Barbell (Emissions) Intensities
Oil and gas emissions intensities are going upโฆ and down.
๐ข๐ถ๐น ๐ฎ๐ป๐ฑ ๐ด๐ฎ๐ ๐ฒ๐บ๐ถ๐๐๐ถ๐ผ๐ป๐ ๐ถ๐ป๐๐ฒ๐ป๐๐ถ๐๐ถ๐ฒ๐ ๐ฎ๐ฟ๐ฒ ๐ด๐ผ๐ถ๐ป๐ด ๐๐ฝ... ๐ฎ๐ป๐ฑ ๐ฑ๐ผ๐๐ป.
๐ง๐ต๐ฒ ๐๐ผ๐ฝ ๐ฎ๐ป๐ฑ ๐ฏ๐ผ๐๐๐ผ๐บ ๐พ๐๐ฎ๐ฟ๐๐ถ๐น๐ฒ๐ ๐ผ๐ณ ๐ฎ๐๐๐ฒ๐ ๐ฒ๐บ๐ถ๐๐๐ถ๐ผ๐ป๐ ๐ถ๐ป๐๐ฒ๐ป๐๐ถ๐๐ ๐ฎ๐ฟ๐ฒ ๐ด๐ผ๐ถ๐ป๐ด ๐ถ๐ป ๐ผ๐ฝ๐ฝ๐ผ๐๐ถ๐๐ฒ ๐ฑ๐ถ๐ฟ๐ฒ๐ฐ๐๐ถ๐ผ๐ป๐ according to benchmarking by BCG.
The best assets (top quartile) have seen emissions intensities fall (improve) by about 4 kg CO2e/boe/yr from 2020-2023. ๐ง๐ต๐ฒ ๐๐ผ๐ฟ๐๐ (๐ฏ๐ผ๐๐๐ผ๐บ ๐พ๐๐ฎ๐ฟ๐๐ถ๐น๐ฒ)? ๐ง๐ต๐ฒ๐ ๐ถ๐ป๐ฐ๐ฟ๐ฒ๐ฎ๐๐ฒ๐ฑ ๐ถ๐ป๐๐ฒ๐ป๐๐ถ๐๐ ๐ฏ๐ ~๐ฎ.๐ฑ ๐ธ๐ด ๐๐ข๐ฎ๐ฒ/๐ฏ๐ผ๐ฒ/๐๐ฟ.
The divergence is not that surprising given that the benchmarking was based on โdata from multiple companies in all major oil and gas producing regions, ranging from small independents to enterprises with global portfoliosโ. ๐๐ถ๐ณ๐ณ๐ฒ๐ฟ๐ฒ๐ป๐ ๐ฝ๐ฟ๐ถ๐ผ๐ฟ๐ถ๐๐ถ๐ฒ๐ ๐บ๐ฒ๐ฎ๐ป ๐ฑ๐ถ๐ณ๐ณ๐ฒ๐ฟ๐ฒ๐ป๐ ๐ผ๐๐๐ฐ๐ผ๐บ๐ฒ๐.
What did catch my attention was that the ๐๐ผ๐ฝ ๐พ๐๐ฎ๐ฟ๐๐ถ๐น๐ฒ ๐ฎ๐๐๐ฒ๐๐ ๐ฏ๐ฒ๐ป๐ฒ๐ณ๐ถ๐๐ฒ๐ฑ ๐บ๐๐ฐ๐ต ๐บ๐ผ๐ฟ๐ฒ ๐ณ๐ฟ๐ผ๐บ ๐น๐ผ๐ ๐ฐ๐ฎ๐ฝ๐ถ๐๐ฎ๐น ๐ถ๐ป๐๐ฒ๐ป๐๐ถ๐๐ฒ ๐ฎ๐ฐ๐๐ถ๐๐ถ๐๐ถ๐ฒ๐ like โMore efficient energy and operationsโ relative to the average (see image below). In other words, cheap (and easy) led to more progress than expensive.
๐๐ผ๐ถ๐ป๐ด ๐๐ต๐ฒ ๐ฐ๐ต๐ฒ๐ฎ๐ฝ ๐๐๐๐ณ๐ณ ๐ณ๐ถ๐ฟ๐๐ ๐บ๐ฎ๐ธ๐ฒ๐ ๐๐ฒ๐ป๐๐ฒ. However, the median asset made virtually no improvement in intensity at all (the average saw improvements of ~0.5 kg CO2e/boe/yr) while relying on more capital intensive activity on average. ๐๐ถ๐๐ต๐ฒ๐ฟ ๐ฎ ๐น๐ผ๐ ๐บ๐ผ๐ฟ๐ฒ ๐ฒ๐ณ๐ณ๐ผ๐ฟ๐ (๐ฎ๐ป๐ฑ ๐ฐ๐ฎ๐ฝ๐ถ๐๐ฎ๐น) ๐ถ๐ ๐ด๐ผ๐ถ๐ป๐ด ๐๐ผ ๐ฏ๐ฒ ๐ฟ๐ฒ๐พ๐๐ถ๐ฟ๐ฒ๐ฑ, ๐ผ๐ฟ ๐๐ต๐ฒ ๐ฝ๐ฎ๐ฐ๐ฒ ๐ผ๐ณ ๐ถ๐บ๐ฝ๐ฟ๐ผ๐๐ฒ๐บ๐ฒ๐ป๐ ๐ถ๐ ๐ด๐ผ๐ถ๐ป๐ด ๐๐ผ ๐๐น๐ผ๐ ๐ฑ๐ผ๐๐ป.
Carbon prices (taxes and incentives) can help, and so can technology improvements and cost deflation. ๐ช๐ต๐ฎ๐ ๐ฑ๐ผ ๐๐ผ๐ ๐๐ต๐ถ๐ป๐ธ - ๐ฎ๐ฟ๐ฒ ๐๐ต๐ฒ๐๐ฒ ๐ณ๐ฎ๐ฐ๐๐ผ๐ฟ๐ ๐ฒ๐ป๐ผ๐๐ด๐ต ๐๐ผ ๐ธ๐ฒ๐ฒ๐ฝ ๐๐ต๐ฒ ๐ฝ๐ฎ๐ฐ๐ฒ ๐ผ๐ณ ๐ฒ๐บ๐ถ๐๐๐ถ๐ผ๐ป๐ ๐ถ๐ป๐๐ฒ๐ป๐๐ถ๐๐ ๐ถ๐บ๐ฝ๐ฟ๐ผ๐๐ฒ๐บ๐ฒ๐ป๐ ๐ถ๐ป๐๐ฎ๐ฐ๐? ๐ข๐ฟ ๐ถ๐ ๐ฎ ๐๐น๐ผ๐๐ฑ๐ผ๐๐ป ๐ถ๐ป๐ฒ๐๐ถ๐๐ฎ๐ฏ๐น๐ฒ?