G r e e n t e c h n o l o g ie s f o r u p s t r e a m o il a n - PowerPoint PPT Presentation

G r e e n t e c h n o l o g ie s f o r u p s t r e a m o il a n d g a s AOGC, KUALA LUMPUR SESSION CREATING DISRUPTION, MANAGING RISKS JUNE 24 ND , 2019 JARAND RYSTAD RYSTAD ENERGY

Global GHG emissions: Energy 62%; Oil&Gas 37%, Up-midstream: 6% 2

Upstream CO 2 footprint range from 6 to 104 kg CO 2 /barrels produced CO 2 Emission from upstream activity KG CO 2 per bbl 104 Norway has 23 had CO 2 tax since 1990. 19 18 13 11 8 6 Middle East North North Offshore Other Offshore Middle East offshore American Norway American deepwater onshore shelf Onshore shelf Shale Oil sands 3

Sources of CO 2 emission; example from Norway Motors – 2% 0.1% Other* 2% Flaring – 6% 1% Flaring 2% 1% Turbines Turbines Motors 74% 11% 3% Production, platform Exploration Rigs/Drillships Transport/onshore (82%) rigs (1%) (4%) (14%) *E.g. boilers, well testing, minor leakages Source: Norsk Olje and GassNPD; Rystad Energy research and analysis 4

Sources of CO 2 emission; example from Norway Motors – 2% 0.1% Other* 2% Flaring – 6% 1% Flaring 2% Injection Turbines Export 9 % 74% compression 1% 12 % Turbines Motors 11% 53 % 3% Power: 50% water injection 25 % 25% gas compression Compression 5% oil export 20% utilities Production, platform Exploration Rigs/Drillships Transport/onshore (82%) rigs (1%) (4%) (14%) *E.g. boilers, well testing, minor leakages Source: Norsk Olje and GassNPD; Rystad Energy research and analysis 5

Floating wind farms to feed power to five giant platforms in Norway • 11 turbines each 8 MW • 35% of power demand • Reduce emissions by 200,000 tonnes per year • Equinor 6

Floating offshore wind projects. A huge market if prices comes down 7

Surplus power could produce H 2 for back-up power and feed vessels 2021: First H2 vessel Source: Maritime forening Sogn og Fjrodane consider to create H2 cluster around a concept as this 8

Renewable power from shore big potential, ideally as HVAC • If onshore powersupply is renewable, electrification of offshore platforms has a high emission reduction potential • Long distance HVDC conventional solution, since HVAC creates reactive effect harming source grid • However; long distance HVAC, if enabled, has benefits – Avoid converter stations, as many platforms do not have deck space – FPSOs with turrets cannot take HVDC • Equinors Martin Linge (start Q1 2020) is world record long distance HVAC with 163 km from shore – Enabled by new Static Var compensator (Siemens) absorbing reactive power before grid access 9

Compact topside CCS to capture CO 2 from exhaust and inject • Compact topside CCS to capture CO2 from the exhaust gas from turbines on a platform • Self contained power system: Secures green supply of power and heat • Captured CO2 disposed in the injected water. (CO2 levels too small for CO2 EOR) • Dependent on easy access to exhaust gas and available deck space – pose challenges to brownfield retrofits 10

Reduce CO 2 emissions through direct seawater injection from seafloor • Water injection drives 40% of emissions from turbines • Avoid topside lifting and treatment of water reduce power consumption (and capex) • Full pilot as Ekofisk currently with NOVs Seabox 11

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Globally, reduced flaring will have the biggest impact 10.4 Emission from flaring, by segment globally KG CO 2 per bbl (55%) (share of total upstream emissions) 7.7 6.6 (34%) (35%) 4.1 3.8 (25%) (35%) 2.4 (40%) 1.1 Norway has had CO 2 tax 0.5 since 1990. Norway has (1%) (6%) been focusing on flaring reduction through digitalization since 2014 and reduced emissions further by 39% versus rest of world 9% Norway North Middle East Offshore Other Offshore North Middle East America Offshore deepwater onshore shelf America Onshore Oil sands shelf Shale 13

Methane leakages significant both upstream, midstream and downstream 14

OGCI addressing methane leakage – ambition similar to CO 2 New members 20 kg Co2 per boe in upstream. Assuming 0.32% methane leakage = 0.4 kg methane Next two decades, climate effect is 84 times (33 kg) (heat absorbance), or 32 times (13 kg) whwn looking at all effects 15

The next step is to invest in renewables – cost getting competitive 16

Offshore wind projects are getting bigger and bigger 12 MW turbine sits 260 metres high with a 220 metre rotor diameter Use picture of Petronas Towers 35 m 270 m 35 m 17

Solar PV also go offshore: Dau Tieng 1&2 in Vietnam; 450 MW Dau Tieng 1 & 2 Capacity: 450 MWp Developer: B.Grimm (Thailand) EPC: PowerChina Huadong Tracking: Fixed CAPEX: 545.84 MAUD (387 MUSD) CAPEX per MW: 0.86 USD/MW Full load hours: 1800 Capacity factor: 0.1 Operational cost: USD 4 mill/year (30 workers) Production per year: 800 GWh Lifetime production: 2.4 TWh Lifetime Cost: 500 MUSD Cost per kwh: 21 cent

Renewables investments to surpass upstream investments in Asia Pac USD billion invested in Asia Pac (excluding China, including India) 70 60 50 40 30 Upstream oil and gas investments in 20 new fields 10 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 19

Renewables investments to surpass upstream investments in Asia Pac USD billion invested in Asia Pac (excluding China, including India) 70 60 Investments in renewables 50 40 30 Upstream oil and gas investments in 20 new fields 10 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20

But first – shale is the biggest disruption - could take 25% market share Global production of liquids and gas Thousand barrels per day Source: Rystad Energy UCube 21

Energy financing to change; Shale - a step on the road The offshore megaproject era The shale oil and gas era The renewables era 1970 – 2015 2015 – 2035 2035 – 2100 Large projects, bespoke Well by well, industrialized farming Plant by plant, manufactirung USD 1 – 10 billion USD 5 – 50 million USD 10 million – 10 billion 30% – 50% equity 5% – 15% equity 80% - 85% equity 15% - 20% debt 50% - 70% debt 85% - 95% debt Finance by oil companies Finance by PE and funds + operational Fiannce by pension funds and banks cash + asset sales primarily Subsurface risk, project risks, Less subsurface risks, project risks and Often governmentall guaranteed sales market risks, upside potential risks market risks, production can be hedged contracts and limited project risks 90 60 18 Offshore Shale Renewables 22

…and geopolitical consequences follows The OPEC+ era The shale oil and gas era The renewables era 1970 – 2015 2015 – 2035 2035 – 2100 A few countries controls large One nation, USA, controls up to 25% of global Solar, wind and storage will be energy resources. US care about energy resources. build in all countries. Switch from energy security and it is a key oil to electricity and gas in element in foreign policy. Energy security no longer key driver in US transportation. Many smaller foreign politics. Self confidence to enforce energy markets rather than one Nations collapse with the oil sanctions on Iran, Venezuela and Russia global. price, e.g. Soviet union and Venezuela Less focus on building and maintaining Energy dominance less important international institutions like WTO. US in geopolitics. US influence will Middle East and Russia prosper isolationism legtimace similar policies elsewhere. decline. A more balanced world. from energy dominance Opens up a space for China, Russia and others. Trade, technology and cooperation matters Middle East and Russia shift to east for markets 23

THANK YOU Jarand Rystad CEO Rystad Energy jarand.rystad@rystadenergy.com Oslo, Singapore, Dubai, Tokyo, Sydney, Bangalore, Moscow, London, New York, Houston, Rio, Stavanger, Aberdeen, Ålseund Consulting: Strategy, Benchmarking; Market research; Transaction DD, Macro Databases: Upstream (Ucube), RigCube, OilService, Subsea, Shale wells; Shale your oil & gas knowledge house Economics; Global E&P, Carbon Footprint 24

And resources are abSolar full load hours 25

Wind onshore full load hours 26

Offshore wind market potential North West Europe East coast US and China Canada Japan - Few projects in the medium term Buenos Aires - No planned Bass Strait projects - Star of the South 27

Peak oil demand however, very relevant Peak oil supply movement – dead? -0.9% pa -1.6% pa -2.2% pa -2.6% pa -2.7% pa -3.1% pa 28

Simulation without OPEC+ cuts (back to Oct 2016 levels) and with shale Global demand and supply Million bbl/d 4 years cycles if uninterupted Source: Rystad Energy Dynamic Oil Price Simulation Model 29

Simulation with active OPEC+ market mgmt; Steady oil price at 65 – 85 USD/bbl Global demand and supply Million bbl/d Source: Rystad Energy Dynamic Oil Price Simulation Model 30

However; OPEC+ needs to cut very deep – will they do? 31

Hybrid situation; OPEC+ cuts for a while, but also pushing market share (in 2021) Global demand and supply Million bbl/d 2021/22 Downturn? Source: Rystad Energy Dynamic Oil Price Simulation Model 32