Saving Energy in the Oil and Gas Industry — final for...

Saving Energyin the

Oil and Gas Industry

Contents

The context 3

Energy use in the oil and gas industry 5

Oil refining 6

Oil and gas production 6

Transportation 7

How the oil and gas industry is saving energy 8

Energy management 8

Oil and gas production 10

Oil refining 12

Transportation 13

Liquefied natural gas 14

Future challenges: the way forward 15

References and information sources 18

© IPIECA 2007. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, ortransmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without theprior consent of IPIECA.

This publication is printed on paper manufactured from fibre obtained from sustainably grown softwood forests and bleachedwithout any damage to the environment.

Acknowledgements

Task Force Members

Dominique Chauvin (Chair, Total) • Bill Boyle (BP) • Dag Roar Christensen (Hydro)

Richard Ward (Shell) • Chee Yong Ong (ExxonMobil) • Edgar Furuholt (STATOIL)

Charlie Curlee (Marathon) • Carlos Augusto Arentz Pereira (Petrobras)

Walt Retzsch (API) • Charles Bowen (OGP) • Sophie Depraz/Rob Cox (IPIECA)

IPIECA gratefully acknowledges the assistance of Trevor Morgan of Menecon

Consulting in preparing this document.

Hydrocarbons will remain essential to global economic developmentand prosperity for decades to come. Meeting rising energy demandneeds to be reconciled with the goals of energy security andenvironmental protection. Energy efficiency and conservation canmake a major contribution to moving the world onto a moresustainable energy path. Most of the potential for saving energy lieswith end users, however the oil and gas industry continues to investheavily in further improving the energy efficiency of its ownoperations, reducing waste and helping final consumers to use lessfuel. Major challenges remain, notably in countering the increased useof energy to exploit less accessible crude oil resources and to meettougher fuel-quality standards. The oil and gas industry, as astakeholder in the energy debate, will play its part in furtherpromoting rational energy use all along the supply chain for the goodof everyone.

Enhancing energy efficiency is an important issue for IPIECAmembers, who can contribute by implementing changes in theiroperations, planning and investments. There are many positivedrivers for industry as energy efficiency can help in lowering operatingcosts and reducing environmental impacts. Energy efficiency can alsoextend the life of finite natural resources and help keep energyaffordable for consumers by lowering the investment costs and theeffort required to meet rising demand. IPIECA aims to raiseawareness of the benefits of energy efficiency and promote sharing ofbest practices.

Saving Energy in the Oil and Gas Industry 1

Figure 1: Outlook for global primary energy use and carbon dioxide emissions

Energy demand in the Reference Scenario Energy-related CO2 emissions

0

2

4

6

8

10

12

14

16

18

1980 1990 2000 2010 2020 2030 2004 2010 2015 2020 2025 2030

30

34

38

42

26

oilcoal

gas

nuclearhydropowerbiomassother renewables

energy-efficiency measures

more renewables andnuclear power

Alternative Policy ScenarioReference Scenario

billi

on to

nnes

of o

il eq

uiva

lent

billi

on to

nnes

of C

O2

2 Saving Energy in the Oil and Gas Industry

Global demand for energy is growing, drivenby rising population and economic growth.Over the past three decades, energy use hasmore than doubled. This increase, in turn, hasenabled the world economy to expand, raisingliving standards and helping to meet theaspirations of millions of people around theworld. It is impossible to operate a factory, runa shop, drive a car or deliver goods toconsumers without using some form of energy.Oil and gas make a vital contribution to meetingthe world’s energy needs. Today, they accountfor well over half of global total primary energyuse. There are limited practical alternatives tooil-based fuels for transport—the fastest growingenergy sector. In many cases, oil and naturalgas are the lowest-cost fuels in industry, theresidential and services sectors and powergeneration, and are essential feedstocks for awide range of industrial and consumer goods.

Demand for oil and gas, as well as all otherenergy sources, will continue to rise. In its

latest World Energy Outlook, the InternationalEnergy Agency projects global primary energydemand to grow by more than half between2004 and 2030 in a Reference Scenario thatassumes no change in government policies(Figure 1). Oil and gas continue to dominatethe global energy mix, their share of totalprimary energy use falling slightly from 56 percent to 55 per cent. The use of modernrenewable technologies, including hydro,solar, geothermal and wind power, expandsrapidly, but their combined share of globalenergy demand reaches only 5 per cent in2030 because they start from a low base.More than 70 per cent of the projectedincrease in overall energy demand comesfrom developing countries, where economicactivity and populations are growing fastest.

Rising demand for energy services reflectsincreasing prosperity, but it also raisesconcerns. The main net-importing regions—theUnited States, Europe and Asia—will have to

The context

Sour

ce:

IEA

(200

6a)


is often the most cost-effective way of curbingthe growth in demand for fossil fuels andcutting emissions of greenhouse gases and airpollutants (McKinsey, 2006; IEA, 2006b). Thereis considerable remaining potential forimproving efficiency. This is demonstrated bythe IEA’s Alternative Policy Scenario, whichassumes that all the energy-security and climatepolicies that governments around the world arecurrently considering are fully implemented.Global CO2 emissions are reduced by 16 percent in 2030 vis-à-vis the Reference Scenario,with energy efficiency gains contributing almost80 per cent of avoided emissions. Importantly,the economic cost of these policies is more thanoutweighed by the economic benefits of lowerspending on fuel by consumers that come fromusing and producing energy more efficiently.

import increasing volumes of both oil and gasas their indigenous output fails to keep pacewith consumption, with implications for thesecurity of supply. And the future energy mixwill put added strains on the environment. TheIEA projects global energy-related emissions ofcarbon-dioxide (CO2) from burning oil, gasand coal to grow by 55 per cent between2004 and 2030 in its Reference Scenario. Inaddition, local air quality may also be affectedby increased use of fossil fuels.

Saving energy through improved efficiency andconservation has a central role to play inreconciling the goals of economic development,energy security and environmental protection. Anumber of recent studies have shown thatinvestment in more efficient energy technologies

Energy can be saved by using it more efficientlyor by using less of it. Energy efficiency refers tothe ratio between the input of energy—be it aprimary source like fossil fuels or an energycarrier such as electricity or hydrogen—and theoutput of an energy service, such as light, heat ormobility. Improving energy efficiency, byreducing the quantity of energy consumed, canenhance energy security and mitigate theenvironmental harm caused by producing,transporting and consuming energy. It can alsobring broader economic and social benefits, bylowering costs to businesses and households,increasing the competitiveness of the economyand creating jobs in supplying energy-efficienttechnologies and practices (‘energy services’).Energy efficiency can be enhanced through theapplication of new technology that yields a lowerinput/output ratio, using the same fuel or an

alternative. For example, energy can be saved inpower generation by replacing a conventionalthermal station with a gas-fired combined-cyclegas-turbine station, which has much higherthermal efficiency.

Improving energy efficiency is not the sameas energy conservation which, strictly speaking,refers to consuming less of a given energyservice, and therefore consuming less of theenergy that would be needed to provide it.Examples include switching off the light whenleaving a room or walking short distances insteadof driving. Where an energy service is wasted oris of little value to the person or businessbenefiting from it, conservation can bring realeconomic and social benefits. But forgoing anenergy service that is critical to economic activityor to living standards can hold back economicdevelopment and reduce social welfare.

Ways of saving energy

Figure 2: World energy consumption along the oil and gas supply chain, 2004

(Covers only those countries for which data are available)

oil and gasextraction/processing

0 50 100 150 200 250 300

oil refining

liquefaction (LNG)/regasification

pipelines

million tonnes of oil equivalent

oilnatural gaselectricity/heat

PRODUCTION

TRANSFORMATION

TRANSPORTATION

10%

48%

42%


It is often overlooked that the oil and gasindustry is, itself, a major consumer—as wellas a producer—of energy. The industry isinherently very energy-intensive. That is, largeamounts of energy are needed to extractresources from the ground and process,transform, transport and deliver thoseresources to final users, relative both to theeconomic value and to the volume of the oiland gas supplied. This does not mean that theoil and gas industry is inefficient comparedwith other industries: efficiency can only becompared for processes involving the sameinputs and outputs. In fact, oil and gascompanies have been investing and willcontinue to invest heavily in improving theefficiency of their operations.

Globally, the energy consumed by the oil andgas industry is estimated to amount toapproximately 10 per cent of gross oil and gasproduction, or about 600 million tonnes of oilequivalent (Mtoe) a year, based on 2004 data.1

Around 90 per cent of the primary energy usedby this industry takes the form of oil and gas, assupplies are available on site and are typicallythe cheapest source of energy. Natural gasmakes up about half of the total (Figure 2). Someof the oil and gas used directly by the industry istransformed into electricity and heat, especiallyin the case of refineries and other large facilities.In total, about 10 per cent of the electricity andheat consumed by the industry is supplied fromthe grid, though its relative importance variesconsiderably by type of activity and country.

Energy use in the oil and gas industry

Sour

ce:

IEA

dat

abas

es

1 Comprehensive data on energy consumption by oil and gas companies around the world is not available. The IEA compiles and publishes data,where available, on the own use of energy by country and fuel type in crude oil and natural gas production, oil refining, gasliquefaction/regasification, and pipeline transportation. In 2004, consumption for all these activities amounted to 513 Mtoe. However, thisunderstates the total amount of energy used by the oil and gas industry worldwide, as data is not available for some countries, especially in thedeveloping world. In addition, no breakdown of the use of transport fuels is to hand for any country, so it is not possible to estimate precisely howmuch of this energy consumption is used by the oil and gas industry for the distribution of oil products by tankers, barges, railcars and road trucks.


natural gas are the main fuels used inrefineries. Several factors are contributing tohigher energy intensity in refining, offsettingpart of the efficiency gains from newinvestment. More stringent oil productstandards, such as low-sulphur diesel,increasing demand for lighter products andheavier crude oil slates are forcing refiners toincrease secondary processing and conversionof heavy residues. The introduction of carboncapture and storage at refineries while helpingto offset increased emissions wouldsignificantly boost energy use too. Accordingto IEA data, the energy intensity of oil refininghas nonetheless fallen by 13 per cent since1980 in OECD countries (for which reliabledata are available) thanks to large efficiencyimprovements in processing.

Oil and gas production

Large amounts of energy are also needed toextract oil and gas from wells. Energy usecovers a range of activities, including: driving

The oil and gas industry has a strong financialincentive to save energy, because of the largeshare of energy in the overall cost of operatingits facilities. Efficient energy use reduces costsalong the whole supply chain, improvessupplier’s competitivenes and makes energymore affordable to consumers. The industry isalso commited to acting in a sociallyresponsible manner, notably with respect to theenvironmental impact of energy use, and has astrategic interest in extending the life of itslarge but finite resources. That is why oil andgas companies have invested heavily over theyears in more efficient technologies all alongthe supply chain and plan to invest more in thefuture. However, those investments are notalways reflected fully in trends in the energyintensity of oil and gas supply, measured bythe amount of energy needed to supply a givenquantity of oil or gas to consumers.

Oil refining

Oil refining is the most energy-intensive part ofthe value chain, accounting for about half ofall the energy consumed by the oil and gasindustry as a whole. Refinery gas (a by-productof refining processes), heavy fuel oil and


pumps to extract hydrocarbons and to reinjectwater; heating the output stream to allowseparation of the oil, gas and water;producing steam and reinjecting gas forenhanced oil recovery; powering compressorsand pumps for transporting oil and gasthrough gathering pipelines to processingplants; and driving turbines to generate theelectricity and heat needed for on-siteoperations and living quarters. Energy needsvary widely according to local circumstancesand operational conditions. Locally producedgas is the main fuel used for upstreamoperations. The energy intensity of oil and gasextraction has been increasing—byapproximately one-third since 1980 in OECDcountries—despite heavy investments to improveefficiency.2 There are two main reasons:● The growing maturity of oil and gas fields.

Production declines as reservoirs becomedepleted of hydrocarbons, yet the amountof work and, therefore, energy required toproduce those volumes stays about thesame. Increased use of energy-intensivesecondary and enhanced recoverytechniques are also boosting energy needs.

● Increasing reliance on less accessibleconventional fields, heavy crude oil andnon-conventional resources, such as oilsands, which generally require moreenergy to produce.

Transportation

Sea-going oil tankers, fuelled by diesel oil andresidual fuel, as well as pipelines, whichmainly use natural gas to fuel pumps andcompressors, account for much of the energyconsumed in transporting and distributingcrude oil, refined products and natural gas.Road tankers and rail cars, which distribute oilproducts in bulk to service stations and directlyto end users, also consume significant amountsof diesel. Important advances have beenachieved in improving the energy efficiency oftransporting oil and gas. But the resultingenergy savings are being offset by a shift inthe geographic focus of production to regionsthat are further from centres of demand,boosting fuel use to deliver the output bypipeline or tanker.

2 Survey data from the International Association of Oil and Gas Producers, covering one-third of world hydrocarbons output, shows that energyconsumption per tonne of oil equivalent produced rose by about half between 2001 and 2005 to 1.4 gigajoules, though this partly reflects changesin the reporting system (OGP, 2006).


considerable resources in pursuit of furtherenergy savings. Many companies havedeveloped and implemented formal energymanagement systems, which seek toincorporate efficiency improvements andemissions reductions into the routine operationsof every aspect of their businesses.

Energy management

There is a strong consensus within the oil andgas industry on the importance of savingenergy by improving the efficiency of itsoperations along the supply chain andeliminating unnecessary waste. Despite thelarge investments that have already been made,oil and gas companies continue to devote

How the oil and gas industry is saving energy

Improving energy performance has been a majorpriority of Petrobras, the majority state-ownedBrazilian oil company, since the first oil crisis in theearly 1970s, when it first established the EnergyConservation Programme. It involves targets forenergy use in each area of the company’s activitieswith the aim of lowering energy consumptionand/or reducing spending on fuel. This is achievedby raising awareness of the importance of energysaving among employees, taking energy efficiencyinto account in preparing technical specificationsfor new projects, and analysing and reporting energyconsumption levels. The programme consists of awide variety of activities and projects, including:● upgrading operating procedures in oil refining

processes;● optimizing the distribution and use of steam

and power generated on site;● preventing leaks and spills; and● installing heat-recovery boilers and air pre-

heating systems.

Although all projects are required to yield afinancial return to the company, environmentalaspects are always taken into consideration whenselecting the projects to be implemented. Petrobrasestimates that the programme has saved the companyapproximately 13 Mtoe of energy over the 32 years ofits existence—equal to 11 per cent of all energy

consumed by the company during that period.Investments under the Programme amount to$210 million (in year-2005 dollars). Savings in CO2emissions are estimated at about 42 million tonnes,while the average amount of CO2 emitted per unit ofenergy consumed has fallen by around 20 per cent.

Despite these achievements, Petrobras hasidentified significant potential for further energysavings. Several major projects are currently underway, including a range of measures to reduce gasflaring. The company is also planning to installfour turbo-expanders at different refineries, with atotal capacity of 68 MW. Turbo-expanders use theenergy contained in the flue gas emitted bycatalytic cracking units, which are found at mostPetrobras refineries, to generate electricity.

Case Study 1: Petrobras’ Energy Conservation Programme

Below: an air preheater incorporated into distillation unitU-32 at the Landulpho Alves Refinery in Brazil, whichimproves the thermal efficiency of the crude oil heatingfurnace of the unit.


Integration of operations often makes a bigcontribution to improving efficiency. Forexample, cogeneration of electricity and steamusing natural gas is nearly twice as efficient astraditional methods of producing themseparately. A growing share of power and heatneeds at upstream production sites, refineriesand petrochemical plants around the world isbeing met by cogeneration plants, yielding bigimprovements in energy efficiency.

Oil and gas production

The growing energy intensity of oil and gasproduction in many parts of the world—as wellas rising energy prices—is giving new impetusto industry efforts to improve the efficiency ofthe different operations involved in theproduction process, combat waste and reduceemissions. Recent initiatives, as mentionedearlier have largely focused on better

In 2000, ExxonMobil launched the Global EnergyManagement System (GEMS), which wasdeveloped to drive energy efficiency improvementsat the company’s refineries and chemical plants. Thesystem utilizes a common methodology to identifyopprotunities, develop plans to exploit them andcontinuously improve performance. GEMS is basedon a three-step approach: the first step is to improvebase performance by operating existing facilitiesoptimally and efficiently through application of bestpractices; the second is to identify economicinvestment opportunities above an optimized base;and the third is to implement strong managementsystems to provide the rigour and disciplinenecessary to drive continuous improvement.

Since the launch of GEMS, the company hasidentified opportunities to improve energyefficiency by 15 per cent to 20 per cent. To date,more than half of these opportunities have beencaptured. In 2006 alone, the reduction inExxonMobil’s energy costs was about $750 million,with an associated reduction in CO2 emissions ofaround 8 million tonnes—an amount equivalent totaking about 1.5 million cars off the road in theUnited States. Most of these savings have comefrom the company’s refining and chemicaloperations. From 2000 to 2005, ExxonMobil’srefineries and steam cracking operations haveimproved their energy efficiency at a rate of abouttwice that of the historical industry average.ExxonMobil is on track to meet its commitment toimproving energy efficiency by 10 per cent

between 2002 and 2012 across the company’s USrefining operations as part of the API ClimateAction Challenge programme (see ‘Oil refining’ onpage 12).

In addition to the GEMS initiatives,cogeneration is a significant factor in improvingenergy efficiency at ExxonMobil facilities aroundthe world. ExxonMobil is an industry leader incogeneration, investing more than $1 billion insuch projects during 2004–05 alone. The companynow has interests in about 100 cogenerationfacilities in more than 30 locations worldwide, witha capacity to provide about 4,300 MW of power—enough electricity to meet the needs of close toseven million households in Europe. ExxonMobil’scurrent cogeneration capacity reduces global CO2emissions by more than 10.5 million metric tonsannually. The company is continually consideringnew cogeneration investments. Projects currentlyunder construction or development in Kazakhstan,Belgium, China and Singapore have a combinedcapacity of 875 MW of power, which will bring thecompany’s total cogeneration capacity to over5,000 MW by 2010.

Case Study 2: ExxonMobil’s Global Energy Management System (GEMS)

(IEA, 2006b). In addition, energy useassociated with oil and gas exploration hasbeen reduced as a result of big improvementsin drilling success rates, mainly due toadvances in seismic surveying and analysis,and drilling techniques.

One important way in which the oil and gasindustry has been conserving energy is by

integration of operations, including theincreased use of cogeneration of power andsteam. The introduction of more efficient pumpsand compressors has also helped save energy.The most advanced high-efficiency motors thatare increasingly being used in the upstreamindustry are about 85 per cent to 95 per centefficient, compared with 60 per cent to 70 percent for many of the oldest motors still in use


The Athabasca Oil Sands Project (AOSP) inAlberta, Canada—a joint venture of Shell, ChevronCanada and Western Oil Sands—is the first fullyintegrated oil sands project. The project, whichbegan operation in 2003, consists of two maincomponents: ● The Muskeg River Mine, located north of Fort

McMurray, Alberta. A mix of heavy crude oil(bitumen) and sand is removed from just belowthe surface using trucks and mechanical shovelsand is then mixed with warm water and solventsto separate the oil from the sand. The minecurrently produces 155,000 barrels per day.

● The Scotford Updgrader (see photograph),located next to Shell’s Scotford Refinery in FortSaskatchewan. The bitumen is mixed withdiluent at the Muskeg River Mine to reduceviscosity and enable it to be transported souththrough a 493-kilometre pipeline to theupgrader. Once the bitumen is separated out,hydrogen-addition technology is used to processit into low sulphur synthetic crude oils. Thediluent is recycled and piped back to the mine. Integrated oil-sands projects are very energy

intensive, so the AOSP was designed to minimize theenergy requirements for financial and environmentalreasons. Energy savings were made at the mine byusing low-temperature extraction techniques,integration of heat streams and the installation of gas-fired cogeneration facilities. The bitumen-separationprocess was designed to remove clays and asphaltenesso as to achieve higher purity, thus enabling more

efficient hydroconversion at the Scotford Upgrader.The upgrader was sited and designed to maximizeintegration with the existing refinery andcogeneration units. Energy-efficient cogeneration andhydro-conversion technology, as well as combinedhydroconversion/hydrotreating process integration toavoid pressure drop, were adopted to minimize energyuse. In addition, a hydrogen-rich waste stream ispurchased from a nearby Dow Chemical plant toreduce the need to produce hydrogen on site.

As a result of these factors, AOSP currentlyproduces refined products emitting 27 per cent lessCO2 on a well-to-wheels basis than would havebeen the case with the original project design.Emissions are nonetheless approximately 50 percent higher than for imported crude oil. AOSP isexploring ways of achieving a voluntarycommitment to cut greenhouse-gas emissions fromcurrent levels by 50 per cent by 2010, includingthrough new projects to improve energy efficiencyand to capture the CO2 produced at the upgraderand reinject it into oil fields to enhance oil recoveryor into saline aquifers. The remaining reductionswill be achieved though domestic and internationalrenewable energy and emission-offset projects.

Case Study 3: Athabasca Oil Sands Project, Canada


reducing the flaring or venting of natural gasproduced in association with crude oil. Flaringis sometimes carried out where barriers to thedevelopment of gas markets and gasinfrastructure prevent the gas from being used.The industry is commited to eliminatingunecessary flaring by developing processingand distribution infrastructure in order tomonetize the gas. The Global Gas FlaringReduction partnership—a World Bank-ledinitiative that brings together representatives ofgovernments of oil-producing countries, andstate-owned and major international oilcompanies—facilitates and supports nationalefforts to use currently flared gas by promotingeffective regulatory frameworks and tacklingthe constraints on gas utilization, particularly indeveloping countries. For example, Nigeria’sShell Petroleum Development Company—ajoint venture between the Nigerian NationalPetroleum Company, Shell, Total and Agip—invested more than $2.3 billion between 2000and 2005 in building pipelines and

compressor stations to gather associated gasand use it in local power plants or for makingliquefied natural gas (LNG). As a result, theamount of gas flared has been cut by 30 percent since 2001 (www.shell.com).

Oil refining

As large energy consumers, oil refiners havelong recognized the importance of improvingenergy efficiency. The amount of secondaryprocessing of crude oil and other feedstockscarried out by refineries as a proportion ofthroughput has increased sharply over recentdecades, resulting from the need to handleheavier crude oils with higher sulphur contentand to meet increasing demand for lighter andbetter quality products. Yet the amount of energyused per barrel of output has actually fallen, dueto massive investments in more energy-efficientprocesses, the adoption of efficient practicesand the reconfiguration of refining andassociated operations such as petrochemicals

The Hydro-operated Sture oil terminal on the westcoast of Norway receives oil through two pipelinesystems:● The Oseberg Transportation System, which began

operating in 1989. It comprises a 115-km pipelinethat brings crude and condensate from the Oseberg,Brage and Veslefrikk offshore fields. The oil containssome associated gas, which is separated out. Thenaphtha and liquefied petroleum gases contained inthe oil are also removed in a processing plant beforethe oil is shipped from the terminal. Close to26 million cubic metres of crude oil and condensatewere shipped from the terminal in 2006.

● The Grane Transportation System, a 212-kmpipeline bringing crude oil from the Grane field.The system came onstream in 2005. Grane crudeis heavy and must be heated to facilitate loadingoperations at Sture. Heat requirements amountto 9 MW.

The processing of the Oseberg oil involvesheating it to approximately 100°C. A heat exchangerwas constructed in 2006 to transfer excess heat fromthe Oseberg crude after processing to the cold andheavy Grane crude. The heat exchanging processsaves approximately 8,000 toe of energy each year,reducing CO2 emissions by about 25,000 tonnes.

Case Study 4: Heat exchanger at Hydro’s Sture Oil Terminal, Norway

gains. Refiners have become far more systematicin reviewing the efficiency of their processes,improving maintenance practices and runningon-site assessments or audits of energyperformance. The refining industry has

and power production. Improved integration ofoperations, including increased reliance oncogeneration of heat and power and theinstallation of heat recovery systems onprocessing units, has contributed much of these


A combined heat and power plant at Mongstad isbeing built to supply Statoil’s adjacent refinery withelectricity and heat, and to supply power to theTroll A platform in the North Sea and the gas-processing facilities at Kollsnes. The project involvesthe construction of a new gas pipeline from Kollsnesto Mongstad, as well as tie-ins and modifications tothe Mongstad refinery (Figure 3). The plant isexpected to be ready for operation in 2010. Totalinvestment is estimated at about 4 billion krone($650 million). DONG Energy, a Danish company,will participate as an owner of the plant and will beresponsible for building and operating it.

The facility will have a power-generation capacityof approximately 280 megawatts (MW) and heat-production capacity of about 350 MW. All of theheat will be supplied to the refinery. Electricityproduction of 2.3 terawatt-hours (TWh) per year willbe shared by the refinery, the Kollsnes procesing plantand the Troll A platform. The plant will comprise two

gas turbines. Each of these will be connected to agenerator for electricity production, and have its ownwaste heat recovery unit. A steam turbine andgenerator will also be installed. The high-temperatureenergy from the heat-recovery unit will be used topre-heat the crude oil before it is distilled at therefinery. It will also be used to produce high-pressuresteam to be used in crude distillation and secondaryprocessing of intermediate refined products.

The project will significantly improve theefficiency of energy supply and use at the refinery.At start-up, thermal efficiency—the output ofusable energy as a precentage of the energy contentof the natural gas feed—is expected to be around70 per cent and may exceed 80 per cent in thefuture as more units in the refinery are connected.Emissions of CO2 per unit of output will bereduced sharply and the reliability of the electricpower supply to Kollsnes and Troll A improved.

Case Study 5: Mongstad refinery energy project, Norway

Figure 3: Technical configuration of the Mongstad Refinery Energy Project, Norway

Troll A Kollsnes Mongstadrefinery

new gas pipeline

terminalgas

gas to Europe

turbinesapprox.

350 MWheat

surplus gas

energy efficiency CHP station at 70–80%

electricity

power gridpower to Troll via grid(approx. 180 MW)

power toGjøa platform

(approx. 40 MW)

power to refinery(approx. 60 MW)

Combinedheat andpower plant

280 MWelectricity


developed tools to benchmark performance toprovide a robust basis for taking decisionsabout energy use and efficiency.3

Refiners in several countries have madevoluntary commitments to improve their energyefficiency and cut emissions. In the UnitedStates, for example, member refiners of theAmerican Petroleum Institute (API) haveundertaken to reduce their greenhouse-gasemissions by using less energy as part of theInstitute’s voluntary Climate Action Challengeprogramme. They have set a target ofincreasing energy efficiency by at least 10 percent between 2002 and 2012. Theseimprovements are being tracked using theSolomon Energy Intensity Index whichcompares the overall energy efficiency of agiven plant against the industry standardtaking account of each type of processing unitin the plant and the type of crude oilprocessed. Refiners from the NationalPetrochemical and Refiners Association(NPRA) recently joined the API effort. The firstprogress report on meeting this goal shows

that API and NPRA member refineriesimproved their overall energy efficiency byabout 2 per cent in the two years to 2004.The energy saved over that period is enoughto meet the total energy needs of more thanhalf a million American households.

Transportation

The energy requirements of long-distance oiland gas pipelines and local gas networks havebeen reduced significantly in recent years,mainly through the development of moreefficient pumps and compressors, and high-pressure (HP) gas transmission pipelinetechnology. High-efficiency turbines used tocompress natural gas can now achieve thermalefficiency of up to 40 per cent. Higher pressurepermits a corresponding increase in throughputcapacity for a given diameter. Energyconsumption per cubic metre of gastransported is between 20 per cent and 35 percent lower for a 15 to 30 billion cubicmetre/year line, because of the need for fewerstations, higher throughput levels and reducedfriction losses.

3 See, for example, a 2004 study by CIEEDAC, which reports harmonized data on energy and CO2 emissions intensities for the Canadian refiningindustry. Both intensities have fallen significantly since 1990.

Liquefied natural gas

The last decade or so has seen majorimprovements in fuel efficiency in liquefactionand regasification, mainly through thedeployment of high-efficiency gas turbines inon-site cogeneration facilities and incompressors. Some of these gains have beenachieved through the development of largerturbines, which are now able to achieveelectrical conversion efficiencies of 60 per centwhen used in combined-cycle configuration(integrated with a steam turbine and a heatrecovery steam generator) and overall thermalefficiencies of up to 80 per cent (when the heatoutput is fully utilized). Optimization of designparameters, improved reliability, closed-loopcooling systems, exploitation of cold-recoveryand new heat exchanger designs are alsocontributing to higher efficiency.

The fuel efficiency of oil tankers, which carrythe bulk of crude oil and refined productstraded internationally, has improved greatlyover the years, with the replacement of steam-boiler propulsion systems with more efficientand less polluting diesel engines. LNG carriers,which account for a growing share of trade innatural gas, are among the few large ships stillusing steam boilers, fuelled with gas that hasto be ‘boiled off’ during the voyage tomaintain pressure and temperature inside thevessels to within operating limits. But a numberof carriers now being built feature modifieddiesel engines, including dual-fuel systems thatcan burn both diesel oil and gas.

The loss of oil, natural gas and refined productsthrough leaks and spills in transportation andstorage has been dramatically reduced throughthe introduction of a wide range oftechnologies, including improved valves,vapour-recovery units, double-hulled tankers,improved underground storage tanks atgasoline stations and improved corrosion-prevention technologies. When spills do occur,a substantial portion is now recovered andreused. For example, well over half of the crudeoil associated with pipeline spills is nowrecovered and reused (www.api.org).



Future challenges: the way forward

The oil and gas industry is facing majorchallenges in meeting the world’s risinghydrocarbon needs in an environmentallysound and socially acceptable way whilecurbing its own energy consumption. Many newsources of hydrocarbons, including oil sands,gas-to-liquids and biofuels, are inherently moreenergy-intensive. Tougher standards for refinedproducts and the growing shift towards lighterproducts are pushing up the energy intensity ofrefining. The greater distances over which oil andgas must be transported will boost fuel needs,as would the introduction of carbon capture andstorage. These challenges make it all the moreimportant to unleash the potential that still existsfor the industry to save energy through efficiencygains and conservation. Energy efficiency is oftenthe cheapest, fastest and most environmentallyfriendly way of meeting the challenges ofreducing industry’s own energy needs.

All stakeholders in the hydrocarbon sector—from producers to consumers—have a role toplay, working together, to ensure energy is

used efficiently and cleanly. The hydrocarbonindustry is commited to stepping up efforts toseek out every opportunity for saving energywhere it is economic to do so, and to helpingpolicymakers formulate strategies andmeasures aimed at saving energy andreducing emissions. Policymakers, for theirpart, are responsible for establishing a stableand predictable policy framework thatpromotes planning and investment in moreefficient energy options, and enhances marketdrivers to improve efficiency all along thesupply chain.

Total has developed a new diesel fuel that achieveshigher mileage while reducing engine noise andlowering emissions of toxic gases. The fuel ismarketed at most service stations in France and iswidely available in several other countries, notablyBelgium, Germany, The Netherlands, Portugal, theUnited Kingdom and Turkey.

Total launched a project in late 2005, inpartnership with Bouygues Construction and thewater sanitation company, SAUR, to test the fuel,as part of a broader programme aimed at reducingemissions of CO2 and pollutants, partly through

changes in driving behaviour. In the first phase ofthe project, during which 8 million kilometreswere driven in real driving conditions by the 750vehicles involved testing the fuel, average fuelconsumption per kilometre was reduced by 3.7 percent. In the second phase, which is still under way,drivers are being encouraged to change theirbehaviour. The objective is to cut fuel use by afurther 1.3 per cent, giving an overall fuel saving of5 per cent and avoiding an estimated 12,500 tonnesof CO2 emissions.

Case Study 6: Total’s high-mileage diesel programme

distributors of oil, gas and electricity toundertake energy-efficiency measures thatensure that their final users save an amount ofenergy equal to a pre-defined percentage oftheir annual energy deliveries. Whitecertificates are documents certifying that acertain reduction of energy consumption hasbeen attained. Great Britain was the first EUcountry to introduce such a scheme, combiningits obligations on suppliers to save energy withthe possibility of trading those obligations andthe certificates. Italy started a scheme inJanuary 2005 and France a year later, whileDenmark and The Netherlands are consideringintroducing them in the near future.

The oil and gas industry, as a stakeholder in theenergy debate, is playing, and will continue toplay, its part in promoting rational energy useall along the entire supply chain. IPIECA,representing international oil and gascompanies as well as national oil companiesand numerous industry associations from aroundthe globe, strongly supports energy efficiencyand conservation. IPIECA will continue to raiseawareness and share best practices among itsmembers in identifying and implementingprojects to save energy, in line with IPIECA/APIVoluntary Sustainability Reporting Guidance. Itwill also encourage networking and partnershipswith other key stakeholders in the industry.IPIECA members stand ready to broaden theirdialogue with energy end users on how we canall best save energy for the good of everyone.

Oil and gascompanies willcontinue to investheavily in researchand development ofmore efficienttechnologies; manycompanies areaugmenting theirefforts substantially.Government-fundedresearch will remainvital, especially for

promising technologies that are not yet readyto be commercialized. Yet public budgets foroil and gas research remain well below thelevels reached after the oil shocks of the 1970sand have fallen in many cases over the pastdecade. There is a pressing need for the publicand private sectors to work together to developmore efficient oil and gas technologies.

The oil and gas industry is responsible forensuring efficient energy use and conservationin its own activities, or ‘inside the fence’. But italso has an interest—and, in some cases, alegal obligation—to promote energy-efficientuse of its products ‘outside the fence’ too,particularly since the potential for saving energythere is considerably higher in absolute terms.For example, a 10 per cent improvement in theefficiency of oil use in transport and other enduses would save the equivalent of one-half of allthe energy used by the oil and gas industryworldwide. The oil and gas industry is alreadyhelping final consumers of its products to saveenergy and will continue to do so. Another wayin which the industry is seeking to reduceenergy needs is through improvements in thequality of its products, such as advanced roadfuels that improve mileage.

Several European countries have implementedor plan to introduce white certificate schemes,involving obligations or voluntary commitmentson the part of producers, suppliers and


Reports/books

International Association of Oil and Gas Producers (OGP) (2006), EnvironmentalPerformance in the E&P Industry: 2005 Data, October 2006, OGP, London.

International Energy Agency (IEA) (2006a), World Energy Outlook, OECD/IEA, Paris.

International Energy Agency (IEA) (2006b), Energy Technology Perspectives,OECD/IEA, Paris.

Mckinsey Global Institute (2006), Productivity of Growing Global Energy Demand: AMicroeconomic Perspective, November 2006, McKinsey and Co, Inc, San Francisco.

Canadian Industry Energy End-Use Data and Analysis Centre (CIEEDAC) (2004), AReview of Energy Consumption Canadian Oil Refineries 1990, 1994 and 2002,Simon Fraser University (on behalf of Canadian Petroleum Products Institute andCanadian Industry Program for Energy Conservation), British Columbia.

Websites

Alliance to save Energy: www.ase.org

American Council for an Energy-Efficient Economy: www.aceee.org

American Petroleum Institute: www.api.org

CONCAWE: www.concawe.be

European Commission: http://ec.europa.eu/energy/demand/index_en.htm

International Association of Oil and Gas Producers (OGP): www.ogp.org.uk

International Energy Agency: www.iea.org

International Petroleum Industry Environmental Conservation Association (IPIECA):www.ipieca.org

United Nations Environment Programme (UNEP), Division of Technology, Industry andEconomics: www.unep.fr/energy/act/ef/index.htm

US Department of Energy, Office of Energy Efficiency and Renewable Energy:www.eere.energy.gov

The World Bank Group: www.worldbank.org

The World Energy Council: www.worldenergy.org


References and information sources


IPIECA membership

Company Members

BG Group

BHP Billiton

BP

Chevron

CNOOC

ConocoPhillips

ENI

ExxonMobil

Hess

Hunt Oil

Hydro

Kuwait Petroleum Corporation

Mærsk Olie og Gas

Marathon Oil

National Hydrocarbon Corporationof the Republic of Cameroon

Nexen

NOC Libya

Petrobras

Petroleum Development of Oman

Petronas

Petrotrin

PTTEP

Repsol

Saudi Aramco

Shell

Statoil

TNK-BP

Total

Woodside Energy

Association Members

American Petroleum Institute (API)

Australian Institute of Petroleum (AIP)

Canadian Association of Petroleum Producers (CAPP)

Canadian Petroleum Products Institute (CPPI)

CONCAWE

European Petroleum Industry Association (EUROPIA)

Institut Français du Pétrole (IFP)

International Association of Oil & Gas Producers (OGP)

Petroleum Association of Japan (PAJ)

Regional Association of Oil and Natural Gas Companies inLatin America and the Caribbean (ARPEL)

South African Petroleum Industry Association (SAPIA)

World Petroleum Council (WPC)

International Petroleum Industry Environmental Conservation Association5th Floor, 209–215 Blackfriars Road, London SE1 8NL

Tel: +44 (0)20 7633 2388 Fax: +44 (0)20 7633 2389E-mail: [email protected] Internet: www.ipieca.org

IPIECAIPIECA is the single global association representing both the upstream and

downstream oil and gas industry on key environmental and social issues,

including: oil spill response; global climate change; fuels; biodiversity; social

responsibility and sustainability reporting

Founded in 1974 following the establishment of the United Nations

Environment Programme (UNEP), IPIECA provides a principal channel of

communication with the United Nations. IPIECA Members are drawn from private

and state-owned companies as well as national, regional and international

associations. Membership covers Africa, Latin America, Asia, Europe, the Middle

East and North America.

Through a Strategic Issues Assessment Forum, IPIECA also helps its members

identify emerging global issues and evaluates their potential impact on the oil

industry. IPIECA’s programme takes full account of international developments in

these issues, serving as a forum for discussion and cooperation, involving

industry and international organizations.

Saving Energy in the Oil and Gas Industry — final for...

Documents

Transcript of Saving Energy in the Oil and Gas Industry — final for...