Upstream Oil and Gas Emissions Trending Downward: Wood Mackenzie Report

By Editor


A recent report by Wood Mackenzie indicates a promising decline in Scope 1 and 2 upstream emissions intensity by 12 percent since 2017. However, the report also warns of a potential plateau in absolute emissions due to production growth.

Wood Mackenzie’s analysis, titled “Is upstream oil & gas delivering on decarbonisation?” highlights significant strides in reducing emissions intensity through measures such as flaring reduction, methane detection and repair, electrification, and carbon capture, utilization, and storage (CCUS).

Despite these efforts, the report notes that increased production volumes in certain regions could offset emission intensity gains. When factoring in the broader oil and gas value chain, absolute emissions might surpass pre-pandemic levels by 2028.

Principal analyst Adam Pollard emphasizes the need for more comprehensive actions beyond addressing the “low-hanging fruit” of emissions reduction. “Flaring, methane, and venting initiatives show that progress can be made, but efforts need to move beyond the low-hanging fruit,” Pollard states. He points out that while combustion emissions remain a primary concern, progress in emissions abatement has been limited. The report suggests that electrification can yield substantial reductions, especially in regions with access to low-carbon power sources.

The findings from Wood Mackenzie’s Emissions Benchmarking Tool underscore the leadership role of Majors and International Oil Companies (IOCs) in improving emissions intensity. Net-zero commitments, along with increasing regulations and carbon taxes, have been key drivers for these companies.

However, National Oil Companies (NOCs) contribute significantly to upstream emissions, comprising 51 percent of the total. Pollard notes that not all NOCs have followed the lead of their counterparts in implementing emission reduction measures.

The report highlights the impact of “super emitters,” with half of the sector’s emissions originating from just 165 oil and gas fields. These include persistent flarers, large Middle Eastern fields, oil sands projects, and integrated LNG facilities.

Looking ahead, Pollard anticipates that new developments will exhibit lower-than-average emissions, and companies will utilize mergers and acquisitions (M&A) to optimize their portfolio with more environmentally friendly assets.

However, he emphasizes that many companies and governments are still behind in their emission reduction efforts. Pollard urges stakeholders to set targets, develop decarbonization strategies, engage in existing initiatives, and learn from the successes of leading companies in the industry.

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