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Published:December 12, 2016 5:01 PM
Groundwork for Climate Change Climate change refers to the deviation in average weather conditions. This deviation is generally caused by the factors such as, biotic processes and abiotic processes. Biotic factors are caused by the living things including plants, animals, bacteria, fungi etc. resulting in Photosynthesis, Decomposition, Digestion, Respiration, Transpiration. Further, abiotic factors include non-living parts of an ecosystem like Latitude, Altitude, Ocean Currents, Topography, Solar Radiation, Evaporation, Orbital Variations and Volcanic Activity. Climate change is also subjected to the human causes like Greenhouse Gases, Deforestation, Coal mining, burning of fossil fuels, Industrial processes and Agriculture. Major Greenhouse Gases (resulting Global Warming) from human’s Activities along with the share of each gas is shown in Fig 1. Source: Intergovernmental Panel on Climate Change Considering the fact, the current global carbon dioxide level as on October, 2016 was recorded at 404.93 ppm. Moreover, 2015 annual average of the global temperature stood at 0.87°C. (Fig 2). Source: NASA High level of CO2 in the atmosphere results in the absorbtion of sunlight, thus giving a push in increasing global average temperature. (Fig 3) Source: NASA The current warming trends is more inclined towards human factors and has witnessed a unprecedented rate in the past 1,300 years. There are many evidence of rapid climate change like, •Global sea level rose about 6.7 inches in the past century and the last decade has shown shocking rise in the sea level. •Global temperature rise with record 15 warmest years since 2001. •Ocean absorbing heat with top 700 meters showing warming of 0.302 degree Farenheit since 1969. •Declining Arctic sea ice at a rate of 13.3% per decade. Also, Antartica alone lost 152 cubic kilometers of ice between 2002 and 2005. Moreover, the Greenland ice sheet is loosing an estimated 287 gigatonnes per year. •Glacial retreat from all around the world including Alps, Himalayas, Alaska etc. •Extreme events like increment in the number of record high and low temperatures, intense rainfalls etc. •Ocean acidification has increased remarkably as the amount of carbon dioxide absorbed by the ocean’s upper layer is increasing by about 2 billion tons per year. Other significant effects of climate change include extreme drought, decline in crop productivity, hurricanes, an increase in the concentration of ground level ozone, therefore, reducing air quality, UV exposure etc. Footprint on the Oil and Gas Industry According to recent statistics, oil and gas accounts for more than 55% share in the total energy mix which is a major driving factor for the global economy. In addition, volatility in the oil and gas industry can oscillate the global economy at par. Over the past few years, changes in climate has affected oil and gas industry in many ways leading to heavy losses in the entire value chain of the industry. Some of the major impacts on the oil and gas industry: •Upstream players specially in the deep water blocks can see a tremendous operational challenges owing to the rising sea level and water acidification. There operational challenges will bound to increase the marginal cost •Hurricanes will disrupt the oil and gas production. It has been seen in the past as well the oil production was shut down because of hurricanes Katrina and Rita in the Outer Continental Shelf in the Gulf of Mexico. Furthermore, refineries also took a hit as after Rita, 5.6 mbd of refining capacity was slammed which accounted for 1/3rd of the U.S. total. In addition to crude oil , 278 bcf of natural gas production was shut down because of Katrina •Storms, hurricanes and other extreme whether conditionshave the potential to break the back of the pipeline infrastructure which helps in transportation of the molecules to the end market •Gas based power plants will take a hit, resulting in the loss of production in electricity •Technologies like hydraulic fracturing, horizontal drilling etc. for the extraction of the unconventional resources like shale gas/oil and CBM will bear the brunt owing to the reduction in water resources due to climate change •Employee health and safety risk and drop in value of financial assets •Expedition of gas hydrates will be challenging. Climate related pressure on oil and gas producers Oil and Gas majors like British Petroleum, ExxonMobil and Shell are taking steps in reducing their carbon emissions, as fossil fuels accounts for more than 57% in the green house gas emissions by energy as depicted below in the diagram. Over the past 10 years, ExxonMobil has reduced its emissions by around 40% across all its operations by investing in the clean fuel projects. Furthermore, Shell is making sustainable energy endeavour across biofuels, carbon capture and storage, energy efficiency and natural gas. Source: IIGCC Source: World Resources Institute Conclusion and way forward Events like Paris summit aims to reduce the drastic climate change by investing heavily in the clean sources of energy and reducing carbon footprints in the operations. Source: CBC News However, these efforts should come in practice because the climate is changing at a staggering rate and mitigation measures needs to be taken without any further delay. The operators should conduct a high level assessment of how the climate change can impact their business model and the regulatory norms should be practiced diligently in order to safeguard the industry in the long run. The world is shifting towards cleaner source of fuel; therefore, the operators should consider entering in the renewable vertical. InfralineEnergy Disclaimer:The views expressed here are solely those of the author in his private capacity and do not in any way represent the views of the InfralineEnergy (Technologies India Pvt. Ltd.). The organization is not liable for any use that may be made of the information contained therein and any direct/indirect consequences resulting therefrom.
Groundwork for Climate Change
Climate change refers to the deviation in average weather conditions. This deviation is generally caused by the factors such as, biotic processes and abiotic processes. Biotic factors are caused by the living things including plants, animals, bacteria, fungi etc. resulting in Photosynthesis, Decomposition, Digestion, Respiration, Transpiration. Further, abiotic factors include non-living parts of an ecosystem like Latitude, Altitude, Ocean Currents, Topography, Solar Radiation, Evaporation, Orbital Variations and Volcanic Activity.
Climate change is also subjected to the human causes like Greenhouse Gases, Deforestation, Coal mining, burning of fossil fuels, Industrial processes and Agriculture.
Major Greenhouse Gases (resulting Global Warming) from human’s Activities along with the share of each gas is shown in Fig 1.
Source: Intergovernmental Panel on Climate Change
Considering the fact, the current global carbon dioxide level as on October, 2016 was recorded at 404.93 ppm. Moreover, 2015 annual average of the global temperature stood at 0.87°C. (Fig 2).
Source: NASA
High level of CO2 in the atmosphere results in the absorbtion of sunlight, thus giving a push in increasing global average temperature. (Fig 3)
The current warming trends is more inclined towards human factors and has witnessed a unprecedented rate in the past 1,300 years. There are many evidence of rapid climate change like,
•Global sea level rose about 6.7 inches in the past century and the last decade has shown shocking rise in the sea level.
•Ocean absorbing heat with top 700 meters showing warming of 0.302 degree Farenheit since 1969.
•Declining Arctic sea ice at a rate of 13.3% per decade. Also, Antartica alone lost 152 cubic kilometers of ice between 2002 and 2005. Moreover, the Greenland ice sheet is loosing an estimated 287 gigatonnes per year.
•Glacial retreat from all around the world including Alps, Himalayas, Alaska etc.
•Extreme events like increment in the number of record high and low temperatures, intense rainfalls etc.
•Ocean acidification has increased remarkably as the amount of carbon dioxide absorbed by the ocean’s upper layer is increasing by about 2 billion tons per year.
Other significant effects of climate change include extreme drought, decline in crop productivity, hurricanes, an increase in the concentration of ground level ozone, therefore, reducing air quality, UV exposure etc.
Footprint on the Oil and Gas Industry
According to recent statistics, oil and gas accounts for more than 55% share in the total energy mix which is a major driving factor for the global economy. In addition, volatility in the oil and gas industry can oscillate the global economy at par. Over the past few years, changes in climate has affected oil and gas industry in many ways leading to heavy losses in the entire value chain of the industry.
Some of the major impacts on the oil and gas industry:
•Upstream players specially in the deep water blocks can see a tremendous operational challenges owing to the rising sea level and water acidification. There operational challenges will bound to increase the marginal cost
•Hurricanes will disrupt the oil and gas production. It has been seen in the past as well the oil production was shut down because of hurricanes Katrina and Rita in the Outer Continental Shelf in the Gulf of Mexico. Furthermore, refineries also took a hit as after Rita, 5.6 mbd of refining capacity was slammed which accounted for 1/3rd of the U.S. total. In addition to crude oil , 278 bcf of natural gas production was shut down because of Katrina
•Storms, hurricanes and other extreme whether conditionshave the potential to break the back of the pipeline infrastructure which helps in transportation of the molecules to the end market
•Gas based power plants will take a hit, resulting in the loss of production in electricity
•Technologies like hydraulic fracturing, horizontal drilling etc. for the extraction of the unconventional resources like shale gas/oil and CBM will bear the brunt owing to the reduction in water resources due to climate change
•Employee health and safety risk and drop in value of financial assets
•Expedition of gas hydrates will be challenging.
Climate related pressure on oil and gas producers
Oil and Gas majors like British Petroleum, ExxonMobil and Shell are taking steps in reducing their carbon emissions, as fossil fuels accounts for more than 57% in the green house gas emissions by energy as depicted below in the diagram. Over the past 10 years, ExxonMobil has reduced its emissions by around 40% across all its operations by investing in the clean fuel projects. Furthermore, Shell is making sustainable energy endeavour across biofuels, carbon capture and storage, energy efficiency and natural gas.
Source: IIGCC
Source: World Resources Institute
Conclusion and way forward
Events like Paris summit aims to reduce the drastic climate change by investing heavily in the clean sources of energy and reducing carbon footprints in the operations.
Source: CBC News
However, these efforts should come in practice because the climate is changing at a staggering rate and mitigation measures needs to be taken without any further delay. The operators should conduct a high level assessment of how the climate change can impact their business model and the regulatory norms should be practiced diligently in order to safeguard the industry in the long run. The world is shifting towards cleaner source of fuel; therefore, the operators should consider entering in the renewable vertical.
InfralineEnergy Disclaimer:
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