Oil and gas sector leading the way emissions technology investments from 2000 to 2014
Since 2000, the oil and gas industry has invested more capital in carbon emission technologies than the automotive, electric utilities and agriculture processor sectors combined, according to a new study commissioned by the American Petroleum Institute (API).
From 2000 to 2014, the oil and gas industry has privately invested approximately $90 billion to emission technologies. The total represents nearly 30% of total United States investment, which stands at about $303 billion. The federal government set an emissions spending benchmark for the peried at $110 billion.
In a conference call addressing the study, Jack Gerard, President and Chief Executive Officer of the API, said, “This study demonstrates how market-driven, private-sector leadership can achieve public policy goals more quickly and more efficiently than government programs and mandates.”
Contributing to the EPA’s Clean Power Plan
The dedicated capital has decreased methane emissions in hydraulically fractured wells by 79% since 2005, along with a 38% emission reduction in natural gas production overall. The improvements led to emissions from the electric power sector reaching a 27-year low in April 2015, according to data from the Energy Information Administration (EIA). Interestingly, April 2015 also marked the first time natural gas generated more electricity than coal. Overall, natural gas has increased its stake in power generation to 31% compared to 22% in April 2010.
Analysts at Sanford C. Bernstein & Co. believe implementing the Clean Power Plan will lead to an additional 10% increase in national natural gas demand, coupled with a 23% drop in coal consumption by 2020. The shift to natural gas was a factor in C02 emissions growing at their slowest rate since 1998, according to the 2015 BP Statistical Review of World Energy.
Innovation Beyond Extraction
The industry’s ability to quickly respond to government measures is evident in the Williston Basin. In 2013, various reports arose that Williston producers with tunnel vision on oil production were flaring off natural gas at alarming levels. The North Dakota Industrial Commission stepped in, and producers responded. Flaring levels dropped to 19.6% in December 2013 compared to about 33% in July 2013, and continue to drop.
In July 2015, Lynn Helms, Director of North Dakota’s Department of Natural Resources, said data in April 2015 was already approaching goals the state had set for year-end. In an exclusive interview with Oil & Gas 360®, he mentioned major midstream investments and further initiatives taken by the industry is leading to the state reaching its 85% gas capture goal by January 1, 2016.
Other methods, including hydrocarbon floods, can be used to enhance existing operations, but some are uneconomic in current market conditions. The Western Governors’ Association in particular is confident that advances in enhanced oil recovery can further reduce emissions.
Companies like Synergy Resources (ticker: SYRG) have purchased state-of-the-art cameras that measure emissions from well sites. In June 2015, six major oil companies petitioned the United Nations to issue a carbon tax on hydrocarbon development. Two of North America’s largest producers, ExxonMobil (ticker: XOM) and Chevron (ticker: CVX), did not sign the petition but are also proactive in addressing emission reduction. XOM has been implementing a carbon proxy price in its business plan since 2007, while CVX is the largest renewable producer among all oil and gas companies.