Most energy use is essential, and the world still struggles to displace coal
Global GHG emissions have set new highs in recent years due to increased energy consumption driven by industrial, transportation, and heating/cooling needs. Most energy used is essential. This is highlighted by the mild decline in energy consumed during the Covid-19 pandemic, when most non-essential travel was restricted.
Access to energy has historically translated into economic well-being, fueling progress, growth in GDP, and betterment of the human condition. About 80% of the global primary energy supply is driven by fossil fuels. However, the dynamics of oil, gas, and coal vary across regions and evolve over time.
In each major area where coal has been reduced in use, natural gas acted as the main displacement fuel. Although in some areas of rapid energy demand growth, such as China and India, where coal provides the most economic and secure source of energy, its use has grown to outpace the displacement in other parts of the world. China’s use of coal today is equivalent to the entire energy supply basket of the U.S.
U.S. as a leader in the supply of low carbon oil and gas
Oil has been a global commodity for decades and, with increased use of LNG, gas is becoming one of equal weighting. With the projected continued use of oil and gas as primary sources of energy for decades to come, and likely increased use of natural gas, reducing the associated upstream emissions is a foundational step toward a more sustainable future.
The U.S. oil and gas industry is one of the most dynamic worldwide with the necessary resources, capabilities, and infrastructure to continue to contribute to the global energy security. The technological leadership of U.S. producers has progressed efficiencies globally, and with the increased emphasis on producing low carbon oil and gas, the U.S. is well-positioned to lead in this field.
The importance the U.S. upstream sector decarbonization
The U.S. oil and gas has prioritized HS&E (Health, Safety, and Environment) for decades and has worked diligently to reduce worker injuries and environmental impact of operations, though focus on air emissions has never been more active. As this report demonstrates, work has already commenced on the “low hanging fruit” and there is still much to be accomplished.
The trade-offs around production vs. air emissions impact, is one of planning and working with partners and regulators to ensure product can reach markets and efficiency is maintained and grown. Some basins have faired better than others. For example, gas flaring has subsided nationwide, however, work needs to continue to eliminate unnecessary flaring. Same applies to natural gas pneumatic devices and equipment leaks – and investments in technology to minimize these sources of emissions payout in more than monetary ways.
Harder areas for the industry to abate do exist in the face of combustion equipment. Though a shift toward the use to natural gas instead of diesel has been a meaningful one, and electric fleets are making progress, drilling and completions, operational power needs, and compression will continue to demand and consume a lot of energy. Full electrification, though possible, comes with challenges of grid reliability and competing demands with other end users. The electricity used must also come from lower carbon sources.
Therefore, it is crucial to comprehend the emission trends, key contributing sources, and unique challenges of each producing basin within the U.S. onshore production sector. This understanding enables operators, investors, and industry stakeholders to make informed decisions regarding the reduction of upstream’s environmental footprint, both in the short and long term.
What types of solutions does ESG Dynamics provide clients in environmental analysis and research?
We offer our clients solutions with custom benchmarking projects, in-depth data research and analytics into specific areas of interest, and basin or portfolio-wide studies of environmental trends. Reach out to us today to discuss your needs.
