The Dirtiest And Cleanest Oil Projects In The World

By Alex Kimani - Apr 03, 2023

• Oil and gas companies are pursuing oil and gas projects that have a less negative impact on the environment.
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• Research from the non-profit Rock Mountain Institute reveals that Gazprom’s Astrakhanskoye natural gas field is the world’s dirtiest fossil fuel project.
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• Texas Eagle Ford Volatile Oil Zone is one of the cleanest in the world, producing just 458 kg of CO2 equivalent per barrel.

Climate modeling in recent years indicates that it is still hypothetically possible to limit global warming to no more than 1.5 °C--the level sought by the Paris Agreement--even given currently committed fossil-fuel-emitting infrastructure as long as no new fossil-fuel-emitting infrastructure is built. The Intergovernmental Panel on Climate Change concurs with this view, with the IPCCs Sixth Assessment Report calling for “...no investment in new fossil fuel supply projects”. 

Unfortunately, the global energy crisis triggered by the pandemic as well as Russia’s war in Ukraine has highlighted the world’s inextricable relationship with fossil fuels, meaning the IPCC utopia is unlikely to be realized. Indeed, no less than seven major oil and gas projects have been unveiled worldwide since that report came out a year ago as nations intensify their pursuit of energy security. Another dilemma--the fast pace of transition to renewable sources only appears to be adding to the total energy supply but is not doing much to displace oil and gas demand to any appreciable degree. 

At this point, it’s more realistic to try and pursue oil and gas projects that have a less negative impact on the environment–which makes this report more interesting. A first-of-its kind analysis by the nonprofit Rocky Mountain Institute has looked at greenhouse-gas emissions across entire supply chains and found that oil and natural gas fields in Russia, Turkmenistan and Texas are the worst polluters on our planet. According to the report, the dirtiest fields emit more than 10 times as much CO2 equivalent as the least emissions-intensive sites. The study looked at 135 global oil- and gas-producing resources–accounting for half of the world’s supplies–based on a full life-cycle analysis of their 2020 emissions.

Gazprom’s Astrakhanskoye natural gas field was found to be the worst offender with the biggest footprint thanks to prolific leaks on its pipelines and other downstream infrastructure. Turkmenistan’s South Caspian basin is the second worst polluter while the Permian Basin in West Texas ranks third with the majority of their emissions coming from upstream production. 

The report concludes that significant fossil-fuel emissions occur directly at the wellhead and during processing, refining, and transportation and not just at the point of combustion.

 Oil-Climate Index Dirtiest & Cleanest

There are other tools that you can use to compare the carbon and greenhouse gas emissions of different oil fields. The Oil-Climate Index (OCI) says it relies on consistent, comparable, and verifiable open-source data on crude oils, including oil assays that are reported out in a specified format. Going by the OCI, Canadian Oil Sands with their heavy, bituminous crude are some of the dirtiest oil and gas fields in the business.

According to the Oil Climate Index, Canada’s Athabasca DC SO in Alberta Province has the highest GHG emissions at 736 kg CO2 equivalent for every barrel extracted. The oil field produces 144,000 barrels of oil equivalent per day. This field produces extra-heavy, high-sulfur bitumen that is upgraded into a medium, sweet synthetic crude oil (SCO) before transport to the refinery. A DC (delayed coker) unit produces petcoke, which is used to upgrade this oil, with  high heat and hydrogen associated with its refining. These processes make Athabasca DC SCO the most emissions intensive of all current sample oils on the Oil Climate Index.

From some perspective, the largest oil field on the OCI, Saudi Arabia’s Ghawar, emits 491 kg CO2 equivalent per barrel. Ghawar produces 5,000,000 barrels of oil equivalent per day. According to the OCI, Ghawar’s relatively low GHG emissions can be chalked up to a combination of low upstream extraction emissions, low energy intensity during refining, and low end-product combustion emission.

California’s Midway Sunset is the United State’s dirtiest oil field, producing 725 kg of CO2 equivalent per barrel. Midway Sunset produces a sour, watery oil whose gravities range from medium to extra-heavy. It’s one of the country’s oldest and largest fields in the San Joaquin Valley and has been in production for 120 years. Midway Sunset’s high GHG emissions are large due to the high volume of steam injected into the reservoir to loosen and allow oil to flow, as well as the high water content in the wells meaning that extra energy is required to pump it out of the ground. 

On the opposite side of the spectrum, Texas Eagle Ford Volatile Oil Zone is one of the cleanest in the world, producing just 458 kg of CO2 equivalent per barrel. This field produces an ultra-light, sweet oil with production zones ranging from oil to gas. This oil zone exists in a gaseous phase while under pressure in the reservoir and has a higher gas-to-oil ratio than other resources from this play.

The U.S. Wyoming, Bakken No Flare and Texas Eagle Ford Black Oil Zone are also among the cleanest, with GHG emissions of 467 kg, 471 kg and 477 kg of CO2 equivalent per barrel, respectively. The Wyoming field produces a light, sweet oil from the Niobrara play in central Wyoming, with a high gas-to-oil ratio. Although the field’s venting and flaring emissions are high, they are offset in part by natural gas that is captured upstream and exported. 

OCI says that Bakken No Flare’s upstream GHG emissions are low when the associated gas is well-managed and not flared or otherwise released. The field’s ratio of carbon to hydrogen is also relatively low while its refining and combustion emissions are likewise relatively low. 

The Texas Eagle Ford Volatile Oil Zone also produces a light, sweet oil with production zones ranging from oil to gas. The Eagle Ford’s moderate gas-to-oil ratio leads to moderate levels of GHG emissions mainly from venting and flaring.

German Insurance Companies Renew Nord Stream 1 Coverage

By Charles Kennedy - Apr 04, 2023

Two German insurance majors have renewed their cover on the Nord Stream 1 pipeline that was sabotaged last summer and has been out of commission since then.

According to Reuters sources, the cover renewal could mean that a return to commission of the infrastructure is a possibility for Germany.

Allianz and Munich Re renewed their insurance cover of the pipeline to no opposition from the German government, Reuters reported citing the unnamed sources.

Such cover is important for the long-term prospects of such infrastructure, Reuters noted, but also quoted the German economy ministry as saying the renewal of the insurance cover was not any form of government support for Nord Stream 1.

The 55-billion-cubic-meter pipeline was the main conduit of Russian natural gas to Europe and specifically Germany, which was Moscow’s biggest gas customer until last year.

Following the Russian incursion into Ukraine, Germany spearheaded a sanction wave that prompted retaliation from Russia in the form of a gradual lowering of gas volumes delivered to Europe, especially via Nord Stream.

Then, in July, Gazprom shut the pipeline down for repairs but in September, a series of blasts along both Nord Stream 1 and its twin Nord Stream 2 suddenly darkened the prospects of any restart of the pipeline.

While the blasts were described as sabotage from the beginning, the authorities of the countries that are investigating the event remain apparently uncertain about the perpetrators.

Russia, whose Gazprom holds a 51-percent stake in the pipeline, has said it would not bother with repairs as it sees no likelihood of restoring former relations with Europe.

Meanwhile, some of Nord Stream’s German shareholders apparently hope that relations would improve and Russian gas flows will resume, hence the insurance cover.

The official German position remains unyielding, however, with a spokesman for the economy ministry telling Reuters that the government aimed to reduce both imports of Russian gas and all gas eventually, as it forged ahead with the shift to alternative energy sources.

By Charles Kennedy for Oilprice.com

Putin Approves $1.2 Billion Payment To Shell For Sakhalin-2 Exit

By Tsvetana Paraskova - Apr 04, 2023

Vladimir Putin has approved a request by Novatek to allow Shell to receive $1.2 billion (94.8 billion rubles) from the Russian gas producer for its 27.5% stake in the Sakhalin-2 LNG project, Russian daily Kommersant reported on Tuesday, quoting sources with knowledge of the matter.

Last year, a decree from Putin stipulated that a newly set up state Russian company would take over the rights and obligations of Sakhalin Energy Investment Co., the joint venture running the Sakhalin-2 oil and gas project.

Shell and Japan’s Mitsui and Mitsubishi were minority shareholders in Sakhalin Energy Investment Co, whose biggest shareholder is Gazprom.

Shell has a 27.5% in the project, but it had already announced it would withdraw from Sakhalin-2. After Russia invaded Ukraine, Shell said in early 2022 it would exit its equity partnerships with Gazprom and related entities, including its 27.5% stake in the Sakhalin-2 liquefied natural gas facility, its 50% stake in the Salym Petroleum Development, and the Gydan energy venture.  

After Putin’s decree in July last year, the Russian government gave the Sakhalin-2 minority foreign investors – Shell, Mitsui & Co, and Mitsubishi – one month to claim their stakes in the new entity that replaces the existing project. Shell confirmed it was looking at ways to exit the project, while the Japanese companies kept their stakes.    

Mitsui, which still has 12.5% in Sakhalin-2, said in November that the project had enough technical know-how to run operations without Shell.

On Monday, Russia’s LNG producer and exporter Novatek applied to buy Shell’s stake in the Sakhalin-2 project. The Russian firm has asked the government for consent that the payment be made to Shell and allowed to be received in a foreign account. According to Kommersant’s sources, Putin agreed with Novatek’s request to have the money transferred to Shell to “minimize the risks for operating activities and export of hydrocarbons from the project.”    

By Tsvetana Paraskova for Oilprice.com

Can Big Oil Do More To Prevent Oil Spills?

By Felicity Bradstock - Apr 01, 2023

• Pipeline ruptures and oil spills continue to be a threat for an increasingly scrutinized oil industry
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• Governments must strengthen their regulatory frameworks and give regulators the power to enforce strict standards on all energy companies to prevent spills.
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• Oil and gas firms should be obligated to put new leak detection technologies in place, and ensure they are up to date in line with technological innovations.

Oil spills are very much a thing of the present and if Big Oil wants to stay successful in the green transition it will have to clean up its act. With several reports of oil spills in different areas of the world in recent years, it seems that even under mounting international pressure to respond to climate change, oil and natural gas companies are failing to implement the necessary standards to prevent these events. So, just what can energy companies do to prevent oil spills and the devastating effects that follow?  Last year, in North America, Canada's TC Energy Corp was forced to shut its Keystone pipeline in the U.S. after more than 14,000 barrels of oil spilled into a creek in Kansas. This marked the biggest spill of crude in the U.S. in almost a decade. The 662,000-bpd pipeline delivers heavy crude from Alberta in Canada to U.S. refiners in the Midwest and Gulf Coast. But this was not the first spill seen from Keystone, with other major examples in 2011, 2016, 2017, and twice in 2019. Around 12,000 barrels of oil are thought to have been spilt from Keystone since it became operational in 2010.

The spill was a result of a ruptured stretch of the pipeline. And to make matters worse, TC Energy has been accused of allowing the pressure inside parts of its Keystone system — including the stretch through Kansas — to exceed the typical maximum permitted levels in the past, which has long concerned environmentalists. However, the company stated, “At the time of the incident, the pipeline was operating within its design and regulatory approval requirements.”

Elsewhere, in the Philippines, just last month a tanker carrying 800,000 litres of industrial fuel oil sank off the coast of the Oriental Mindoro province. The oil from the MT Princess Empress has since reached the shore of fishing villages in the region and caused many people to fall sick. 

The Philippines authorities have declared a state of calamity for the areas affected, as well as a fishing ban while the spill is being cleaned. The fishing ban is already having a major effect on the locals, with over 18,000 fishermen across 60 villages relying on fishing for their livelihoods. It could also harm tourism in the region. Further, the environmental risks could be huge, with the spill threatening 36,000 hectares of coral reef, mangroves, and seagrass.And in the U.K., around 200 barrels of reservoir fluid leaked into the Poole harbour, in the southwest of England, last week. Poole Harbour Commissioners (PHC), the harbour regulator, stated that the leak occurred at a pipeline operated by gas company Perenco. The fluid is said to consist of 85 percent water and 15 percent oil. Perenco said that some of the oil had already been recovered and much of the slick appeared to be dispersing. The company closed down and sealed the pipeline to avoid further leakage. Following the leak, thegovernment launched an investigation after MPs raised concerns about sensitive nature reserves and the impact on local fisheries. Environmental campaigners also gathered at the site to draw attention to the situation and warn of the potential impact of oil spills on the environment. 

Meanwhile, in Nigeria, residents in the oil-rich Niger Delta are taking action as over 13,000 people sue oil major Shell for years of spills in the region. The health of those living in the region has been long affected by a multitude of spills that have occurred over several years, which have also threatened the livelihoods of fishermen in the region, as many fish have died in tainted waters. There have been 55 oil spills in the last 12 years, with the region now being referred to as one of the most polluted places on earth. 

The court case has yet to be resolved, with worried that Shell has repeatedly escaped accountability in the past. However, in 2021, the U.K. Supreme Court unanimously ruled that there was a “good arguable case” that Shell plc, the U.K. parent company, was legally responsible for the pollution caused by its Nigerian subsidiary, Shell Petroleum Development Company and that the case would proceed in the English courts. 

As we see repeated instances of oil spills all around the world, from pipelines and sea vessels, just what should energy companies be doing to prevent these events? Firstly, governments must strengthen their regulatory frameworks and give regulators the power to enforce strict standards on all energy companies to prevent spills. Oil and gas firms should be obligated to put new leak detection technologies in place, and ensure they are up to date in line with technological innovations. In addition, the development of industry-sponsored safety institutions would allow for greater research and development, to advise oil and gas operators. Companies should also be required to provide specialised training to their workers on spill prevention and be prepared to carry out emergency response measures. Finally, oil and gas companies should establish spill reduction targets and be transparent about these goals to enhance accountability. 

So long as there are oil and gas operations, the unfortunate inevitability of oil spills remains, with several having been seen in the last year alone. However, there are several ways that governments and energy firms can mitigate the risk of these spills and reduce the instances of spills. By strengthening the regulatory framework and holding oil and gas companies accountable for their operational safety, future spills may be prevented and the response to equipment failures improved. 

By Felicity Bradstock for Oilprice.com

U.S. Company Signs Deals In Europe For Small Nuclear Reactors

By Leonard Hyman & William Tilles - Apr 01, 2023, 4:00 PM CDT

• Last Energy signed deals for 34 SMRs with Poland and the UK.
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• The tiny modular reactors produce about 20 MWs of electricity each.
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• In terms of cost, the UK press cited a figure of £100 million or less per 20 MW unit, or about $6,135 per KW.

Last week, Washington, D.C. based Last Energy announced that it had signed agreements in the UK and Poland for thirty four small modular reactors. Frankly, when we first saw the headline we assumed editorial failure by the UK press and moved on. But our initial impression was wrong. These are among the tiniest modular reactor designs we have seen to date, producing a mere 20 MWs of electricity. All of the 34 orders cited above collectively equal about one half of a gigawatt scale power plant regardless of type. By contrast the proposed NuScale reactors produce 77 MWs and the GE Hitachi BWRX 300 reactor under consideration by TVA for its Clinch River site is, as the name implies, 300 MWs. But size is not the only thing that differentiates Last Energy from its more conventional competitors. Last Energy is unusual in that its financial backing comes from libertarian, Silicon Valley funders who typically have been portrayed in the press as “disrupters”. Last’s CEO, Bret Kugelmass, started a Washington D.C. based think tank, the Energy Impact Center, “which sought to answer the ultimate question of our lifetime: how to reverse climate change. Nuclear is the answer.” They also sponsored a podcast, ”Titans of Nuclear”, featuring many experts and issues in the field. Our point here is that this company bears little resemblance to the conventional array of government-backed defense contractors representing most of the other SMR technologies. Given its background, not surprisingly Last Energy sounds to us a bit like Uber or WeWork but for new nukes. Their lofty and worthwhile goal is to reverse the impacts of climate utilizing off the shelf nuclear technology with an innovative delivery mode. Their claim is to “follow the best practices of the renewables industry: scaling of quantity rather than size.”

Their offering is a compact 20 MW, single loop, pressurized water reactor that could sit on a site of ½ an acre. It would use conventional nuclear fuel, 4.95% enriched uranium and standard fuel rods in a 17 by 17 array. The build time is estimated to be just 30 months. But, given the full modularity of all plant structures the estimated actual on site construction time is estimated at just three months. The fuel cycle is a lengthy 72 months with a three month refueling interval. These plants would also be air cooled and the company touted its meager water usage of a mere 8 gallons per minute. This contrasts with the significant water demands of other even relatively small reactors. Like other smaller reactors the Last Energy design would feature a “subterranean nuclear island” and “low profile balance of plant”. Gone are the big reinforced domes or rectangles of previous designs that could withstand whatever hypothetical impact short of an asteroid. They describe their approach as “customer centric” and that “our innovation is simple; leverage only proven nuclear technology, create a replicable, manufacturable power plant, and size for private capital.” The first actual plant installations could occur as soon as 2025 or 2026. No other SMR builder is offering a new plant much before 2029.

In terms of cost, the UK press cited a figure of £100 million or less per 20 MW unit, or about $6,135 per kw. This was for a total of 34 European reactors, 24 in the UK and 10 in Poland. Romania is also considering the design. The company has secured PPAs, purchase power agreements, with 4 industrial partners. In Poland they are partnering with the Katowice Special Economic Zone in southwest Poland. In the UK they have three industrial partnerships only identified as “a life sciences campus, a sustainable fuels manufacturer, and a developer of hyperscale data centers.” Last Energy is unique in that they offer “one stop shopping” for nuclear energy purchasers. They state that, “We cover all aspects of the investment process including design, construction, financing, service, and operation.”

The European Nuclear Energy Agency, which monitors nuclear issues, currently lists no fewer than twenty one promising nuclear technologies on its SMR dashboard. (Last Energy’s PWR 20 is not currently listed.) There are multiple entries in each of the five categories of new, small nuclear technology: water cooled, gas cooled, fast spectrum, micro (which would include Last Energy), and molten salt. The dashboard approach ranks these various technologies on five criteria: licensing, siting, supply chain, engagement, and fuel. None of these technologies has as yet been commercially licensed outside of China and Russia. The NEA stated that less than half of the featured technologies could obtain financing for a first-of-its-kind unit and an even smaller subset would be able to obtain purchase power agreements, which  Last Energy has done.

The one major difference between say the BWRX 300 or NuScale versus Last’s PWR 20 is with respect to licensing. The first two companies go to great lengths to describe and advertise their proximity to regulatory approvals. Last’s website notes that the “Biggest uncertainties (are) posed by the licensing process.” They further state their hope that in terms of design development “we are able to fabricate in parallel with our licensing process”. Regardless of how they describe the regulatory/licensing process, the NEA summarizes the basic process in the US and Europe as consisting of four essential steps: 1) pre-licensing interaction with regulators, 2) design approval, 3) construction, and finally 4) issuance of an operating license and commercial operation. Stated differently, it won’t matter how quickly Last Energy engineers can fabricate and assemble their PWR 20 until various regulators approve their design.

From a commercial acceptance perspective, it is difficult to even hazard a guess about future SMR technology since we’re really talking about a replacement cycle, mostly for aging natural gas power plants in the 2040s. Assuming that a new generation of SMRs begin operating at the end of this decade as planned, there is no reason to believe the market will coalesce around one SMR size or technology much before the mid to late 2030s. Right now all we can say broadly is that there seem to be two markets for SMRs, the almost utility scale reactors producing 300 MWs like the BWRX model and micro reactors in the 5-50 MW range including Last Energy. And that these are being pitched to very different types of customers. Electric utilities have been gravitating towards larger reactors for reasons of cost, bigger is still considered cheaper. Smaller reactors on the other hand have appeal for inside the fence commercial and industrial activities, provision of process steam, and compatibility with district heating systems. And this is where Last Energy seems to be making some inroads. 

In the end, though, neither the technical nor business prowess of Last will prevail if the public becomes uncomfortable with the idea of mini nukes spread over the landscape. These will have to be guarded against terrorists, possibly by weak governments, and whose waste has to be transported through neighborhoods and communities to facilities not yet built. Mini nukes look good on paper. But as they say in automotive circles, “Let’s wait until the rubber hits the road.” Something better might come along while we wait. 

By Leonard Hyman and William Tilles for Oilprice.com

The Clean Energy Subsidy Dispute That Could Define Europe's Future

By Haley Zaremba - Apr 03, 2023

• The lawsuit over renewable energy subsidies promised by Spain to investors in 2011 is being heard in a London courtroom, which could impact clean energy financing across Europe.
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• Spain has been sued internationally over 50 times for retroactive changes to its clean energy subsidies, losing over 20 cases so far, but has not paid out.
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• The ongoing dispute highlights accountability mechanisms in the EU and the importance of policy support for accelerating the development and investment in the renewable energies sector

A dispute over renewable energy subsidies which has been drawn out for over a decade is finally coming to a head in a London courtroom. Back in 2011, Spain promised subsidies to renewable energy investors, who accordingly poured millions of dollars into the Spanish clean energy market. But those subsidies never arrived. Now, the case over the $125 million broken promise is finally going to be adjudicated. That decision will have long-lasting implications for clean energy financing across the European continent. 

The lawsuit, which takes place in London’s Commercial Court this week, addresses claims from clean energy investors from the Netherlands and Luxembourg. These actors invested millions of Euros into a solar plant in southern Spain in 2011, under a standing clean energy subsidy from the Spanish government. But Spain slashed those subsidy payments with no warning after the 2008 financial crisis threw the economy into disarray. 

“Spain has been sued internationally more than 50 times over the retroactive changes,” reports the Associated Press. “It has not paid out despite losing more than 20 cases so far, according to U.N. data on international investment disputes.” While this is already concerning for potential investors, the main issue is that the EU has consistently backed Spain’s position. 

While the details of the case are specific to Spain, arguments are shining a spotlight on accountability mechanisms within the EU and the priorities of the European Commission. The grander implications of this probe means that the ultimate decision – to pay or not to pay – could impact all clean energy investing going forward. Investors need to be confident that the rules of engagement are fair – and so far, it’s not clear that that’s the case. 

Clean energy incentives have received increasing attention on a global scale as the Russian war in Ukraine has upended existing energy trade flows and created an energy crisis in Europe with major ripple effects for countries in every corner of our increasingly interconnected world. When the Russian oil and gas that sustained the European economy became unreliable, European leaders rushed to scale back dependence on the Kremlin by ramping up their own energy production, particularly through increased development of clean energy production capacity. In 2022, for the first time in history, wind and solar produced more energy than gas in the European Union. 

The dual energy and climate crises have underscored the importance as well of the urgency of the green energy transition. Reaching climate goals and shoring up global energy security will require a massive and unprecedented acceleration of development and investment in the renewable energies sector. The record-breaking progress we’re currently seeing in Europe is certainly promising, but it isn’t enough. Far from it. And getting the sector to the levels it needs to be at to meet global emissions goals and avoid ongoing energy security crises will require lots of policy support, especially in the form of subsidies and incentives. 

In the United States, the Biden administration has made steps towards rising to this challenge in the form of the Inflation Reduction Act, which marks the single biggest piece of climate legislation ever passed in Congress. But this Act, which incentivises home-grown clean energy supply chains, has been unpopular in Europe. According to reporting from the Associated Press, “experts say the Inflation Reduction Act is already drawing clean energy investment away from EU countries [...], leaving the 27-nation bloc much less competitive globally.” 

This is what will make the current courtroom drama unfolding over clean energy subsidies in Spain all the more important and impactful for the way that the clean energy transition will unfold going forward. And so far, quibbling over who should be responsible for the shirked payments is shaking investor confidence in the EU. 

By Haley Zaremba for Oilprice.com