Kent to develop decarbonization guidelines for upstream oil, gas sector

(WO) — Kent and the Energy Institute have announced a collaboration to create comprehensive guidelines for the economics of decarbonization in greenhouse gas (GHG) emission reduction projects within the upstream oil and gas sector. The guidelines aim to provide clear, actionable advice to help the industry meet its environmental goals.

Under the leadership of Graham Filsell, Kent’s asset decarbonization lead, the guidelines will clarify the financial aspects of decarbonization projects.

"We have seen the challenges of presenting decarbonization projects against standard project economics with the only justification being the reduced OPEX related to Emission Trading Scheme credits and potential increased revenue from an increase in sales gas quantities from reducing fuel and flare gas," Filsell said. "With the changes proposed in the NSTA’s consultation on the draft OGA Plan to reduce UKCS GHG Emissions, there is a strong case for the societal cost of carbon and potentially an individual asset marginal abatement cost to form part of the project economics for decarbonization projects."

While the focus is on the U.K. North Sea, the guidelines are intended to serve as a foundation for future global research. Key objectives include providing clarity for energy professionals with limited experience in project economics, offering insights into carbon cost calculations, recommending alternative metrics beyond net present value (NPV), and justifying the choice of both standard and non-standard metrics.

The development of these guidelines will involve collaboration between Kent’s Environmental, Asset Decarbonization, and Energy Environment Economic (E3) Modelling and Communications teams. The Environmental Team will review the U.K. Carbon Budget and GHG regulations, while the Asset Decarbonization Team will focus on industry legislation and best practices. The E3 Modelling and Communications Team will guide the valuation of GHG emissions and the demystification of decarbonization economics.

James Lawson, chair of the upstream environmental group (USEG), emphasized the importance of this initiative, highlighting that decarbonization projects often involve a wide range of energy professionals who may not be familiar with economic assessments. He stressed that a clear and concise document would be invaluable in ensuring that capital and resources are allocated appropriately to meet net-zero commitments.

This collaboration is a significant step toward achieving the environmental objectives of the North Sea Transition Deal and ensuring the U.K. North Sea upstream oil and gas sector operates with the lowest possible environmental impact.