Analysis
Energy

Aramco, Adnoc and the long road to decarbonisation

October 28, 2022, 5:43 AM

Solar plant in Uyayna, north of Riyadh. Saudi Arabia, along with other Gulf countries, is intensifying decarbonisation efforts

Saudi Aramco sustainability report outlines carbon storage plan
Adnoc waste-heat recovery project to produce steam used for power
Experts call on oil giants to commit to absolute reductions in emissions

As some of the world’s biggest carbon emitters, the Gulf’s national oil companies have come under considerable scrutiny in recent years.

Several are now ramping up their decarbonisation efforts in response to the deepening climate crisis and tougher targets for environmental, social, and corporate governance.

In October last year Saudi Aramco, the world’s largest oil-exporting company, announced plans to become carbon neutral by 2050 and it has since been unveiling initiatives and projects in support of this pledge.

In June this year, Aramco published its first dedicated sustainability report, which outlines plans to begin permanently storing carbon dioxide from 2026 in one of the largest facilities of its kind located near the industrial city of Jubail, on the east coast of Saudi Arabia.

In a process known as carbon capture and sequestration (CCS), the company is looking to collect carbon dioxide emitted by processes that convert natural gas into hydrogen, among other industrial activities, and store the gas underground in a reservoir that previously produced oil and gas.

Aramco currently has facilities that can store 800,000 tonnes of CO₂ – by 2035 it plans to increase this capacity to 11 million tonnes.

The process of converting natural gas to hydrogen emits carbon dioxide, but these emissions can be trapped – resulting in what’s known as blue hydrogen. This hydrogen can be used to make blue ammonia – a compound that’s much easier to ship than hydrogen.

Helicopter, Aircraft, Vehicle — Saudi Aramco aims to become a world leader in producing hydrogen – a gas seen as integral to the energy transition since it produces zero emissions when burned

For this reason, Aramco hopes to use blue ammonia to reduce emissions in hard-to-decarbonise sectors, including heavy-duty transport, heating and industrial applications. The blue ammonia can later be converted back into hydrogen.

The project is part of Aramco’s larger vision to become a world leader in producing hydrogen – a gas seen as integral to the global energy transition since it produces zero emissions when burned.

Other targets include renewables investment, energy efficiency improvements, methane and flaring reduction, and carbon offsets.

Adnoc’s 25% target

Abu Dhabi’s national oil company (Adnoc) has also been rolling out strategic initiatives to decarbonise its operations in pursuit of its stated target of decreasing its greenhouse gas emissions intensity by 25 percent by 2030. However, it is worth pointing out that it has not specified the baseline or scope of this target.

Adnoc has introduced a routine zero gas flaring policy and oversaw the establishment of the region’s first commercial-scale CCS unit in 2016.

More recently, Adnoc Refining, a joint venture company between Adnoc, Eni and OMV, launched a $600 million waste-heat recovery project in 2018. This will capture exhaust heat from the gas-powered turbines at Adnoc’s Ruwais plant – which is currently vented into the atmosphere – to produce steam that is subsequently used for power production.

In recycling this waste heat, it will produce up to an additional 230 megawatts of electricity a day and 62,400 cubic metres of distilled water a day for use in the plant.

Last month Adnoc Refining announced that it is planning to complete the first phase of the project by the end of this year. The second phase is due to be completed around mid-2023.

Person, Human, Sunglasses — Adnoc’s power grid will be supplied by nuclear and solar energy. Picture: Reuters/Christopher Pike

“It makes great sense for Aramco and Adnoc to reduce their upstream carbon emissions. Their oil is already naturally carbon competitive due to advantageous geology,” Jim Krane, energy research fellow at Rice University’s Baker Institute, told AGBI.

“Carbon competitiveness will become increasingly important as firms look to decarbonise their supply chains and importing countries enact carbon border tariffs. Aramco and Adnoc are positioning themselves in anticipation of these changes.”

Last October Adnoc also announced plans to meet up to 100 percent of its power requirements from clean nuclear and solar energy sources through a partnership with the Emirates Water and Electricity Company.

In doing so, it plans to become the first oil and gas company in the world to completely decarbonise its electric grid at scale.

In December last year, Adnoc launched a $3.6 billion renewable energy project in collaboration with TAQA, to decarbonise its offshore production operations.

The need to reduce absolute emissions

Both companies’ initiatives are ambitious, but industry experts say they do not go far enough and are calling for a reduction in absolute emissions.

Aramco’s 2022 sustainability report shows that its absolute emissions in 2035 will be almost the same as the level recorded in 2021. It expects to increase oil production by 1 million barrels a day by 2027 and boost gas production by 50 percent by 2030.

Meanwhile, Adnoc plans to increase oil extraction by 42 percent by 2030 and also has a high ratio of locked-in emissions to its carbon budget.

“Both Aramco and Adnoc should commit to absolute emission reduction targets across the value chain if they are to be viewed as leaders on the green energy transition,” said Mike Coffin, head of oil, gas and mining at Carbon Tracker, an energy think tank.

“Based on our assessment framework, we see Saudi Aramco and Adnoc lagging behind almost all oil majors in terms of the future impact on the environment.

“Not only do both ignore end-use emissions or set clear-cut absolute emission reduction targets, but they are each planning to increase oil output by 1 million barrels per day over the next few years.”

However, Amin Nasser, CEO of Saudi Aramco, defended Aramco’s strategy and future emissions trajectory while speaking at the Energy Intelligence Forum earlier this month.

“If you think about it today, alternatives, solar, wind, only contribute 2 percent to the primary industry, 10 percent in electric power, electric cars 2 percent of the total global fleet,” said Nasser.

“So, alternatives are not ready yet. Until they are ready, we need to work in parallel. We need to develop our oil and gas and make sure that we decarbonise our resources by building carbon capture and sequestration.”