​It's not a threat: How oil and gas companies are integrating renewables to cut costs and curb carbon

Image: Statoil

Before delving into the details, a partnership between renewable energy and oil and gas might seem like an odd couple situation, but a number of companies have been making it work for years.

According to the Pembina Institute, U.S.-based oil and gas companies invested approximately $9 billion in renewable technologies in 2000-10, but the potential for partnership has grown exponentially since then. In its 2013 study, Renewable Energy Opportunities in the Oil and Gas Sector, Pembina encouraged oil and gas companies to play an active role in the renewable sector. “Companies who lead in this space will be able to position themselves more credibly as energy companies ahead of their peers,” the report says.

It also notes that oil and gas companies shouldn’t consider renewable energy a threat to their business but rather an opportunity for innovation. “Renewable energy projects do not have to completely replace or offset core utilities for megaprojects, but rather can augment or complement conventional systems,” the report says.

Companies are beginning to get on board with the idea. The two sectors are banding together to discover and develop innovative ways of using renewable energy in oil and gas operations to benefit both with lowered costs and fewer emissions.

Where the wind blows

The WIN WIN project is one such endeavour. The partners in this joint-industry venture—DNV GL, ExxonMobil, Nexen, Statoil, ENI Norge and others—have been studying the use of wind turbines to power offshore water injection systems. The test system is a six-megawatt wind turbine mounted on a floating foundation 30 kilometres from shore in the North Sea with injection pumps that can handle up to 80,000 bbls/d of water, and it has so far met all key requirements, including injection volume targets, reliability and minimized downtime.

WIN WIN, which stands for wind-powered water injection, builds on other recent advances in wind technology, particularly as it relates to offshore operations, like Statoil’s Hywind pilot project.

“For the first time, we can now see renewable energy as a large-scale source of power to offshore oil and gas operations. By using the recent development of floating offshore wind turbines, this concept can offer a clean, reliable and cost-effective alternative for powering water injection in offshore locations,” says Remi Eriksen, group president and chief executive officer of DNV GL.

The costs for the WIN WIN project are comparable to conventional methods and may prove to be less expensive in the long run; though its operational expenditures are higher, the capital expenditures of the WIN WIN project are significantly lower. According to DNV GL, the system is commercially competitive, particularly when host platform capacity is limited or injection wells are located far away.

“For the specific example case assessed in the report, we are looking at a potential cost saving of approximately 20 per cent compared to a conventional solution,” says Johan Sandberg, service line leader of offshore renewable energy with DNV GL.

Sunny days ahead

Cutting costs is also high on the priority list for GlassPoint Solar, a company that works primarily with oil and gas companies to install solar technology that will generate steam for thermal enhanced oil recovery (EOR). The company operates all over the world, including California, where it recently expanded its operations, and Oman, where it broke ground last year on a new joint-venture project.

In California, EOR is used to produce nearly half its crude oil, traditionally consuming approximately 14 per cent of all the natural gas used in California. GlassPoint, however, can help oil and gas companies harness the state’s abundant sunshine to reduce that associated gas consumption by more than 30 per cent.

“The single largest operating cost for a heavy oilfield in California is fuel purchase for steam generation,” says Michelle McGarry, GlassPoint’s director of project development, Americas, who came to the company after a lengthy career in oil and gas. “In today’s low oil price environment, GlassPoint can play an important role in helping producers reduce costs and optimize their recovery strategy.”

Headquartered in Fremont, Calif., GlassPoint currently operates a 300-kilowatt commercial solar pilot in McKittrick, Calif., with Berry Petroleum. The project’s success and the state’s seemingly endless supply of sunny days prompted the company to multiply its operations and open a new office in Bakersfield, Calif.

The expansion in California comes not long after another GlassPoint milestone: a partnership with Petroleum Development Oman (PDO) recently broke ground one month early on a landmark solar project. Miraah, a 1-gigawatt project at the Amal oilfield in southern Oman, will rank among the world’s largest solar plants of any kind when operational.

Miraah is expected to start up in 2017 and will be approximately 100 times larger than PDO and GlassPoint’s pilot solar project at Amal, which has been operational for almost three years. The megaproject is slated to span a three-square-kilometre area and generate an average of 6,000 tons/day of steam, saving approximately 5.6 trillion Btu of natural gas every year and reducing CO2 emissions by 300,000 tons.

“Miraah will provide a substantial amount of steam demand at Amal, reducing our reliance on natural gas to make steam. The gas saved can be used by other industries to support Oman’s diversification and economic growth strategies,” says Raoul Restucci, managing director of PDO.

Accounting for approximately 70 per cent of the country’s crude production and almost 100 per cent of its natural gas, PDO is owned by the Government of Oman (60 per cent), Shell (34 per cent), Total (four per cent) and Partex (two per cent).