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a) We have agreed to share best practice in this area. We will review ongoing GHG reduction programmes across the industry. These include the voluntary Flare Consents Pilot and the UK Emissions Trading (ACBE-CBI) Scheme, in which our industry is playing a significant role
b) Several UKOOA companies are also involved in European Union efforts to establish viable processes to reduce methane emissions and capture or sequester CO2.
c) We will examine other potential areas for action and, with a fuller understanding of the issues, review the potential for developing an industry-wide approach for end 2001.
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Section a)
The multi-partner operations typical of the industry encourage the transfer of good practice and this is reinforced through the exchange of information within the numerous UKOOA technical committees, in this case most particularly the UKOOA Atmospherics Workgroup and the UKOOA Facilities Committee. Industry GHG reduction programmes have centered on two areas - the Flare Consents Pilot Scheme and the UK Emission Trading Scheme (see boxes below).
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BOX 1: The UK Voluntary Flare Consents Pilot Scheme
Flaring represents around 30% of the offshore industry's CO2 emissions (5.5m tonnes CO2). During 2001, the industry participated in the voluntary Flare Consents Pilot Scheme. 11 companies participated in 2001 involving 63 offshore fields, representing some 45% of UKCS production. The companies involved agreed targets averaging 10% below consents levels. The scheme led to successes in reducing GHG emissions. Actual flare volumes released in 2001 (across the industry) were 12.5% less than 2000. The scheme will continue to run in 2002. Other projects were initiated by non-participants in the pilot scheme and these were successful in reducing flaring by a similar amount.
The overall success of the industry in reducing gas flaring in spite of rising production is shown in the table below.
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See Graph below: Recent history of UKCS offshore gas flaring (by volume)
In addition to the Flare Consents Pilot, a number of member companies were involved during 2001 in discussions concerning the UK Emissions Trading Scheme (ETS). This led to both BP and Shell, the largest UKCS operators, making successful bids into the UK ETS and hence into reduction commitments. Only operators were allowed to bid into the scheme, but BP and Shell have secured agreements with over 30 partners indicating a high degree of cooperation across the sector. Thus a significant part of the sectors GHG emissions is capped and subject to incentives to reduce emissions. The industry can now participate in this pioneering application of market-based mechanisms.
UKOOA is also following the evolution of the proposed mandatory EU scheme, which is under discussion within the EU with a view to becoming operational in 2005.
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BOX 2: UK Emissions Trading Scheme
The ETS is a voluntary national scheme and the first of its kind in the world. It seeks to reduce GHG emissions via a cap and trade system. Participants have made absolute reduction commitments against their emissions in 1998-2000 in exchange for an incentive payment. The UK ETS was launched in March 2002. The auction established total UK reduction targets across all the industries involved of over 4 million tonnes CO2 over the period to 2006.
The scheme formally commenced on 1st April 2002. It will run for 5 calendar years, 2002 - 2006 inclusive, and involves some 34 UK companies (including BP and Shell in the offshore oil and gas sector). The ETS has already had some success in that it has required companies which enter to have their emissions independently verified - this is imposing a measurement and recording discipline which has previously been reserved for oil and gas product streams. The incentive monies provided by the government are also leading to an increased technical focus on energy efficiency.
For details see:
http://www.defra.gov.uk/environment/climatechange/trading/auction.htm
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Section b)
Methane emissions
(Link to 5-year performance graph in Introduction)
Methane emissions are of particular concern to the industry because methane is a significant GHG with 21 times the effect per weight of CO2. However, offshore methane emissions are a minor contributor to anthropogenic emissions accounting for only 6% of UKCS GHG (CO2 equivalent) emissions.
Industry methane emissions are primarily from venting but can also occur from leaks. At the time of this commitment the EU had been looking into European methane emissions (see the OGP web site). The EU concluded that the offshore industry was not a large contributor - the greatest quantities come from agriculture, refuse tips and marsh land - and that most practical measures offshore had already been taken.
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BOX 3: Methane Emissions
The EU study found that the total technical reduction potential of all the options amounted in 2010 to about 120Mt CO2 equivalent. The areas of potential significant reductions were identified as:
- Landfill management: 67Mt CO2 equivalent, by waste gas collection/utilisation landfill and alternative waste treatment.
- Natural gas distribution (and other onshore oil and gas activities): 26Mt CO2 equivalent by reducing fugitive emissions from natural gas transportation.
- Agricultural sector: 14Mt CO2 equivalent by improvement of fodder, better treatment of animal manure.
- Coal mining: 9Mt CO2 equivalent.
See www.europa.eu.int for more details
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Carbon capture and sequestration
A number of companies are reviewing the technology for CO2 sequestration, which involves a number of techniques one of which is the separation of CO2 and pumping it into mature oil and gas reservoirs, both increasing recovery of oil & gas, and moving the CO2 underground. Many complex issues are still involved in making this technology a commercial reality in the North Sea.
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BOX 4: CO2 Capture
A number of UKOOA member companies are participating in a Norwegian project to move CO2 to underground geological formations. In this, the first case of industrial scale CO2 sequestration in the world, CO2 has been injected in the Sleipner field in the North Sea since 1996. CO2 is injected into the Utsira formation and data is being collected to evaluate the potential for subsurface CO2 storage. Currently around 1 million tonnes of CO2 is injected per year.
Six UKOOA members, BP, ChevronTexaco, Shell, Agip, PanCanadian, and Statoil support the CO2 Capture project (CCP). This is aimed at developing new breakthrough technologies to reduce the cost of CO2 separation, capture and geologic storage from combustion sources such as turbines, heaters and boilers. The project will do this by:
- performing benchtop research and development,
- developing guidelines for maximising safe geologic storage, measuring volumes and assessing storage risks,
- developing an economic model for establishing lifecycle CO2 separation/ capture/ sequestration costs for current and best technologies to help direct research into the most potentially effective areas,
- making available new technologies to industry via publications. A web site and commercial services.
The CCP project emphasises collaboration with governments, industry, NGOs and other stakeholders in recognition of the fact that challenges associated with global climate change require solutions that are economically and socially acceptable. From the work done to date reductions in cost of some 50% appear possible - this would allow CO2 capture on a large scale. Already the capture and storage of CO2 is viable under advantageous conditions where there are low cost sources near suitable sinks in a regulatory environment that gives a high value to carbon.
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Section c)
The potential for developing an industry-wide approach to GHGs has been discussed within UKOOA during 2001, with now a greater understanding of the issues and the full complexity of such an undertaking. A major study project has now been designed jointly with an independent policy institute and funding is being sought. This will develop a methodology for a holistic consideration of the industrys GHG output (and other emissions and discharges) and potential abatement measures. The scoping for this project has already involved gaining an understanding of some of the areas of energy use by the offshore industry and the study will be looking at the major areas from turbine use on platforms and FPSOs, to reinjection of produced water, to the energy involved in decommissioning. (See also Commitment No.55 - Energy Efficiency)
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Sustainability Strategy Commitments
