Sustainability in the Oil and Gas Industry: Important, yet Misunderstood (Sustainability Series, #2)

Sustainability in the Oil and Gas Industry

People in the oil and gas industry and beyond, including regulators, environmentalists, and sustainability advocates have a right to know the facts. This blog post, the second in a series titled “Eugenie Sustainability Series”, will educate you on differences in the definition of “Sustainability” within the oil and gas sector, and why those matters.

Sustainability has remained been a key consideration for oil and gas companies and is fueled by an increasing momentum for the transition to low-carbon. Evolving Government climate policies, direct public, and shareholder activism, and changing investment strategies are jointly creating and highlighting the urgency for oil and gas companies to reduce emissions.

Consequently, sustainability has elevated from being an important element in oil and gas companies being good corporate citizens, to a critical pillar for future long-term business competitiveness. Despite the fact that all oil and gas companies will need to reduce emissions, not all of them will evolve into diversified energy companies (survival of the fittest).

However, given that oil and gas will remain a core part of the global energy mix for the foreseeable future, companies must develop transparent sustainability strategies that maintain their license to operate in their traditional business, while identifying and securing new opportunities arising from the transition to a low carbon economy.

Reducing emissions from oil and gas operations requires companies to take actions across a range of company operations:

· Mapping of energy flows and emissions across the company, followed by internal and external performance benchmarking goal-setting, and establishment of reporting structure and frequency.

· Piloting, followed by deployment of advanced technologies to monitor and reduce emissions, to implement mitigation-enabling technologies

· Modification of investment strategies to account for future regulatory impact and to rebalance the current portfolio as necessary.

· Strengthening and aligning internal corporate governance structures to achieve sustainability objectives.

100 companies are responsible for 70% of the world’s carbon emissions. Yes, but of the 70.6% of emissions attributed to these hundred entities, over 90% is actually emitted by us, the general population. It’s getting emitted in the process of heating our houses and moving our cars and making the steel and aluminum for our buildings and cars and F35 fighters and concrete for our roads and bridges and parking garages. Oil and gas producers may be enriched in the process, but who is ultimately responsible for the consumption of what they are producing?

Nonetheless, let us not forget that the blowout of a natural gas well in Ohio in 2018 emitted a larger volume of methane in twenty days than an entire year’s emission total of the oil and gas industries of Norway, France, and the Netherlands combined! Over the course of this blog post, you’ll understand how all this ties in with Eugenie.

A gas well blowout in Ohio

As a deep-AI product conceived meant to help oil and gas companies reduce greenhouse gas (GHG) emissions in a cost-feasible manner, we’re often surprised to learn how much the oil industry’s contribution to GHG emissions, especially in midstream and upstream processes, is underestimated.

Since we have access to the asset-wise emissions levels at some of the world’s most significant upstream and midstream refining facilities, we have a unique unbiased view on this subject. Let’s start by touching upon the various factors within oil and gas facilities that lead to operational breakdowns (or even disasters) which result in significant GHG emissions;

The common culprit is corrosion i.e. degradation of materials because of chemical reaction with the external environment, leading to a deterioration of materials. Corrosion results in weakening and gradual damage to the operational equipment.

· 46% of all the petrochemical failures are the result of corrosion of material components.

· 60% of corroded materials consist of stainless steel, carbon steel, and alloy steel.

· The most commonly damaged material is stainless steel (31%).

Fatigue failure is the second largest cause of failure type. Alloy steel carries the highest probability of fatigue failure at 43%. Fatigue failure occurs when a material undergoes varying amounts of stresses below its static yield strength over a prolonged time, resulting in cracks.

Corrosion, erosion, brittle fracture, and fatigue lead to piping failures, and unsurprisingly, the largest number of failures occur in the pressure vessels and pipes.

In light of this, it is not far-fetched to assert that “Net Zero Emissions” is a pipe dream

While reducing carbon footprint is a high priority across countries and sectors, to achieve net-zero emissions, the oil and gas sector would need to reduce the emissions by 3.4 gigatons of carbon dioxide, leading to the reduction of almost 90%.

One of the biggest problems here lies in the fact that the oil industry’s definition of sustainability is different from that of some regulators and most laymen. Many Sustainability Boards are focused on planning for their companies’ transition into renewable energy-based business models, whereas the need of the hour remains testing and implementation of sustainability-focused technologies and processes in today’s fossil fuel operations.

To learn more about how Eugenie has helped oil and gas majors ensure a profitable transition to operational sustainability, talk to us today or feel free to reach out to us at

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