Industry Trend Analysis - Majors Returning To CCS Development - DEC 2017

BMI View: Growing concern around ESG is driving the diversification of oil company portfolios , though hydrocarbon production will continue to be the core business . The use of carbon capture and storage (CCS) technology offers a method to offset company carbon emissions, while support the longevity of production through enhanced oil recovery.

Oil majors are becoming increasingly interested in alternative sources of energy amid the changing policy landscape and growing pressures associated with social and environmental risks related to the production of hydrocarbons ( see ' 2C Transition Series: O&G Diversification Remains Muted ' , August 3 2017). The transition to the low carbon economy and the need to reduce carbon emissions to limit global warming, represent inherent risks to the conventional business model of the energy sector.

The potential to use CCS technology to increase production and revenue, or the presence of financial incentives to reduce carbon emission, could encourage oil companies to invest in developing carbon capture and storage technology. A partnership agreement signed by Statoil, Shell and Total on October 2, aiming to deliver a large scale CCS project in Norway, indicates that oil majors are becoming increasingly interested in using the technology for enhanced oil recovery. The project aims to capture carbon dioxide from industrial plants in eastern Norway which would be subsequently transported and stored on the west coast of the country. The investors aim to then inject the captured CO2 into the Troll field on the Norwegian continental shelf. Plans to deploy CCS technology would not only contribute towards the reduction of Norway's carbon footprint but would help the oil companies to build expertise in carbon capture and storage techniques.

CO2-EOR Weyburn-Midale Project 2000-2012
Saskatchewan Conventional Heavy Oil Production (m3/d)
Source: National Energy Board

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