Oil Industry Emerges as Leader in Global Carbon Management Efforts

[Editor's note: A version of this story appears in the May 2022 issue of Oil and Gas Investor magazine.]

The issue of carbon management is increasingly a priority–for the oil and gas industry as well as more broadly. 

The energy transition is accelerating, bringing with it pressure to decarbonize more rapidly, but at the same time energy demand is rising and fossil fuels are still required to help meet those needs. Against this backdrop, oil and gas companies are having to strike a balance between decarbonizing and continuing to produce fossil fuels. And the more oil and gas they wish to produce over the longer term, the more important carbon management tools–particularly carbon capture and storage (CCS) and carbon capture, utilization and storage (CCUS)–will be.

“Most of the E&P companies, especially oil majors, consider CCUS a critical carbon abatement tool to fulfil respective net-zero targets,” said Yvonne Lam, head of CCS research for Rystad Energy. “And these energy companies are estimated to spend a significant part of their total capital expenditure on low-carbon business ventures over the next five to six years, including CCUS.”

Companies have different strategies for reaching their decarbonization goals, Lam noted, and therefore it is difficult to say how much CCUS will dominate their carbon management plans. She added, though, that hydrogen and CCUS feature far more heavily in E&P players’ plans than other low-carbon investments such as wind and solar.

“CCUS is definitely part of the game plan and the low-hanging fruit for oil and gas companies,” she said.