Premium energy basins: Focus on emissions reduction as oil and gas demand persists [Energy Insights]

Despite the accelerating energy transition, oil and gas will remain central to the global energy mix for the foreseeable future as the key hydrocarbon sources continue to satisfy global primary energy demand, which is projected to exceed 650 exajoules (EJ) in the coming years. Rystad Energy estimates that by 2030, more than 75% of total demand will be met by fossil fuels, with emissions climbing as a result. A significant portion of these emissions will originate from upstream activities, particularly hydrocarbon extraction and gas flaring. Approximately three-quarters of these emissions will be linked to the hydrocarbon extraction process, while the remaining quarter will result from gas flaring. This is expected to contribute around 1.1 billion tonnes of carbon dioxide equivalent (CO2e) annually over the next few years.

This underscores the continuing importance of hydrocarbons, while also highlighting the need for oil and gas companies to build sustainable portfolios and reduce their Scope 1 and Scope 2 emissions to meet medium and long-term targets. As upstream organizations work to transform into integrated energy players and decarbonize their operations, it is crucial not only to achieve transition goals but also to minimize the carbon footprint of upstream activities, with extraction of these resources accounting for more than 800 million tonnes of CO2e every year.

As investors and governments intensify their focus on carbon-reduction goals, identifying basins that can help lower the overall emissions impact is becoming increasingly important. Premium energy basins (PEB)—a term coined by Rystad Energy —are particularly valuable because they are rich in hydrocarbon reserves and offer potential for integrating low-carbon energy sources. As such, they provide an ideal platform for addressing emission challenges by combining substantial hydrocarbon volumes with opportunities for incorporating low-carbon solutions to reduce overall emissions.

"A select few basins hold the potential for upstream players to decarbonize while continuing to meet oil and gas demand. However, the race to decarbonize hinges on three crucial factors: accelerating investment, overcoming geographical challenges and modifying existing infrastructure. These changes are essential for unlocking the full potential of these basins and for upstream players to achieve their decarbonization targets," says Palzor Shenga, Vice President, Upstream Research, Rystad Energy.