Turning the Titanic by Differentiating Oil and Gas Climate Footprints

Public scrutiny on oil and gas keeps intensifying. Beyond today’s wars and price shocks, these fossil fuels have outsize climate footprints. But just how large those footprints are depends heavily on which oil or gas a buyer chooses, as new RMI research shows. And the differences between individual resources provide immediate opportunities for emissions reductions. Our research also shows how focusing on the emissions from oil and gas combustion to the exclusion of supply chain impacts can lead to significant undercounting of fossil fuel emissions.

RMI just released the Know Your Oil and Gas (KYOG) report and open-source Oil Climate Index plus Gas (OCI+) web tool, which assess emissions from half of the world’s oil and gas supplies with unparalleled transparency. This work provides important climate intelligence that operators, policymakers, investors, and civil society need to turn the sector’s titanic-sized emissions.

Oil and gas emit 70 percent of total energy sector greenhouse gases (GHGs) — significantly more than coal. But no two resources are exactly alike. Emissions stem from production, processing, refining, transport, and end uses. As a result, life-cycle emissions intensities vary by as much as a factor of five from the lowest- to highest-GHG oil and gas. Even when two resources have the same total emissions, the climate drivers can differ markedly. Methane, for example, is a potent GHG that leaks excessively from some oil and gas systems — and it is raising the Earth’s temperature to new heights.

RMI’s new data, available through the OCI+, shows why it pays to know your oil and gas. RMI uses a series of open-source models to estimate GHG emissions throughout the supply chain, from production through end uses, or from the “barrel forward.”  The models take publicly available operational and satellite data as inputs (Exhibit 12). With this approach, the KYOG report and OCI+ web tool offer emissions transparency that can facilitate climate decision-making. As countries strive to meet the climate targets set under the Paris Agreement and the new Global Methane Pledge (announced at COP26), there are ample near-term opportunities that industry, investors, policymakers, and civil society can take to better evaluate and reduce oil and gas emissions.

Exhibit 1: OCI+ Model Schematic

Current Emissions Factors Undercount Emissions

The US Environmental Protection Agency (EPA) assigns a single emissions factor to an equivalent barrel (boe) of oil or gas based on its average carbon content. A standard barrel of oil is reported to emit 434 kilograms of CO2 equivalent (kg CO2e), and an equivalent barrel of gas is reported to emit 315 kg CO2e. In reality, however, most of the assessed oil and gas fields around the world have life-cycle emissions intensities in excess of these EPA emissions factors (Exhibit 2). Focusing on combustion emissions associated with the carbon content can significantly undercount total life-cycle emissions of oil and gas. The OCI+ offers a more robust way to assess the highly variable life-cycle emissions of different oil and gas resources. More accurate emissions assessments facilitate government cost-benefit analysis, support regulatory controls, value companies based on their performance, and inform operational decisions.

Exhibit 2 : Life-Cycle Emissions Intensities of Most Oils and Gases Are Greater Than EPA Emission Factors

Cutting Methane Is the Highest Priority for the Oil and Gas Sector

The planet’s temperature is rapidly rising toward the 1.5°C threshold scientists warn could unleash the worst impacts of climate change. Recent studies pinpoint methane as a critical climate forcer. The oil and gas sector is a major source of human-made methane emissions, and avoiding the release of this powerful pollutant has a significant climate benefit. Targeting methane reduction is the highest priority for the oil and gas sector, which accounts for an estimated one in four tons of methane emitted globally from all human-made sources each year.

Some oil and gas resources and operations are leakier than others (Exhibit 3). On average, methane accounts for over one-half of upstream oil and gas operational emissions in the 135 fields modeled.

The International Energy Agency estimates that a 50 percent cut in methane from oil and gas is possible at no net cost, and a 70 percent reduction is possible with today’s technology. The variation in methane leakage rates for different fields modeled in the OCI+ highlights the importance of breaking out methane emissions on top of carbon dioxide emissions so that mitigation strategies can be tailored to different global resources.

Methane Plays a Large Role in Driving Upstream Emissions

Differentiating Oil and Gas Emissions Drives Actionable Climate Opportunities

Equipping operators, policymakers, investors, and civil society with greater climate intelligence allows stakeholders to target emissions reductions through better design and maintenance, rules and regulations, lending practices, and public engagement.

The OCI+ offers critical insights about the climate risks from different resources, including:

  • Extra-heavy and heavy oils emit high amounts of CO2 in their extraction and refining.
  • Light oils, wet gases, and coal bed methane typically leak the most methane.
  • Depleted oils and gases require fossil fuel-intensive enhanced recovery methods.
  • Gases with high CO2 composition (acid gas) typically vent significant carbon dioxide.
  • Resources that contain or inject large water volumes require fossil fuel-intensive pumping and separation methods.

The scenarios section of the OCI+ web tool explores a dozen strategies to reduce GHG emissions through various segments of the oil and gas supply chain. Near-term emissions savings in this critical sector can add up quickly given the massive volumes delivered each day.

The Benefits of Greater Transparency

The oil and gas climate intelligence uncovered by the OCI+ and its accompanying report, demonstration videos, and articles supply much-needed transparency in a sector marked by too little information and too many self-reported claims. The climate challenges we now face underscore the need for open-source, peer-reviewed, standardized data. We cannot manage what we do not measure. As we work to transition to clean energy sources, we must act swiftly to reduce emissions from today’s oil and gas resources that are flowing through the global economy.

Access the OCI+ web tool and download the Know Your Oil and Gas report for insights on the oil and gas industry’s hidden emissions, and contact senior principal Debbie Gordon at dgordon@rmi.org for a briefing on how the web tool and report can inform journalistic research, industry action, and policymaking.