OGCI’s upstream carbon intensity target

OGCI’s target aims to reduce member companies’ aggregate upstream carbon intensity from 23 kg of greenhouse gases per barrel of oil or gas (kgCO2e/boe) in 2017 to 20kg by 2025.

This is consistent with the reduction needed across the oil and gas industry by 2025 to support the Paris Agreement goals[1]. IEA analysis from 2018 and 2019 shows a reduction of between 9% and 11% is needed to remain on track – the OGCI target is a reduction in intensity of 13%. IEA data calculated using the same perimeter also shows that the OGCI baseline is considerably lower than the industry average.

The target represents a reduction of 52 million tonnes of greenhouse gas emissions per year by 2025 (assuming consistent levels of marketed oil and gas production).

There was a 7% reduction in member companies’ collective average upstream carbon intensity since 2017 to 21.1 kg CO2e/boe in 2019. This progress involved reducing absolute upstream emissions by 21 million tonnes of CO2e – equivalent to eliminating the annual emissions from energy use in 2.4 million US homes.


How do oil and gas companies reduce carbon intensity?

OGCI’s target requires all member companies – including those with lower carbon intensity levels – to put initiatives in place now and over the next five years to reduce carbon dioxide and methane emissions in the short term.

The measures that member companies are using to reduce upstream carbon intensity include:

  • Electrifying operations, using power from the grid where it is low carbon
  • Co-generating power and useful heat
  • Integrating solar and wind power into both onshore and offshore facilities as a key source of power
  • Improving energy efficiency through improved monitoring, energy audits, proactive and predictive maintenance, automation and machine learning
  • Using carbon capture, utilization and storage to avoid operational emissions
  • Reducing routine flaring to zerothrough improved design and the build-out of infrastructure to use gas
  • Continued progress on the methane target will contribute up to a quarter of the reductions needed to meet the new combined carbon intensity target. OGCI will also continue to monitor these emissions separately to accelerate improvements.

What does the carbon intensity target include?

The carbon intensity target covers carbon dioxide and methane emissions from OGCI member company upstream operated oil and gas exploration and production activities (known as Scope 1), as well as emissions from imports of electricity and steam to those same sites (Scope 2).

Upstream operations account for about half of emissions on average across OGCI, although this share varies widely by company. OGCI’s target only covers facilities where member companies are directly in charge of operations – not where they are just equity owners.

The target does not include liquefied natural gas (LNG) and gas-to-liquids (GTL) in the upstream carbon intensity target, but OGCI is working on a specific set of initiatives to address these emissions. Both these businesses are enabling a shift to lower carbon-intensive fuels – LNG in areas that have traditionally been reliant on coal, and GTL as a way to produce low-carbon transportation fuels. But the processes required to produce them are energy-intensive and this reduces their positive climate impact. However, since these facilities are mostly owned but not operated by OGCI member companies, it was important to find a different approach to addressing these emissions.

The OGCI carbon intensity target also does not include member companies’ refinery operations. A taskforce is currently working with external experts to define and quantify emissions on these facilities in a way that cuts across differing portfolios and engineering standards. Member companies are already putting in place downstream initiatives.


Why is OGCI targeting carbon intensity and not absolute emissions?

OGCI’s carbon intensity target measures the reduction in average aggregate carbon intensity rather than an absolute reduction in emissions. Reducing intensity means reducing the amount of greenhouses gases emitted per unit of energy produced.

If production levels remain the same, absolute emissions will fall by 13%. if they fall absolute emissions will fall much further – conversely, if production levels rise, absolute emission levels could stay flat or even rise.

The aim in focusing on carbon intensity is not to open up wiggle room to increase production, but to retain a meaningful target regardless of shifts across the portfolios of member companies, and to allow members to join or leave without damaging the target. It also allows other oil and gas companies to adopt the metric as a benchmark.

[1] Extrapolated on the same perimeter from IPCC AR4 data and International Energy Agency data (World Economic Outlook 2018 and 2019 editions and the IEA special report The Oil and Gas Industry in Energy Transitions, 2020).