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► The Oil & Gas Sector has a variety of impacts on the environment.
These impacts depends upon the stage of the process, the size and
complexity of the project, the nature and sensitivity of the surrounding
environment and the effectiveness of planning, pollution prevention,
mitigation and control techniques.
► The major areas of environmental concern includes :
1. Atmospheric Impacts
2. Aquatic Impacts
3. Terrestrial Impacts
4. Ecosystem Impacts
5. Potential Emergencies
Plant and animal communities may be directly affected by changes in their environment through variations in water,
air and soil quality and through disturbance by noise. Such changes may directly affect the ecology: for example,
habitat, food and nutrient supplies, breeding areas, migration routes etc. The effect is upsetting of the nutrient
balances and microbial activity of the soil.
Direct Fossil
Fuel
Cement Indirect CO2 Consumption
18% Emissions 49%
from
electricity &
Iron & Steel heat
15% consumption
35%
The Oil & Gas and Chemical industries are among the major emitters of GHGs.
Source: CAIT, IEA, 2004a, Hendriks
► GHGs trap heat energy in the Earth's lower atmosphere, like a thick blanket
round the planet.
► This enhances the green house effect, resulting in commonly known “Climate
Change” or “Global Warming”
Physical Risks
►Global warming poses threat of sea level rise, hurricanes/ other natural calamities for
especially those situated in the coastal regions.
►Coastal E&P facilities, Refineries can face huge damage due to cyclones and
hurricanes
Business Risks
Climate ►Extreme weather conditions resulting in increased energy cost, higher contingency
requirement resulting in erosion of profit margins
Change
Risks for
Oil & Gas
Sector
Competitiveness Risks
►Effect on Gross Refining Margin. As energy costs increase, Oil industries using
conventional and carbon intensive energy sources will see a reduction in the GRM.
Regulatory risks
►‘Carbon ’tax’ implementation on states by Central government can affect profitability of
the Oil & Gas sector
Generation of
Carbon credits
*PIN: Project Identification Note
Verification/ *PDD: Project Design Document
Certification by DOE ERPA: Emission Reduction
Purchase Agreement
UNFCCC / EB DOE: Designated Operational Entity
Issues CERs DNA: Designated National Authority
► This interconnectivity can be achieved by laying submarine cables and transferring surplus power
(NG based) to the shore for sale.
► The project replaces more carbon intensive power source (DG based) to relatively cleaner (NG
based) power.
► Recovery and utilization of gas from oil wells that would otherwise be
AM0009 flared or vented
► Flare (or vent) reduction and utilization of gas from oil wells as a
AM0037 feedstock
Oil and Natural Gas ► Flare gas recovery project at Uran plant, Oil and Natural Gas Corporation
(ONGC) Limited
Corporation (ONGC)
Methodology used: AM0037
Limited ► Flare gas recovery project at Hazira Gas Processing Complex (HGPC), Hazira
plant, Oil and Natural Gas Corporation (ONGC) Limited
Methodology used: AM0037
► Up-gradation of Gas Turbine 1 (GT 1) and Gas Turbine 2 (GT 2) at co-
generation plant of Hazira Gas Processing Complex (HGPC) of Oil and Natural
Gas Corporation Limited (ONGC)
Methodology used: AMS.II-D
► Waste heat recovery from Process Gas Compressors (PGCs), Mumbai high
south (offshore platform) and using the recovered heat to heat process heating
oil
► Methodology used: AMS-II.D
Numaligarh ► NRL -Captive power generation by recovery and utilization of the waste energy
(thermal and pressure) of HP steam
Refinery Limited
Methodology used: ACM0004
Indian Oil ► GHG emission reductions through pre-heat train optimization in the CDU and
VDU of Digboi Refinery,, Indian Oil Corporation Limited (Assam Oil Division)
Corporation Limited
Methodology used: AMS-II.D
► Flare Gas Recovery and Utilization of Recovered Flare Gas for process heating
requirements at IOCL, Haldia Refinery
Methodology used: AMS-III.P
► Flare Gas Recovery system (FGRS) at Barauni Refinery of Indian Oil
Corporation Limited
Methodology used: AMS.III-P
Oil India Limited ► Oil India Limited (OIL) – Greenhouse Gas Emission Reduction through
Recovery and Utilization of Flare Gas
Methodology used: AM0009
Payment for emission reductions can be made using one or more of the
following forms: cash, equity, debt, or in-kind contributions such as providing
technologies to abate GHG emissions.
Carbon Transactions
Project finance
Investors from Europe, Japan interested in
financing CDM, especially RE projects
Right on CERs (full / partial) imperative
Transaction cost finance
Buyers ready to pick up full/part of transaction cost
CER price usually discounted
Voluntary market
► Essentially a non-compliance market
► Driven by social responsibility
► Market is emerging… not stable yet
► Transacted comodity: VER = Verified Emission
Reduction
► From registered projects outside crediting period
► From non-registered projects
► Prices lower compared to CERs
► Opportunities are yet to be assessed
100%
Key step
0% P
1. 2. 3. 4. 5. 6. 7
PIN Issued PDD Prepared. Host Country Approval PDD Registration Construction Issua
Validation with CE
finalised UNFCCC
PIN = Project Idea Note PDD = Project Design Document UNFCCC = United Nations Framework Convention on Climate Change
► Climate change and global warming: major threat to the Oil & Gas industries.
► The Oil & Gas sector will be a significant part of an evolving solution to the CO2
challenge and certainly drive the ushering of a cleaner hydro carbon age in future.
► Big Oil Companies like British Petroleum is planning to invest USD 8 billion in low
carbon power and alternative energy business over the next decade and aims at USD
1 billion of operating profit by 2015 from this business only.
► Adoption of the right strategy for mitigating long term climate change risks can provide
distinct competitive advantage.
► Companies seeking to develop their strategies should first analyze their ‘value-at-stake’
or ‘value-at-risk’ under a variety of scenarios from current and emerging policies to
reduce carbon emissions.
Carbon footprint has the power to influence all decisions on climate change strategy
Establishing carbon footprint
Determin
e
Develop
Map carbon Determine Capacity carbon
carbon
footprint boundary building
inventory emission
Enablers s
ACCURACY
RELEVANCE
COMPLETNESS
TRANSPARENCY CONSISTENCY
Approach
Company selects an approach for consolidating GHG emissions and
then consistently applies the selected approach to define those
businesses and operations that constitute the company for the purpose
of accounting and reporting GHG emissions.