The costs and benefits of carbon abatement technologies for regulated sectors

January 2011


Project funders/partners: SNIFFER, Scottish Environment Protection Agency, Northern Ireland Environment Agency, Environment Agency, Irish Environmental Protection Agency, and UK Petroleum Industry Association.

The oil and gas sector is one of the UK’s largest industrial producers of greenhouse gas (GHG) emissions. In order to meet future national emissions reduction targets, there is significant incentive to identify and promote the most cost-effective carbon abatement technologies applicable in this sector to reduce GHG emissions. In this study, this sector is defined as being split between onshore production, onshore oil and gas processing (“upstream”) and subsequent oil refining (“downstream”). The aim of the work is to identify and then rank low carbon techniques and technologies in terms of both investment costs and benefits. These techniques and technologies represent best practice with respect to energy use and reduction of GHG emissions. The results have been incorporated into a spreadsheet tool for use by regulators.

The vast majority of GHG emissions in this sector relate to CO2 emissions, with a relatively minor contribution (tonnes of CO2 equivalent) from methane and nitrous oxide emissions. However, particularly in the upstream oil and gas sector, CO2 emissions include flaring of excess methane and other light hydrocarbons, and recovery of this material has additional value in terms of offsetting fuel use, or in improved raw material resource efficiency. Carbon abatement technologies can also have important synergies in terms of improving other aspects of environmental performance, such as SO2 releases to air.

Individual carbon technologies have been identified based on prior consultancy and engineering work undertaken by Jacobs Consultancy, reference to sector case studies, and discussions with equipment and software vendors. Jacobs recognised that in the current economic climate many companies are focussing on operational improvements, rather than larger capital projects. This study addresses (1) techniques that can be applied to give smaller GHG emissions reductions but at low investment cost, and (2) technologies that give more of a step change in GHG performance, but generally require much higher capital investment.

Once identified, the individual carbon abatement techniques and technologies have been ranked relative to each other based on a set of scoring criteria. These criteria include the size of GHG emissions reduction achieved, the anticipated capital investment, the expected payout time, and other potential synergistic and environmental benefits.

The applicability of each of the individual carbon abatement technologies to several other industrial sectors has also been evaluated. These sectors are power generation, chemicals, pulp and paper, landfill, water supply and cement.

Due to the focus on cost effectiveness, the most attractive carbon abatement technologies for the oil and gas sector were found to be those which:

In upstream industry, recovery of light hydrocarbon gases as either product or fuel is one of the most attractive strategies for reducing CO2 emissions. This invariably requires some level of compression, either through the use of flare gas ejectors or through mechanical compression.

In the downstream industry, losses of hydrocarbons to flare are generally much lower, but flare gas recompression for use as fuel can still be cost effective.

The most cost-effective carbon abatement techniques and technologies outside of product recovery are those that achieve CO2 emissions reductions as a result of energy savings. This is unsurprising, as energy consumption represents a major operating cost to the oil and gas sector. Consequently there is a large economic incentive for industrial sites to reduce energy consumption, irrespective of additional CO2 emissions incentives. Typically in downstream refining, energy-related CO2 emissions represent 70% of total GHG emissions, and this percentage is often higher in upstream facilities.

Most of the techniques and technologies for operational energy savings are well known and established. Good housekeeping and best practice procedures include activities such as insulation improvements, steam trap maintenance, fouling monitoring, regular furnace and boiler audits, heat exchanger cleaning and general monitoring and reporting of utility usage. “Software” techniques for improving energy performance include advanced process control, energy “dashboards” and online utility optimisation systems. Typically, combined savings of 3-5% in energy and associated CO2 can be achieved through operational improvements.

Aside from major compressor drives, power consumption within the oil and gas sector is generally of less importance than thermal heating requirements, especially in refining. That said, use of variable speed drives and high efficiency motors is generally attractive economically, even though the total percentage saving in site energy use is quite small.

Refinery energy performance is dominated by heat recovery levels and heating requirements for distillation. Capital investment options range from improving the performance of existing equipment and minor upgrades, to major revamps.

The technologies offering the largest reductions in CO2 emissions in a single project generally relate to the combined production of both heat and power, through the use of steam and gas turbines. Cogeneration of heat and power requires very large capital investment, but can give a step reduction in site CO2 emissions. Often the return on investment of such projects can be enhanced by alleviating process bottlenecks or avoiding capital investment elsewhere in utility infrastructure, such as when existing steam boilers are due for replacement.

Most oil and gas facilities have an excess of low grade heat, and, hence, waste heat export can be very attractive if there is a large “heat sink” in the neighbourhood. Waste heat export to local industrial sites and for district heating can lead to very large savings in overall CO2 emissions.

Improvement in the efficiency of hydrogen use within refineries, and technologies to recover liquefied petroleum gas (LPG) and heavier hydrocarbon components from refinery fuel gas, can also be economically attractive, but they only lead to a reduction in overall CO2 emissions if the marginal fuel has a lower carbon content than the hydrocarbon material recovered.

Fuel substitution (switching to lower carbon fuels) offers significant potential for reducing CO2 emissions in the downstream oil refining sector, although market forces often favour the use of higher carbon fuels. Refiners in particular are constrained from a fuel balance perspective by the need to consume internally produced off gas streams.

The main focus on renewables in the refining sector is for reducing the carbon footprint of the motor fuels through biofuels blending, with very little use of renewables in utility production or process heating. This is largely due to the use of by-product liquid and gas fuels in boilers and furnaces, with little potential for co-firing of solid biomass fuels.

Key words: carbon abatement, oil and gas, refining, energy reduction, emissions reduction

Copies of this report are available from the Foundation, in electronic format on CDRom at £20.00 + VAT or hard copy at £25.00, less 20% to FWR members.

N.B. The report is available for download from the SNIFFER Website