Explained - Carbon Management & Decarbonization in Oil & Gas


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In simple terms, carbon management (or decarbonization) is the process of managing carbon and other greenhouse gases emissions produced as a result of a company’s operations. Carbon footprint is another buzzword that is used very widely. What this means is a company must look at ways of managing and reducing both direct and indirect greenhouse gases (GHG) it emits including carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2 O). Very often, greenhouse gases emissions are considered to be “part” of carbon management/decarbonization.

The Oil & Gas industry is a significant contributor to GHG emissions. The exhibit below (source: McKinsey & Company) illustrates emissions by the source and some of the possible solutions that may help to achieve the required targets of carbon management/decarbonization. Interestingly, a lot of the possible solutions are based on existing and well-established technologies that offer reduction/management opportunities relatively quickly and easily.  Besides, some of the options could be monetized very quickly and result in extra cash generation.




Companies may choose different paths to achieve their objectives, e.g. plant more trees instead of reducing direct GHG emissions from their operations. Still, all of the available options revolve around the following concepts:

  • Reducing – initiatives like energy efficiency, addressing methane leakage, zero flarings, switching to low-carbon fuels, changing energy source to renewable electricity.

  • Reusing & Recycling – initiatives like EOR projects with CO2 capture & reinjection, CO2 sequestration, utilization of CO2 in downstream and petrochemicals.

  • Removing – initiatives like reforestation, direct air capture and storage (DACS) and any other ways of removal carbon and storing it, e.g. injection to depleted hydrocarbon reservoirs or into saline aquifers.


Below are the areas where opportunities exist:


Changing energy source to renewable electricity. There are multiple ways to do it, and the path forward would always depend on a particular asset location and infrastructure around it, economics, and in-country policies and regulations. Some examples include 1) connecting assets to the electricity grid, 2) utilization of solar and wind energy, combined with an energy storage solution, and 3) More distant ideas include wireless transmission of renewable and onshore generated electricity to power offshore platforms. There are projects in Norway, China and UAE, whereby offshore assets are (or will be) powered by electricity generated onshore and many other projects globally whereby renewable electricity is used to power oil & gas production, be it partially or completely.


Methane leakage. From the exhibit above, it appears that reducing methane leaks is the single largest and potentially cost-effective way to reduce GHG emissions. There is plenty of opportunities here, too, in particular given the fact that the world’s hydrocarbon infrastructure is relatively old, both technologically and age-wise. Addressing methane leakage boils down to key areas of 1) detection, 2) repair and 3) avoidance. Low hanging fruits examples include a) utilization of satellite and aerial surveillance to detect leaks, b) application of new technology for ensuring the tight sealing effect of the piping, process and compression systems, c) Senso and digital technologies, as well as AI to monitor and predict leaks before they happen.


Zero Flaring. Flare gas, both routing flaring and non-routine flaring, both upstream and downstream, has always been a dilemma. Yet, decreasing gas flaring is another fairly low-hanging fruit initiative with available low-cost proven solutions around such as; 1) compressing the gas and injecting back to the reservoir, 2) inject to the existing gas processing stream 3) using it as a source for power generation. According to IEA c. 75% of emissions originated from gas flaring could be have been prevented.


Energy efficiency. Energy efficiency is not a new concept and the importance of efficient use of power and heat depend a lot on the oil price and necessity for companies to be “efficient”. This area of improvement has a plethora of options, yet, most of it involves 1) Minimizing the demand for power and heat 2) Minimizing the losses and leaks of power and heat, and 3) Recovery and reuse of power and heat.


CO2 sequestration and/or carbon capture, use, and storage (CCUS). As the name suggests, CCUS or carbon sequestration is a process of capturing the CO2, transporting it, then permanently and safely storing it (e.g. underground) or finding a use (such as CO2  enhanced oil recovery or utilization of CO2 in downstream and petrochemicals). CO2  EOR projects and CCUS projects, in general, have gained traction over the last few years and are poised to be deployed on a reasonably large scale globally by many countries and companies. 

There are different types of CO2 sequestration, namely :

  1. Biological (or Terrestrial): Stored in natural areas such as oceans, forests, soils, grasslands, e.g. Photosynthesis
  2. Geological: Stored underground (e.g., depleted hydrocarbon reservoir or any porous rocks)
  3. Technological:  A new method whereby technology is deployed to find ways to reuse carbon. Examples include graphene production, used for screens in smartphones, Direct Air Capture (DAC), and Engineered molecules.


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