Transparency in disclosures and better power management among industry’s key sustainability efforts

Panel session: Building internal commitment to sustainability is important, but so is the need for outside funding that can support carbon reduction initiatives

By Stephen Whitfield, Associate Editor

The world’s intensifying focus on reducing carbon emissions has placed the oil and gas industry under a microscope, with investors, regulators and the public at large all pushing for investments and improvements around sustainability. While many oil and gas companies have set clear carbon reduction targets, translating those ambitions into measurable results will take time.

A panel session at the virtually held 2021 IADC Sustainability Conference on 10 February showcased the work that companies are undertaking to contribute to a low-carbon future. This includes instilling sustainability-focused cultures in their organizations, developing innovative technologies and publicizing their results. 

First, companies are recognizing just how important public disclosure of their sustainability efforts is to maintaining this industry’s social license to operate. It’s not enough to just make these efforts, but you also have to communicate and publicize that work. 

Speaking on the panel, Joey Kawaja, VP of Operations at Noble Corp, noted the common misperception that oil and gas exploration and production is incompatible with meeting global sustainability targets because of the role fossil fuel production plays in global climate change. This perception, he said, is one reason why ratings agencies tend to rate the industry fairly low on ESG and environmental scores.

However, these ratings can serve a purpose, Mr Kawaja said, as they can give companies a “roadmap” for institutionalizing their ESG and sustainability efforts and disclosing those efforts to stakeholders. “We have seen ESG issues get more focus as investor communities and other stakeholders look to ensure that companies are not only generating financial returns but doing so in a responsible way,” he said.

Since Noble published its first sustainability report in 2002, Mr Kawaja said, there has been a major shift in the way companies disclose their ESG and sustainability performance. For example, companies have become much more open about sharing internal data. “When it comes to rating agencies, if you’re not disclosing it, you’re not getting credit for doing it,” Mr Kawaja said. “We want to make sure we’re being as transparent and as accurate as we can.”

Commitment, funding both required

At Valaris, internal cultural development has been a key focus area when it comes to sustainability. That’s because any effective sustainability initiative requires full commitment from every level of an organization, said Alan Quintero, Senior Vice President of Business Development. In that spirit, Valaris has created a sustainability committee with top management from different departments within the company; it meets bi-weekly to discuss new measures. 

Already, the committee has served an important role in guiding the company’s sustainability strategy. “This committee has really helped build commitment in the company to this journey,” Mr Quintero said. “We’re not just talking about what we want to do. We’re keeping close track of what the rest of the industry is doing in terms of sustainability.” 

Another step Valaris has taken to boost its sustainability measures is to create a near real-time dashboard of NOx, SOx and CO2 emissions from its rigs, allowing for comparative analyses of emissions reduction efforts. Data from the dashboard can also be downloaded and shared with operators. The company currently has six rigs in its tracker and is adding more every month. Mr Quintero said the goal is to ultimately monitor its entire operating fleet. 

Valaris has also worked with operators to use biodiesel or blended fuels where available. Three of its drillships now feature selective catalytic reduction (SCR), which can reduce NOx emissions by injecting a liquid-reductant agent through a special catalyst into the exhaust stream of a diesel engine. The company is also talking to operators about running certain rigs with shore-based power, as well as using its experience to aid in wind and hydrogen photovoltaic projects. 

The challenge, Mr Quintero pointed out, is finding outside funding to support these and other sustainability efforts. 

“All of the stuff we’re doing is very exciting, and we look forward to doing more of it, but we have to be realistic with the conditions today,” he said. “In the offshore drilling sector, even after financial restructuring, the rates just barely pay the bills. It’s not hard to see that, at current dayrates, we’re going to have a hard time paying for major capital investments into our fleet. We’ll have to figure out creative ways of financing some of these investments.” 

Zeroing in on power

Patterson-UTI says its approach to sustainability has so far focused heavily on rig power management. Eleven of its rigs are now powered by natural gas, and 59 additional rigs have dual-fuel capacity. This offers the company an opportunity to realize emissions reductions without having to make significant or costly modifications to its fleet. 

Jesse Hein, Environmental Manager at Patterson-UTI, noted that dual-fuel systems provide great flexibility. With a 70% substitution rate, the systems do not need a lot of diesel fuel to operate, making them ideal for locations where field gas is available. When using a dual-fuel rig, Patterson-UTI has seen reductions of its carbon monoxide emissions at more than 90% compared with using a conventional diesel system, as well as 15% NOx reductions. 

The natural gas power systems utilize rich-burn engines equipped with a three-way catalyst, which provide lower NOx levels than conventional lean-burn engines. These systems can run on a number of different fuel types, including CNG, LNG and propane.

On top of the emissions reduction from using natural gas in place of diesel, “there’s significant cost savings with gas, especially if we have some type of natural gas available either through a pipeline or the wellhead at an actual site,” Mr Hein said. “Even if natural gas is unavailable at the site itself, you can still have it trucked in.”

Looking forward, Mr Hein noted there is still ample opportunity for improvement when it comes to fuel efficiency on the rig. Recognizing that engine emission and fuel consumption rates are significantly reduced at higher engine loads, Patterson-UTI last year launched GenAssist, an engine automation app that enables load-dependent starting and stopping of generator sets. The app is currently running on six of the company’s rigs. 

The company also developed EcoCell, a battery-powered energy storage system designed to improve fuel economy. The system, which was also launched last year, operates engines at an optimal load, automatically stopping and starting engines as needed to maintain battery charge. It stores more than 500 kWh of battery power, effectively taking the place of a generator set. Because it uses batteries to power a rig, both fuel consumption and air emissions can be reduced. EcoCell is currently operational on two rigs, but Patterson-UTI has multiple units slated for delivery this year. DC