Contrasting Upstream Emissions in Northwest Australia Offshore

The area offshore northwest of Australia, spanning from the North Carnarvon Basin to the Bonaparte Basin, is the country's most significant petroleum producing area. The commercialization of gas in the region, through the development of liquefied natural gas (LNG) projects, has played a significant role in establishing Australia as a prominent global producer of LNG. This achievement started with the Northwest Shelf LNG asset, and has been realized over four decades, during which time the LNG facilities, and other oil and gas field developments have been sanctioned. Recent hydrocarbon development, however, has shifted to fields with high CO₂ reservoir content, resulting in significantly higher emissions than in the past. Since operators are also aiming for carbon neutrality and complying with Australia's safeguard mechanism policy while continuing to develop high CO₂ fields, carbon capture and storage (CCS) technology has been implemented in the region to reduce emissions, and a number of ongoing or planned projects are anticipated.

To gain insight into the greenhouse gas (GHG) intensity of Northwest Australia oil and gas production, the Scope 1 emissions profiles of all major producing assets offshore Northwest Australia in 2022 were analysed using data from S&P Global Commodity Insights' Vantage. For this study, LNG facilities and their suppliers' upstream gas assets are considered integrated to account for the energy requirement for LNG liquefaction, the emissions from CO₂ removal and carbon abatement implementation. Estimates of GHG emissions include carbon dioxide, methane, and nitrous oxide (CO₂, CH₄, N₂O) and their sources, which consist of fuel gas and diesel combustion, flaring, fugitive emissions, and venting.

Our study found that the production weighted average GHG emissions intensity of Northwest Australia (NWA) was an estimated 44 kilograms of CO₂ equivalent per barrel of oil equivalent (kgCO₂e/boe) in 2022. In comparison to other regions examined by Commodity Insights, the emissions intensity of Northwest Australia was significantly higher than the production weighted average emissions intensity of 7 kgCO₂e/boe for the Gulf of Mexico (GOM) and 11 kgCO₂e/boe for North Sea production in the year 2022. Since nearly 92% of the total production volume comes from the integrated upstream-LNG assets that has a weighted average emissions intensity of 46 kgCO₂e/boe, the emissions performance of Northwest Australia is heavily influenced by the natural gas liquefaction process and therefore caution is advised when interpreting the region's weighted average for asset level upstream performance. As a comparison, when LNG and upstream assets were considered separately, LNG facilities had a weighted average of about 57 kgCO₂e/boe of LNG, while upstream assets had a weighted average of 7 kgCO₂e/boe. In addition, the emissions intensity at the asset level in the region varies significantly, ranging from less than 1 kgCO₂e/boe to 109 kgCO₂e/boe, with assets contributing to 52% of the total production volume having an emissions intensity below the Northwest Australia average.

When the contribution of an asset to the total absolute emissions is plotted against its share of the total production volume cumulatively, the trend of larger assets having a lower emissions intensity observed in the Gulf of Mexico and North Sea is not apparent in Northwest Australia. This is evidenced by the fact that the 4 largest assets by production volume, which accounted for approximately 78% of the total volume, are responsible for approximately 81% of the total emissions. Contrast this to the Gulf of Mexico, where the 10 largest assets by production volume, which accounted for more than 50% of the total volume, are responsible for less than 30% of the total absolute emissions. However, when onshore LNG plant emissions are omitted, an equivalent tendency of larger assets being more emissions efficient is observed in the region. For example, the five largest upstream assets, which account for more than 88% of the production volume, contribute to less than 63% of the total upstream offshore emissions. The different result after excluding LNG facilities explains the significant impact of their emissions on Northwest Australia's performance.

High reservoir CO₂ is a significant factor when considering the GHG emissions for the study area's production. Evaluating the total proportion of emissions by source (fuel gas combustion - 62%; diesel combustion - 2%; flaring - 8%; venting - 28%) reveals that LNG facilities have a significantly higher venting intensity of 18 kgCO₂e/boe of LNG, with the majority of venting emissions originating from the acid gas (reservoir CO₂) removal process. Comparing only upstream assets, gas-producing assets emit less than 1 kgCO₂e/boe from venting, while oil-producing assets emit approximately 3 kgCO₂e/boe. The very low venting activity of gas assets is attributable to the fact that all gas upstream assets do not perform acid gas separation offshore, but instead transfer the acid gas to the LNG plant for removal, thereby shifting the venting emissions to the midstream process. This demonstrates the significance of including midstream liquefaction facilities when evaluating the emissions of oil and gas production, especially when assessing assets with high CO₂ reservoir fields

Key implications:

• Assessment of 20 assets shows that the estimated production weighted average emissions intensity of offshore Northwest Australia (NWA) oil and gas production in 2022 was 44 kilograms of CO₂ equivalent per barrel of oil equivalent (kg CO₂e/boe). There is significant variance of asset level emissions intensity throughout the region ranging from less than 1 kgCO₂e/boe to 109 kgCO₂e/boe.
• Production was categorized by primary product to evaluate the emissions intensity. On average, upstream facilities with oil as the primary product are more emissions intensive compared to those that are producing gas. Nonetheless, the region's emissions performance is heavily influenced by assets that supply feed to LNG plants, which are considered as integrated assets in this study. These integrated LNG assets represented 92% of the total production, with a weighted average emissions intensity of 46 kgCO₂e/boe, bringing the average emissions intensity of Northwest Australia to 44 kgCO₂e/boe. However, the upstream GHG intensity was found to be much lower, at 7 kgCO₂e/boe.
• LNG facilities have a significantly higher venting intensity of 18 kgCO₂e/boe of LNG than upstream assets, which have venting emissions intensity of less than 1 kgCO₂e/boe for gas assets and about 3 kgCO₂e/boe for oil assets. The majority of venting emissions originate from the acid gas (reservoir CO₂) removal process due to the requirement of complete CO₂ removal.
• Emissions intensity of 13 assets, which accounted for about 52% of the total production volume, are below the region's average, whereas the 4 largest asset hubs that share 78% of the total production contributed to approximately 81% of the region's total emissions.

This insight is part of a continuing series of analyses from Commodity Insights' upstream GHG emissions dataset.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.