Applying Innovation to Oil & Gas

This Friday at noon Eastern Time I'll be participating in a webinar on The Energy Collective covering the application of innovation to the emissions from oil and natural gas. The topic is timely, not just because of the current debate over the fate of the Keystone Pipeline, but because despite the growing importance of renewable energy, oil and gas will constitute a major part of our energy diet for decades to come. As I was thinking about my remarks, it occurred to me that the best starting point might be a refresher on how the industry's current emissions are distributed along the value chain. For all the heavily-publicized concerns about higher emissions from the extraction of unconventional hydrocarbons such as oil sands crude and shale gas, combustion by end-use applications accounts for the biggest slice, to the tune of 80-84% of the average lifecycle emissions from gasoline, diesel and jet fuel. Even for fuels refined from oil sands, our tailpipes still put out more than two-thirds of the total emissions attributable to oil. The proportions are similar for natural gas.

The data I'm using come from a presentation of the National Energy Technology Laboratory, which is part of the US Department of Energy, and the NETL reports on which it was based. I could have chosen other sources, but they all reach pretty much the same conclusions, and I liked the way this one displayed the differences among various source crudes. It also goes beyond dividing the total "well-to-wheels" lifecycle (WTW) into well-to-tank (WTT) and tank-to-wheels (TTW) sources, those that happen before the fuel gets to your car and those that happen in your car, respectively. The former category was further broken down into segments of extraction, crude oil transport, refining, and finished fuels transport. All of these are amenable to improvements through innovation, and I plan to focus on the four WTT categories on Friday.

However, as helpful as it would be from an emissions perspective to get oil out of the ground with less expenditure of energy and less leakage of methane and other gases, and then to transport and refine it as efficiently as possible, the most effective emission-reduction strategies by far are those that address vehicle emissions from transport. That includes all the ways we normally think of to improve fuel economy, including hybridization and dieselization, which reduce CO2 emissions in direct proportion to fuel savings. Yet it also includes a whole gamut of strategies for reducing vehicle miles traveled, which are currently below the record set in 2007 but remain about 10% above year-2000 levels. Trip consolidation, telecommuting, carpooling, and using public transport can all make an important dent in emissions, and in the long run they eliminate upstream WTT emissions, too, as less oil is required for the same economic activity.

I'm sure that most of this is old hat to those who are well-informed on energy issues, but it's important periodically to remind ourselves of the basics, before we get overly enamored with all the exotic technology we could apply to other portions of the value chain. Deploying wind and solar generation in oil fields, generating geothermal energy from the hot fluids brought to the surface with oil and gas, and making the liquids shipped through pipelines slipperier can all contribute to reducing greenhouse gases, but we should understand clearly that these techniques can only tackle the 20% of emissions that happen before the fuel gets to the local gas station.