4 Ways Oil & Gas Companies Are Electrifying Operations to Reduce Emissions

Sustainability is one of the most important goals for any company today. Oil and gas businesses face even more pressure than most, given the sector’s significant contributions to greenhouse gas (GHG) emissions. Despite that historical precedent and the industry’s reputation, many companies are embracing emissions reductions.

Oil and gas operations account for 15% of all energy-related emissions globally. Addressing that carbon footprint in an industry inherently reliant on fossil fuels can be complicated, but electrical equipment provides a path forward. Here’s four ways companies in this sector are reducing emissions through electrification.

1.   Electric Drilling and Refinery Equipment

Drilling and refining operations account for much of the industry’s emissions. Many of these processes rely on outdated fossil fuel-powered or pneumatic equipment, making them ideal for electrification.

Many oil wells use pneumatic pumps that self-regulate by periodically releasing methane into the atmosphere. Consequently, switching these pumps for electrical alternatives can dramatically reduce emissions from the extraction process. Some companies have eliminated nearly 40% of their corporate scope emissions by electrifying these processes alone.

Similarly, oil and gas refineries can use electric coils instead of fossil fuel systems to provide heat. Implementing electrical heat recovery systems can make this equipment more efficient by capturing and reusing waste heat. As a result, even if refineries’ electricity comes from fossil fuels, the resulting emissions are still lower than a more conventional approach.

READ: Electrifying Oilfield Operations to Reduce Emissions at BPX

2.   EVs in the Supply Chain

Supply chain emissions are another critical issue oil and gas companies must address to become more sustainable. Transportation accounts for 28% of GHG emissions in the United States, so electrification yields significant carbon footprint improvements.

Electrical vehicles (EVs) have already become common in consumer circles, but long-range commercial EVs are growing as well. Electric trucks today have ranges up to 250 miles and more than 500 horsepower equivalent, making them viable replacements for diesel trucks for last-mile deliveries. EVs will become more practical as this technology advances, enabling more fleet electrification.

Electrification is coming for ships, too. Electrifying marine transportation will substantially reduce GHG emissions for offshore oil operations and transoceanic transport. These innovations may not be accessible now, but they’re rapidly approaching viability.

3.   Embracing Renewables

Oil and gas companies must consider their electricity source as electrification increases. Most electricity today comes from fossil fuels, limiting electrification’s emissions reduction potential. However, some businesses are switching to renewables, enabling zero-carbon electrification.

Major players in the industry are investing billions of dollars in renewables, adding dozens of gigawatts of renewable capacity over the next few years. In some areas, these investments replace fossil fuel production, but in others, it’s powering extraction and refinery equipment. In either case, they make electrification even more sustainable.

Many oil and gas facilities are ideal use cases for renewables. Offshore oil rigs can easily capitalize on hydropower and offshore wind, and gas wells in remote areas have access to ample sunlight for solar power. Consequently, organizations in this industry may be able to transition to renewables faster than some other sectors.

4.   Improving Emissions Visibility

Some oil and gas companies emphasize emissions visibility in their transition to electrical equipment. Because electric alternatives to conventional systems often have more digital capabilities, they make it easier to track sustainability data. Collecting and analyzing this information can enable more effective sustainability improvements.

Tracking energy expenditures and waste is one of the most impactful examples. Some companies have saved more than $15 million by tracking steam usage. Monitoring these factors closely lets businesses see where and how to improve their operations to use less energy, producing fewer GHG emissions.

Electrical equipment also enables Internet of Things (IoT) functionality. IoT systems can respond to equipment data in real time and adjust their operation to use less energy. These adjustments may be small on an individual scale, but they add up to significant savings over the course of a year.

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The Challenges

Despite the opportunities and improvements, electrification in the oil and gas industry faces several challenges. The most straightforward of these obstacles is that it comes with high upfront costs. In addition to the initial expense of buying electrical equipment, businesses must manage the disruption of removing old equipment and installing new alternatives, incurring losses from lost productivity.

Electrical equipment also introduces concerns over material availability. Roughly 30% of global nickel production comes from Indonesia, and the U.S.’s main nickel mine is closing in 2025. Nickel-dependent EV batteries and other equipment are prone to supply chain disruptions and price fluctuations as a result.

Mining these materials may also limit overall sustainability gains. Every ton of mined lithium produces 15 tons of CO2 emissions, and wastewater from these operations can endanger the surrounding environment. Consequently, embracing electrification as a sustainability initiative can lead to misdirected environmental projects or accusations of greenwashing.

The Future of Sustainability

While these obstacles are concerning, they don’t mean electrification can’t be an effective goal for oil and gas companies. Rather, they highlight areas the industry must consider in its sustainability transition.

Furthermore, oil and gas businesses can embrace supply chain visibility along with electrification initiatives to ensure they don’t create more emissions in one area to counteract savings in another. Investments in electrical equipment must also be spread out to minimize the economic impact and improve ROIs.

Eventually, the oil and gas industry may have to abandon fossil fuels altogether. Surviving amid that shift means learning how to become a provider of green energy rather than focusing on making dirty power cleaner. Immediate steps are still necessary, but considering these long-term changes is crucial.

With the industry’s carbon emissions being too high to ignore and in light of growing climate concerns, companies within the sector must embrace sustainability, which begins with electrification as a promising step.

These use cases highlighted specify how oil and gas companies are working to become more sustainable with their operations. Organizations that actively continue these investments while keeping larger long-term changes in mind and accounting for electricity emissions can maintain profits while protecting the environment.

READ: INSIGHT REPORT: 5 Key Operational Pathways to Accelerate Industrial Decarbonization