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Aug 07, 2023

Powering oil and gas production through the energy transition: a four

T he energy transition can be a source of angst for oil and gas producers, but

The energy transition can be a source of angst for oil and gas producers, but it doesn't have to be a cause for concern – at least not in every context. In fact, when it comes to powering oil and gas production assets which are typically reliant on diesel power generation; developments driven by the transition can be a boon to the balance sheet.

What's more, these benefits can be achieved with incremental investment, and don't necessarily require significant capital investment. This can help ease the strain on stakeholder temperaments and Opex and Capex budgets alike.

Our four-phase approach to decarbonising oil and gas production progresses from efficiency maximisation, through transitioning to gas, and introducing renewables.

The process starts with small but mighty changes in a producer's power generation set-up. In fact, it's not even necessary to switch away from diesel to start seeing major gains. Within this step, there are three non-exclusive ways to improve efficiency and reduce emissions while saving money.

The first is ‘rightsizing’. In many hydrocarbon production scenarios, generators are intentionally oversized to make sure they can cope with motor starts and high load periods. The result is that they often run at less than 30% load – an expensive and inefficient way to guarantee uptime. However, modern solutions can nudge that figure as high as 80% without compromising reliability or uptime, saving on fuel and emissions.

One technique is ‘mechanical rightsizing’, which involves coupling a smaller generator with flywheel technology. The flywheel system delivers high-power energy during increasing load steps by deploying excess energy captured during decreasing load steps. Similarly, energy storage technology achieves a similar end with a smart battery hybrid solution – at very low loads the battery can even handle the power output entirely, allowing generators to shut off completely for a period, increasing efficiency.

Alongside rightsizing, ‘load-on-demand’ solutions can be extremely effective at driving efficiency. This is a modular approach whereby one large generator is replaced by a cluster of smaller generators that can automatically power up or down depending on load requirements. For example, in a scenario where a peak output of 1,500 kVA is needed, three 500 kVA generators can replace a single 1,500 kVA generator. When full capacity is required, all three can run at full capacity, but at other times, one or two of the generators can be switched off, saving fuel, emissions and noise pollution.

Finally, supplementary technology can be installed on generators to reduce emissions directly. By attaching a selective catalyst reducer and an oxidation catalyst to generators, up to 99% of controlled emissions can be cleaned, helping to reduce carbon footprints even further.

Deploying one, two or all three of these approaches can slash emissions and fuel costs versus business-as-usual approaches, without even thinking about switching fuel.

Of course, fuel switching is a powerful way to reduce emissions. Natural gas emits up to 40% less CO2, 80% less NOx, and 99% less SO2 than diesel, meaning a lower carbon footprint and reduced air pollution locally. Once a producer has reduced emissions from existing infrastructure as much as possible, the logical next step is to look into gas.

In the past, this was a fairly daunting thing to do – more of a leap than a step. Switching to gas might have involved connecting to or building new gas infrastructure as well as upgrading gensets. However, by breaking down the transition into smaller steps, this process can become more gradual and manageable.

Associated petroleum gases are a golden opportunity in this regard. Traditionally these are vented or flared – it is seen as too complex and expensive to utilise this resource for powering operations. However, the economic scales have been tipped by rising diesel prices, stricter flaring, venting and emissions regulations, and falling costs for associated technology.

Now, expert engineers can survey a producer's site to identify where gas can best and most easily be captured. Then, the gas can either be piped around the site with small-scale gas distribution infrastructure or converted to power and distributed into the site's microgrid.

Crucially, this approach doesn't require wholesale switching out of diesel generators to work. Limited volumes of gas can be blended with diesel to incrementally reduce fuel costs and emissions according to the producer's specific economic requirements.

Once a producer is satisfied with a blended gas-diesel approach, it can begin to consider fully transitioning to gas at a time of its own choosing. For instance, often producers find that some of their sites don't produce enough gas to switch fully, and others produce a surplus. A simple solution, if economically feasible, is to link the sites with gas distribution infrastructure.

That isn't the only solution, however. Virtual pipelines may well prove to be a key enabler for the energy transition, and allow gas to be easily and cost-effectively transported by road and rail in the same way as diesel, allowing producers to move their own gas between sites, or simply buy it in the exact same manner as they do with diesel. The breakthrough in this process has been cost-effective equipment for capturing and converting gas to LNG at source for transportation, as well as re-gasification equipment at the other end.

Of course, in the fortunate scenario where the producer still holds an excess of gas after fully transitioning their own power-requirements, there is then an economic opportunity in the surplus. The gas can be sold via virtual pipeline to power-hungry operations such as mines, data centres and even cryptocurrency mining businesses. Alternatively, it can be converted to power and sold directly into local grids when appropriate.

In any conversation about the energy transition, renewables need to come in somewhere, and oil and gas production is no exception. This is the final step, though it can actually be made anytime, complementary as it is to the others.

Hybridising generation systems to include traditional and renewable sources (plus batteries) means that the transition can be made incrementally. Battery and energy storage systems give greater power quality and resilience while also improving efficiency and saving fuel consumption and emissions.

Typically, this set-up involves adding solar (though wind is also a possibility for some) and batteries to a traditional gas or diesel generator. Solar can power operations during bright periods and store excess in the battery for use in darker ones. The generator is there to pick up any slack or deal with peak loads, but maximum fuel and emissions savings are made by using the solar and batteries whenever possible.

A good time to consider renewable and storage investments is when existing pieces of equipment need to be replaced, rather than replacing like-for-like. This allows you to start using renewable energy without impacting your operations – and any excess gas that the renewables displace can be converted to power and sold to the grid for extra revenue.

By Craig Baker, Head of Power Projects Sales, Asia & Middle East, Aggreko.

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