Does Electrifying Extraction Activities Make Economic Sense?

The issue is as complex as open-heart surgery. Here are a few factors to consider.

The call to electrify everything is loud, but careful consideration is warranted before implementation. Solutions that make sense for one scenario in one location might not make sense in a different situation elsewhere. For example, using an electric car for a 30-mile commute in a warm climate makes more sense than trying to use that same car to tackle I-70 through the Rockies during a snowstorm, where the risk of highway closure for unknown amounts of time is high.

Despite the apparent irony of electrifying efforts to extract oil and gas, there could be some benefits to doing this if it is implemented intelligently. A study by Rystad Energy found that converting upstream oil and gas production facilities to run on electricity produced by renewables or natural gas – which otherwise would have been flared – could reduce associated emissions by more than 80 percent.

Most rigs are driven by electricity, but these are often powered by electric generators, which in turn are powered by diesel fuel. When possible and near populated areas, though, onshore rigs will plug into the local power grid, decreasing emissions credited to the rig but doing little to affect total outputs when the electrical grid is running off fossil-fuel sources such as coal or natural gas.

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The call to electrify everything is loud, but careful consideration is warranted before implementation. Solutions that make sense for one scenario in one location might not make sense in a different situation elsewhere. For example, using an electric car for a 30-mile commute in a warm climate makes more sense than trying to use that same car to tackle I-70 through the Rockies during a snowstorm, where the risk of highway closure for unknown amounts of time is high.

Despite the apparent irony of electrifying efforts to extract oil and gas, there could be some benefits to doing this if it is implemented intelligently. A study by Rystad Energy found that converting upstream oil and gas production facilities to run on electricity produced by renewables or natural gas – which otherwise would have been flared – could reduce associated emissions by more than 80 percent.

Most rigs are driven by electricity, but these are often powered by electric generators, which in turn are powered by diesel fuel. When possible and near populated areas, though, onshore rigs will plug into the local power grid, decreasing emissions credited to the rig but doing little to affect total outputs when the electrical grid is running off fossil-fuel sources such as coal or natural gas.

A project in the North Sea’s Johan Sverdrup Field sends onshore power to its offshore field, the CO2 emissions of which are estimated to be only 0.67 kilograms per barrel. Johan Sverdrup Field is located in the Utsira High area in the North Sea, 160 kilometers west of Stavanger, in water depths of 110–120 meters and covers an area of 200 square kilometers. Phase One of Johan Sverdrup opened in October 2019, and Phase Two came on stream in December 2022. Now that it’s all on production, the field can produce up to 755,000 barrels of oil per day at plateau and has reserves of 2.7 billion barrels of oil equivalent.

Johan Sverdrup has some of the lowest CO2 emissions of any oil field in the world, ٨٠–90 percent lower than the global average, thanks to electrification with power from its Norwegian shore. Norway generates most of its electricity from hydropower and wind power, making this a true reduction in emissions. The usual gas turbines are replaced with power delivered via nearly 200 kilometers of undersea cables (including a fiber optic cable) and part of Phase Two of the project included facilities to send power from shore to the other parts of the Utsira High area.

Power from the shore to Johan Sverdrup will help reduce emissions by an estimated 1.2 million tonnes of CO2 per year – 2.5 percent of Norway’s annual emissions. While that’s all well and good, the economic benefit of all this electrification is a breakeven price of less than $15 USD per barrel, with peak production at 755,000 barrels per day, enough to meet roughly 6–7 percent of the daily oil demand in Europe.

Electric fracturing fleets are also growing, with electric fracturing pumps that are agnostic of power source and can plug into a local electrical grid and/or natural gas-powered pumps. These could ostensibly use onsite natural gas that might have otherwise been flared. Aside from climate and financial benefits, electric fracturing pumps are significantly quieter, which can make communication (and general experience) onsite easier.

Challenges Remain

Electrification is not all sunshine and roses, however. Concerns over power outages, costs, safety and logistical feasibility abound. For example, in November 2024, parts of the Johan Sverdrup oil field were taken offline due to an onshore power outage, pressuring oil prices upward.

Shell’s former Managing Director, United Kingdom Upstream Steve Phimister has compared the complexity of converting oil and gas platforms to renewable electricity to open-heart surgery. Some conversions would be prohibitively expensive, while other installations grant limited access to relevant equipment. Sharing costs across platforms, such as in the North Sea installation, can improve the economics, but converting single, remote platforms usually has a lower all-around return on investment. Many also point out that while extracting oil and gas does contribute to the lifecycle CO2 output from fossil fuels, it’s significantly smaller than the environmental and carbon footprint of utilizing the final product.

The decision to electrify extraction activities is multifaceted, and there’s a lot of space for geoscientists to contribute. We know and understand the natural resources surrounding offshore platforms and onshore sites when it comes to optimizing solar, wind and even ocean waves. We also have extensive knowledge of how much and which fluids should be produced, giving us a seat at the table on how best to utilize all products coming up the wellbore.

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