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Impact of Oil & Gas Industry on the Environment

GROUP NO - 2
ADRITA KACHROO JINEN SHAH RAHUL IYER HARDIK DAMANIA ADITYA TIPLE KRUTI TURAKHIA

Authorities
Ministry of Oil & Natural Gas Directorate General Of Hydrocarbons

Review exploration programmes of companies for

adequacy

Half yearly review of work programmes in Petroleum Exploration Licence (PEL) areas

Processing and review of all the PEL cases for the Ministry Cost monitoring, statutory payments to government, Profit sharing to government. Facilitating statutory & other clearances. Participation in arbitration matters. Advise Government on policy formulations. Issuance of essentiality certificates.

Technical & financial evaluation and review of

development plans of commercial discoveries

Regulatory Bodies/Applicable Regulations


Central Pollution Control Board (CPCB) Ministry of Environment & Forest (MOEF)

- Environment Protection Act, 1986 - Prior environmental clearance - Security Clearance from Ministry of Defense

ENVIRONMENTAL ISSUES FOR THE INDIAN OIL & GAS SECTOR


The Oil & Gas Sector has a variety of impacts on the environment: - Depending upon the stage of the process - The size and complexity of the project - The nature and sensitivity of the surrounding environment The major areas of environmental concern includes :
1. 2. 3. 4. 5.

Atmospheric Impacts Aquatic Impacts Terrestrial Impacts Ecosystem Impacts

Potential Emergencies

POTENTIAL ENVIRONMENTAL IMPACTS

ATMOSPHERIC IMPACTS

Atmospheric issues are attracting increasing interest from both industry and government authorities worldwide. The potential impacts mainly arises due to exploration & production, refining operations etc. The primary sources of atmospheric emissions from oil and gas operations arise from:
Flaring,

venting and purging gases processes in diesel engines and gas turbines particulates from soil disturbance during construction

Combustion Airborne

The main areas of impact are ozone depletion, GHG emissions leading to increased global warming, NOx and SOx emissions, SPM emissions etc.

POTENTIAL ENVIRONMENTAL IMPACTS

AQUATIC IMPACTS
The principal aqueous waste streams resulting from exploration and production operation are:
Produced Drilling Process

water

fluids, cuttings and well treatment chemicals wash and domestic wastes

Cooling
Spills

water

and leakage

The major impact of the waste streams arise from the toxicity, high pH and salt

content of chemicals used as drilling fluids which may result in pollution of


ground and surface waters. Impacts may result particularly where ground and surface waters are utilized for household purposes or fisheries and especially ecologically sensitive areas are affected.

POTENTIAL ENVIRONMENTAL IMPACTS

TERRESTRIAL IMPACTS
Potential impacts to soil arise from two basic sources:
Physical

disturbance as a result of construction

Contamination

resulting from spillage and leakage or solid waste disposal

The potential impacts arising from the poor design and construction includes soil erosion due to soil structure, changes in surface hydrology and drainage patterns, increased salination and habitat damage, reducing the capacity of the environment to support vegetation and wildlife etc.

POTENTIAL ENVIRONMENTAL IMPACTS

ECOSYSTEM IMPACTS

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.

POTENTIAL ENVIRONMENTAL IMPACTS

POTENTIAL EMERGENCY

The major environmental impact occurs in this case due to


Spillage

of fuels, gases, oil, chemicals and hazardous materials Oil or gas well blowout Explosions Fires War & Sabotage Natural disaster and their implication on operation e.g. flood, earthquake, cyclone. The major impact of these emergency events include large GHG emissions, ozone depletion, changes in soil structure and character, habitat and vegetative damage.

Initiatives towards reducing atmospheric impacts

Among all the different environmental impacts, the major focus lies on Atmospheric Impact caused by Oil & Gas Industry. One of the major sources of Atmospheric Impact caused by Oil and Gas Industry is the flaring and venting of gases. So the principle target for emission reduction is in this domain. Various technological initiative have been introduced to reduce emissions as a result of combustion process related to power production. More efficient gas turbines have been developed together with improved turbine maintenance regimes. Efficiency improvements may also result from gas turbine optimization considerations. Other technologies to improve fuel efficiency include: steam injection, combined cycle power generation, pump and compressor optimization, waste heat recovery and the application of energy conservation principles. Improvements in the technologies have resulted in reduced emission from the different sources. The reduction of GHG emissions directly leads to reduction of global warming. These process improvement/energy efficiency measures causing emission reduction can be directly accounted for and thus can be considered as CDM projects.

GHG Emissions from various industries & sectors


GHG emissions associated with industry (including energy utilization) represent about 21% of world GHG emissions.
GHG Emissions from various industries

GHG Emissions associated with Industry


CO2 and non CO2 Emissions from industrial processes 16%

Others 44%

Petroleum, Petrochemic als & Chemicals 23%

Cement 18% Iron & Steel 15%

Indirect CO2 Emissions from electricity & heat consumption 35%

Direct Fossil Fuel Consumption 49%

The Oil & Gas and Chemical industries are among the major emitters of GHGs.

Climate Change Enhanced Greenhouse Effect


Human activities like deforestation or heavy fossil fuel use are increasing the

concentration of Greenhouse Gases (GHGs) in the atmosphere.

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

Climate Change leads to: Rise in average global temperature (expected to go up by 1-4 Celsius in next 100 years) Changes in vegetation Increased storm surges Sea level rise (parts of Maldives & Bangladesh might submerge in next 50 yrs) Risks which will affect the profitability of the Oil & Gas industries

Glimpse of Climate change Risks


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 Change Risks for Oil & Gas Sector

Extreme weather conditions resulting in increased energy cost, higher contingency requirement resulting in erosion of profit margins

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

Kyoto Protocol and CDM

Legally binding emission reduction targets for GHGs only for Annex-1 (i.e., developed ) countries Aim of reducing overall GHG emissions by at least 5.2% below 1990 levels in 2008-2012 commitment period

Developed Country Govt/ Pvt. Sector

Kyoto protocol - Establishes three mechanisms to supplement national actions to achieve real, long term, measurable and cost effective GHG reductions:

Sale proceeds

Carbon Credits

Clean Development Mechanism (CDM) International Emission Trading (IET)


Joint Implementation (JI)

Developing Country GHG Abatement Project

Carbon credits are measured in terms of Certified Emission Reduction (CER) One CER equals 1 MT CO2 equivalent

Potential GHG abatement Projects in Upstream Oil & Gas Sector

Potential GHG abatement projects in Upstream Oil & Gas Sector


1. Installation of Gas Recovery Facilities to prevent emission of methane/CO2 to the atmosphere

Installation of compressors to recover low pressure (LP) gas and compress the same for further distribution Installation of ejector systems which uses the motive force to suck LP gases which were previously flared Installation of separators to separate gas at various pressures and recover very low pressure gas that was previously flared Up-gradation of process gas compressors (PGC) Optimal utilization of gas for internal consumption in gas lift wells/ gas re-injection Laying pipelines from gas rich areas to areas where there is scarcity of gas but greater demand (by identifying potential consumers).

2. Common Grid of Power at Offshore


A common grid of power is setup by achieving interconnectivity across various process and well platforms. 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.

Potential GHG abatement projects in Upstream Oil & Gas Sector...(contd)


3. Recovering Vapors from Storage Tanks Recovery and utilization of vapors, previously being vented out from oil storage tanks, using ejector system. 4. Carbon Capture & Storage (CCS) Capture of CO2 from large stationary sources, transportation of the gas to an appropriate injection site where it is pumped and stored into underground geological formations such as natural gas and oil fields.
Storage may also be combined with Enhanced Oil Recovery (EOR) or

Enhanced Gas Recovery (EGR) recovery from the wells.

This also results in energy consumption reduction of oil and gas

Other Potential GHG abatement projects in Upstream Oil & Gas Sector

Facilities for reduction of gas flaring through ejectors/compressors/separators/pipeline etc. Waste heat recovery at oil production facilities. Energy efficiency improvement in gas processing plant Power factor improvement at oil installations Reduction in gas pipe leaks Fuel switch from fossil fuels to other cleaner fuels like natural gas

Captive power generation by utilizing natural gas


Oil tank head vapor recovery system

Potential GHG abatement projects in Downstream Oil & Gas Sector

Potential GHG abatement projects in Downstream Oil & Gas Sector


1. Energy efficiency Improvement measures in the existing system
Steam generation and distribution system up-gradation

-Enhanced heat utilization through installation of centralized flash steam recovery system to recover steam condensate -Flash steam utilization in vapor absorption chiller to produce refrigeration effect -Better steam trap management to reduce heat loss -Improvement in the cogeneration/ self generation efficiency
Steam optimization by installation of Dry-ejector system instead of

steam-jet ejector in VDU In Dry-ejector system vacuum gas oil is used as motive liquid and circulated in the system. This reduces generation of LP steam which is required as motive fluid in conventional steam-jet ejector. An unique technology.

Potential GHG abatement projects in Downstream Oil & Gas Sector & Petrochemical Units
1. Energy efficiency Improvement in the existing systemcontd Installation of mist cooling tower instead of conventional cooling tower

A much lower cooling water temperature can be achieved through mist cooling tower. This improves heat recovery and reduces cooling water requirement hence lower pumping energy etc. Not a common practice in large-scale hydrocarbon industries.
Heat integration through the application of state-of-the-art pinch technology

Energy efficiency improvement through optimization of heat exchanger network in CDU/VDU/pre-heat train of distillation units etc. Optimization of HEN is performed using Pinch Analysis.
New generation refractory

Replacement of conventional refractory with ceramic fibre insulation to reduce heat loss in furnace

Few more potential areas in refinery units where CDM may be applicable
2. Flare recovery system utilization to cater to heat demand of refinery utilization in boilers/ Gas Turbine 3. Fuel switch projects Fuel switching in furnace, heater etc Fuel switch in the thermal energy generation system/ cogeneration/ self generation equipments Optimization in H2 recovery from off gases from CRU, VGO hydro-treater etc 4. Application of Advanced Processes Use of new generation catalysts which reduces coke deposition on the catalyst Application of energy-efficient Solvent De-asphalting technology instead of energy-intensive Cracking/Coking technology

Companies Registered CDM projects


Essar Oil Limited Bharat Petroleum Corporation Limited

Oil and Natural Gas Corporation (ONGC) Limited

Indian Oil Corporation Limited

Numaligarh Refinery Limited

Oil India Limited

CARBON TRANSACTIONS
carbon transactions are purchase contracts whereby one party pays another party in exchange for a given quantity of GHG emission reductions, either in the form of allowances or credits that the buyer can use to meet its compliance objectives vis--vis greenhouse gas mitigation.

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

Allowance based Transactions (EUA)

Project based Transactions (CER,ERU)

CARBON TRANSACTION OPTIONS


Forward transaction

Ensures guaranteed carbon revenue Advance possible, but modalities still uncertain Could be fixed price or market-linked Possible to put floor and ceiling Guaranteed quantity or best effort basis Transaction on issuance of CERs Till today, has resulted in better rate Has been more popular in India so far Usually when large quantum of CERs available (say >100,000 p.a.)

Spot transaction

Combination of Forward and Spot

Summary

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. Companies have already started pursuing strategies to position themselves in the cleaner, more sustainable and low carbon growth trajectory by conscious reorganization of their product portfolio and restructuring of their multi-location operations. 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.

References
http://www.ibef.org/download/Oil_and_Gas50112.pdf http://www1.ifc.org/wps/wcm/connect/554e8d80488658

e4b76af76a6515bb18/Final%2B%2BGeneral%2BEHS%2BGuidelines.pdf?MOD=AJPERES http://www.oswindia.com/articles/oct_nov2010/Dr_kows hik.pdf http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/ gui_EHSGuidelines2007_OnshoreOilandGas/$FILE/Fina l+-+Onshore+Oil+and+Gas+Development.pdf http://lockthegate.org.au/documents/doc-283evironmental-hazards-of-oil-and-gas-exploration.pdf

THANK YOU

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