes, evenly divided between liquids and gas. Egypt’s Nile Delta, driven by Eni’s giant Zohr gas discovery in the Mediterranean Sea, ranks third with about 5bn boe discovered during this period, followed by the US Gulf Deepwater (3.7bn boe) and the Central Asian Amu-Darya (3.6bn boe) basins.
Rystad Energy reports that the Rub Al Khali, US Gulf Deepwater and Central Arabian basins have seen the highest greenfield investments since 2000, with combined capital expenditure of $638bn. Due to the vast volumes discovered, the unit cost of development in the two Middle Eastern basins has been under $2/boe. In contrast, the smaller average resource size in the exclusively offshore US Gulf Deepwater Basin has driven development costs to over $9/boe, with only the Viking Graben Basin ($11/boe) in north-west Europe having a higher development cost. Significant investments have also been made in resource development in Brazil’s Santos Basin ($153bn) and Australia’s North Carnarvon Basin ($140bn).
Fig 1: Premium energy basins, in bn boe
*Remaining economically recoverable resources as on 1 January 2024
Source: Rystad Energy’s Upstream Solution, September 2024
Several PEBs are reported to offer significant potential for carbon storage, particularly in late-life or abandoned oil and gas fields, which are suitable for enhanced oil recovery or permanent storage. These basins are increasingly being utilised for carbon capture and storage (CCS) due to their geological properties. Deep-seated saline aquifers are especially promising, notes Rystad, with the US Gulf Deepwater Basin leading the way among PEBs in CO2 storage potential, boasting 750 Gt of saline aquifer capacity.
