Environment Report 2018

ENVIRONMENT REPORT 2018

ENVIRONMENT REPORT 2018

2

ENVIRONMENT REPORT 2018

Contents

1. 2. 3.

Foreword

4 6 8 9

Key Findings

Permitted Offshore Emissions and Discharges

3.1 3.2 3.3 3.4 3.5 3.6

UKCS Activity

Produced Water

10 14 17 19 26 30 33 34 35 36 39 40 41 42

Chemicals

Drill Cuttings

Atmospheric Emissions

The Role of Oil and Gas in Meeting Future Emissions Targets

3.7

Waste

4.

Environmental Performance Benchmarking

4.1 4.2 4.3 4.4 5.1 5.2 5.3 5.4 5.5

Dispersed Oil in Produced Water

Discharged Drill Cuttings Production Chemicals

Total Offshore Atmospheric Emissions 37

5.

Accidental Releases

Overview 2003–17

Accidental Oil Releases in Context Accidental Oil Releases Breakdown

Accidental Chemical Releases in Context 46 Accidental Chemical Releases Breakdown 47

6. 7.

Significant Issues and Activities

53 57

Glossary

The UK Oil and Gas Industry Association Limited (trading as Oil & Gas UK) 2018 Oil & Gas UK uses reasonable efforts to ensure that the materials and information contained in the report are current and accurate. Oil & Gas UK offers the materials and information in good faith and believes that the information is correct at the date of publication. The materials and information are supplied to you on the condition that you or any other person receiving them will make their own determination as to their suitability and appropriateness for any proposed purpose prior to their use. Neither Oil & Gas UK nor any of its members assume liability for any use made thereof.

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ENVIRONMENT REPORT 2018

1. Foreword Welcome to Oil &Gas UK’s 2018 Environment Report , which provides an update on the environmental performance of the UK offshore oil and gas industry to the end of 2017. The report analyses and interprets data gathered and monitored by the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), and covers emissions to atmosphere, discharges to sea, accidental oil and chemical releases, and waste disposal. It also summarises the activities Oil & Gas UK groups have undertaken over the last year to support the development of new environmental legislation, to share lessons learnt and good practice, and to improve industry environmental management. Over recent years, the sector has focused on improving efficiency in its offshore operations and this includes a commitment to continuously improve its environmental performance despite the challenges of doing so in a maturing oil and gas basin. Ageing assets require more maintenance and the maturity of the basin means that maximising economic recovery from fields requires greater effort. Notwithstanding these challenges, over recent years efforts by the industry have brought improvements in environmental performance. 2017 saw this performance stabilise, underlining that good environmental management remains a priority for operators. To sustain the positive trend in environmental performance, even as it becomes more difficult, will require the renewed focus, greater collaboration and innovation that are being applied across all aspects of the industry as part of Vision 2035. This annual report provides an opportunity for industry to review environmental performance indicators, and reflect on areas where there are opportunities to drive further improvement. The UKCS is a mature and complex basin, and the challenges that accompany the production of hydrocarbons here mean that the data outlined in this report are equally complex, as the examples below demonstrate. In 2017, there was a reduction of 3 per cent in the volume of produced water discharged to sea during oil and gas production. Record levels of produced water were reinjected into suitable subsurface strata or the reservoir itself as an alternative to discharging to sea and, where technically feasible, to aid enhanced oil recovery. Against this, the total amount of dispersed oil contained in that produced water discharge rose slightly to 2,140 tonnes. There were 451 accidental releases of oil and chemicals, fewer than in 2016, which amounted to around 279 tonnes to the marine environment – again, an improvement on 2016. Of these, 253 were unplanned releases of approximately 23 tonnes of oil, representing 0.00003 per cent of total production. However, there is no room for complacency, as industry always aims for the goal of no accidental releases. Innovative technology has also helped the sector reduce the proportion of associated gas flared and vented. Newer installations are designed to flare less and recover more gas, while an increasing number of older platforms with routine flaring built-in are being decommissioned, but flaring and venting remained relatively stable over the last few years, and both increased in 2017 compared to 2016. Greenhouse gas emissions per installation were lower in 2017 than in 2016. Over the same period carbon dioxide (CO 2 ) emissions from the UK Continental Shelf (UKCS) saw an increase from 13.1 million tonnes in 2016 to 14.2million tonnes, although the sector’s long-term trend for CO 2 emissions continues to fall. Industry’s greenhouse gas emissions contribute around 3 per cent of the total UK emissions, the same proportion as in 2016.

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1

These environmental indicators are affected by many often interrelated factors, and Oil & Gas UK will work with our members to understand and address areas where environmental performance can be improved, and focus on the continuous reduction of environmental risk. Supporting industry’s drive to continually improve is Oil & Gas UK’s Health, Safety and Environment Team who, together with members and stakeholders, assist in managing the regulatory requirements and in implementing efficiency work scopes that affect the licence to operate. Over the past year, key areas of focus have been the implications of Brexit on environmental legislation, moving towards a low-carbon economy, oil spill response preparedness, the introduction of an audit workgroup, and further engagement with regulators. The industry takes its responsibilities for environmental management and compliance seriously, as is demonstrated by the performance captured in this report. We hope you find it helpful and informative.

Any queries regarding this report should be directed to Katie Abbott, Oil & Gas UK's Environment Manager, at kabbott@oilandgasuk.co.uk.

Katie Abbott, Environment Manager, Oil & Gas UK

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ENVIRONMENT REPORT 2018

2. Key Findings

INDUSTRY DISCHARGES AND EMISSIONS

3%

down by

on the previous year to 143 million cubic metres . This is because more produced water was injected in to the subsurface.

The amount of produced water

discharged to sea on the UKCS in 2017 was

Reinjection of produced water was up 10 percent on 2016 to 53 million cubic metres and is at its highest recorded level, as more companies deploy innovate techniques to enhance oil recovery and reduce the quantity of produced water discharged into the marine environment.

2,000 tonnes of oil

just over 0.001 per cent

Around

making up

were discharged to sea with produced water,

of the total mass of produced water discharged.

154 tonnes

65% 34%

of chemicals were discharged to sea per million barrels of oil equivalent (boe) produced in 2017, down from over 161 tonnes in 2016.

of this mass is derived from drilling activities which continues to see a decline in activity, is associated with production related activity and 1 per cent related to pipeline activities.

6

The mass of drill cuttings discharged to sea increased in 2017 to 47,200 tonnes , an increase in comparison with the previous two years. were classified as Pose Little Or NO Risk (PLONOR) 71% Of the chemicals discharged to sea

and 7 per cent were candidates for substitution (SUB). Whilst the discharge of SUB chemicals saw a minor rise in 2017, the general trend continues to show a reduced usage, with the number of SUB production chemicals down to 211 in 2017.

fell 10%

to just under 152,200 tonnes in 2017 , mainly due to considerably less (18 per cent) sludges, liquids and tank washings being brought to shore in comparison to the previous year.

The amount of waste generated by the UK’s upstream oil and gas activity

Overall, the proportion of associated gas flared and vented has continued to fall since 2014 as newer installations are designed to flare less, and older platforms with routine flaring built-in are decommissioned.

7% Total greenhouse gas emissions from UK upstream operations increased in 2017 by

to 15.7 million tonnes of carbon dioxide (CO 2 ) equivalent, contributing 3 per cent of the UK’s total emissions.

6

slight increase in 2017 to 22,700 tonnes per million barrels of oil equivalent (boe) produced. Improved production efficiency from existing assets has driven this trend, rising from a low of 60 per cent in 2012 to 74 per cent in 2017.

Since its peak in 2013 CO 2 per unit of production (carbon intensity) on the UK continental Shelf (UKCS) saw a

emissions

2

This is a 6 per cent increase on 2016 . Over 1.3 million tonnes of gas were flared on the UKCS in 2017, often for safety reasons.

40% Gas venting saw a

increase in 2017, to 61,976 tonnes of gas.

Nearly a third of that total was due to a single installation which has been unable to flare due to incombustible gas emissions, where the CO2 content was too high to permit ignition. Nearly one-third of tha tot l was due to a single installation which has been unabl to flare due to incombustible gas emissions, where he CO 2 content was too h gh to enable ignition.

ACCIDENTAL RELEASES AND DISCHARGES

In 2017 there were 451 accidental releases of oil and chemicals , with a total mass of almost 279 tonnes reaching the marine environment. This is an improvement on 2016.

253

Of these, were accidental releases, totalling just over 23 tonnes of oil . The average mass of oil released per occurrence was less than 0.1 tonnes in 2017 , compared with an average of 0.57 tonnes per occurrence from 2010-17 . This represents less than 0.00003%

of total production.

the average mass of chemicals per release was 2.08 tonnes per release for the period since 2010.

1.3 tonnes ,

In 2017,

compared to an average of

Almost 256 tonnes of chemicals were accidentally released

in 198 incidents

7

the majority (215 tonnes, 96 per cent)

were low hazard or PLONOR.

in 2017. Of these,

of the total mass of chemicals used, and 0.1% 0.27%

Accidental chemical releases represented less than

of the chemicals intentionally discharged under permit.

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Environment Report 2018 Facts and Figures PermiƩed Offshore Emissions and Discharges DRAFT

ENVIRONMENT REPORT 2018

3. Permitted Offshore Emissions and Discharges

In Summary T he oil and gas industry on the UK Continental Shelf (UKCS) strives to continuously improve environmental performance and efficiency in a mature basin where production is increasingly technically challenging. Over recent years industry has improved production efficiency and reduced the associated costs of oil and gas operations while maintaining environmental performance and minimising the risk of environmental harm. The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), part of the Department for Business, Energy & Industrial Strategy (BEIS), regulates the industry’s offshore emissions and discharges. UKCS operators must apply for a permit for emissions to air or discharges to sea, and these must be reported to OPRED through the Environmental Emissions Monitoring System (EEMS). As part of the permit application, companies must assess the potential environmental effects of their operations and put in place mitigation measures. The emissions and discharges monitored include: produced water, chemicals, drill cuttings, greenhouse gas emissions, gas flared and vented, and the amount of waste generated by upstream oil and gas operations. Environment Report 2018 Facts and Figures PermiƩ d Offshore Emissions nd Discharges DRAFT The total volume of produced water discharged to sea under permit fell by 3 per cent to 143 million cubic metres in 2017 When applying for a permit for emissions and discharges, industry must consider potenƟal environmental effects and their miƟgaƟon Environment Report 2018 Facts and Figures PermiƩed Offshore Emissions and Discharges DRAFT The total volume of produced water discharged to sea under permit fell by 3 per cent to 143 million cubic metres in 2017 When applying for a permit for emissions and discharges, industry must consider potenƟal environmental effects and their miƟgaƟon Of the chemicals discharged to sea under permit, were classified as those that Pose LiƩle Or No Risk (PLONOR) to the environment 71% All emissions and discharges are strictly controlled and permiƩed by the industry’s environmental regulator – The Offshore Petroleum Regulator for Environment and Decommissioning When applying for a permit for emissions and discharges, industry must consider potenƟal environmental effects and their miƟgaƟon Total greenhouse gas emissions comprise f the UK's total emission 3 %

The total volume of produced water discharged to sea under permit fell by 3 per cent

h

r

to 143 million cubic metres in 2017

Minimising discharges to sea and aiding hydrocarbon recovery, reinjecƟon of produced water at its highest recorded level Minimising discharges to sea and aiding hydrocarbon recovery, reinjecƟon of produced water at its highest recorded level The amount of waste generate offshore decreased by 10% in 2017

issions and ges are strictly d and permiƩed e industry’s ental regulator – issions and es are strictly and permiƩed industry’s ntal regulator –

hore Petroleum for Environment ommissioning ore Petroleum or Environment mmissioning

Environmental Performance Benchmarking

e chemicals ed to sea under permit, chemicals d to sea under ermit,

Total greenhouse gas emissions comprise Total greenhouse gas emissions comprise

The amount of waste generated offshore decreased by 10% in 2017 The amount of waste generated offshore decreased by 10% in 2017

The proporƟon of associated gas flared conƟnues to fall The proporƟon of associated gas flared conƟnues to fall

3 %

Average concentraƟon of oil in produced water was 15.3mg/l

Average chemical discharge per operator down nearly 4%

The average total emission per installaton fell in 2017

ere classified as those that Pose LiƩle Or No Risk (PLONOR) to the nvironment re classified s those that Pose LiƩle Or No Risk (PLONOR) to the nvironment

of the UK's total emissions of the UK's total emissions

Environmental Performance Benchmarking Environ ental Perfor ance Bench arking

Accidental Oil and Chemical Releases

8

Average concentraƟon of Average

Average chemical discharge per operator Average chemical

The average total emissions The average

3.1 UKCS Activity Production in the basin remained relatively flat year on year, with an estimated 12 million barrels of oil equivalent (boe) lost due to disruption to the Forties pipeline. However, overall production increased by 13 per cent between 2014–17, driven by improved production efficiency and new developments coming on stream. Production efficiency has now seen five years of continuous improvement, reaching 74 per cent in 2017 — the highest level in a decade. Twelve new fields also came on stream in 2017, including major developments such as Quad 204, Kraken and Catcher. 1

3

Figure 1: Historic and Forecast Production

Gas Oil

2,000

1,800

1,600

1,400

1,200

1,000

800

600

Production (Million boe)

400

200

0

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Source: OGA

1 See Oil & Gas UK’s Economic Report 2018 at https://oilandgasuk.co.uk/product/economic-report-2018/

9

ENVIRONMENT REPORT 2018

3.2. Produced Water When oil and gas are produced, water within the hydrocarbon reservoir is also brought to the surface. This produced water can make up over 95 per cent of produced liquids in some fields and is separated from the hydrocarbons before either being reinjected into the reservoir to provide reservoir support and maintain production, or treated and discharged to sea. Operators gain approval for produced water discharges by applying for a permit from OPRED. Produced Water Volumes The total amount of produced water handled on the UKCS follows the general trend of production and has therefore been declining since 2000 (see Figure 2). Over time, however, the decline in production has been greater than the decrease in produced water generated. This is because as the UKCS matures, hydrocarbons become harder to reach and extract and the process generates larger volumes of produced water per unit of production. Since 2014, the UKCS has reversed the production decline of the preceding 15 years, resulting in a rise in total produced water to 196 million cubic metres in 2017 (accounting for approximately 70 per cent of total well stream fluids). Despite this, the amount of produced water discharged to sea fell by 3 per cent, from 155 million cubic metres in 2016 to 143 million cubic metres in 2017. This is because record levels of produced water were reinjected into suitable sub-surface strata or reservoirs as an alternative to discharging to sea and, where technically feasible, to aid enhanced oil recovery (EOR). The amount of produced water reinjected to the subsurface increased to 53 million cubic metres last year, up 10 per cent from 2016.

10

Figure 2: Total Produced Water Discharged to Sea and Reinjected versus Production

2,000

300

Produced Water Discharged Produced Water Reinjected Production

1,800

250

1,600

1,400

100 Produced Water (Million m 3 ) 150 200

1,200

3

1,000

800

600

Production (Million boe)

400

50

200

0

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 2017 Source: EEMS October 2018

International Comparison

The International Association of Oil &Gas Producers (IOGP) reports that 0.5 tonnes of produced water were discharged and 0.8 tonnes were reinjected per tonne of hydrocarbon produced globally (both onshore and offshore) by IOGP member companies in 2017. 2 In comparison, 1.7 tonnes of produced water were discharged and 0.6 tonnes re-injected per tonne of hydrocarbon produced on the UKCS during the same period. This reflects the maturity of the UKCS and its technically challenging environment compared with other basins around the world. It is therefore to be expected that more produced water is generated in the UK than the global average. 2.3 tonnes of produced water were generated per tonne of hydrocarbon on the UKCS in 2017, compared with 0.9 tonnes of produced water per tonne of hydrocarbons on the Norwegian Continental Shelf (NCS). 3 This is because many of the larger fields in Norwegian waters are yet to reach the high levels of watercut as a percentage of total production, and new fields with high levels of daily production are continuing to come on-stream. Twenty-three per cent of produced water on the NCS is reinjected into the sub-surface, a similar amount to the UK, which reinjected around 27 per cent.

23

2 See IOGP Environmental Performance Indicators 2017 data https://www.iogp.org/bookstore/product/2017e-environmental-performance-indicators-2017-data/ 3 See Norsk Olje & Gass Environmental Report 2018 at https://www.norskoljeoggass.no/globalassets/dokumenter/miljo/miljorapporter/environmental-report-2018.pdf

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ENVIRONMENT REPORT 2018

Produced Water Composition Produced water accumulates small amounts of naturally occurring substances through contact with the reservoir rock, including dispersed oil, dissolved organic compounds, naturally occurring radioactive materials (NORM) and production chemicals injected into the process. The composition of produced water is determined by the reservoir geology, maturity and the stage of production life. Dispersed Oil in Produced Water Around 2,140 tonnes of dispersed oil were discharged to sea with produced water, making up just over 0.001 per cent of the total mass of producedwater. The total mass of dispersed oil discharged increased by 6 per cent from 2016. OSPAR Recommendation 2001/1 requires that individual installations do not exceed an average dispersed oil-in-water concentration of 30 milligrams per litre (mg/l). In 2017, the average concentration across industry was 15.3 mg/l, up from 13.3 mg/l in 2016. At such low concentrations, oil rapidly disperses and is quickly broken down by naturally occurring bacteria.

International Comparison

The concentration of oil in produced water on the UKCS remains comparable to global and Norwegian values. The global average was 15.2 mg/l in 2017 while Norwegian data show concentrations of 12.1 mg/l. 4

Figure 3: Dispersed Oil Discharged with Produced Water to Sea

Oil Discharged with Produced Water

Oil in Water Concentration Limit

Average Oil Concentration with IR Method

Average Oil Concentration with GC-FID Method

7,000

35

6,000

30

5,000

25

20

4,000

15

3,000

10

2,000

5

1,000

Oil in Water Concentration (mg/L)

Oil Discharged with Produced Water (Tonnes)

0

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: EEMS October 2018

4 See Norsk Olje & Gass Environmental Report 2018 at https://www.norskoljeoggass.no/globalassets/dokumenter/miljo/miljorapporter/environmental-report-2018.pdf

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Naturally Occurring Radioactive Materials (NORM) in Produced Water Radium and many other radionuclides occur naturally in seawater and have done so for millions of years. The UKCS rock strata contains radionuclides of the uranium and thorium decay series, some of which dissolve into the water in the reservoir. These materials do not have a significant impact on the marine environment or human health. Discharges of NORM are controlled through authorisations issued under the Radioactive Substances Act (RSA) 1993. A condition of these authorisations is to notifiy the relevant environment agency if the concentration of Ra-226 is greater than 0.1 becquerel per millilitre (Bq/ml). There has been an increase in total NORM activity (Pb-210, Ra-228, Ra-226) discharged to sea of 3 per cent compared with 2016. The amount of NORM discharged is dependent on the reservoir conditions and the volume of produced water discharged. The average Ra-226 concentration and the average total NORM concentration remain consistently and significantly below the 0.1 Bq/ml limit by two orders of magnitude.

3

Figure 4: Breakdown of NORM Discharged in Produced Water

Pb-210 (MBq)

Ra-226 (MBq)

Ra-228 (MBq)

Ra-226 concentration (Bq/ml)

Total NORM concentration (Bq/ml)

0.007

800,000

700,000

0.006

600,000

0.005

500,000

0.004

400,000

0.003

300,000

Concentration (Bq/ml)

0.002

200,000

0.001

100,000

Total NORM Activity Discharged to Sea (MBq)

0

0

2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: EEMS October 2018

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ENVIRONMENT REPORT 2018

3.3. Chemicals The offshore oil and gas industry uses and discharges chemicals in the exploration and production of hydrocarbons. Usage is kept strictly to the amounts required for the designated task to avoid waste and ensure a responsible environmental performance. OPRED must permit all use and discharges in advance, and operators are obliged to continually review the volume and the types of chemicals they use. Only chemicals that have been registered with the Centre for Environment, Fisheries and Aquaculture Science’s (CEFAS) Offshore Chemical Notification Scheme (OCNS) are permitted for use and discharge. The OCNS applies the OSPAR Harmonised Mandatory Control Scheme (HMCS), developed through OSPAR Decision 2002/2 (as amended by OSPAR Decision 2005/1) and its supporting recommendation. The OSPAR HMCS contains a list of chemicals that it considers to ‘Pose Little Or NO Risk’ (PLONOR) to the environment, as well as those for which there is a substitution warning (SUB) where a less environmentally hazardous alternative should be used if practicable. Mass of Chemicals Discharged In 2017, just over 96,000 tonnes of chemicals were discharged to sea (154 tonnes per million boe produced). Sixty-five per cent of this (62,170 tonnes) derived from drilling activities, 34 per cent (32,383 tonnes) from production-related activity, and 1 per cent (1,524 tonnes) were related to pipeline activity. The mass of chemicals discharged is dominated by drilling chemicals. These are used in drilling fluids and cement, which are important for safety and well control. Since 2000, however, the amount of drilling chemicals discharged has fallen by 42 per cent, in line with the reduction in drilling activity over this period. The spike in 2013 (see Figure 5) is due to more complex wells being drilled and is out of step with the downward trend from 2010. Although UKCS production has been in decline since 2000, there has been a gentler fall in the use of production chemicals. This is because of the basin’s maturity, which requires chemicals to improve recovery rates, maintain asset integrity and ensure compliance with environmental permit conditions. In 2017, nearly 3,000 tonnes more production chemicals were discharged to sea than in 2016 — a 10 per cent rise. Chemicals used for pipeline maintenance are designed to prevent corrosion or scale build-up. As shown in Figure 5, the amount discharged decreased year on year, and accounted for 1 per cent of total chemicals discharged. As with drilling activity, pipeline works will fluctuate from year to year and chemical discharge will largely reflect this.

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Figure 5: Production, Drilling and Pipeline Chemicals Discharged

Drilling Chemicals

Production Chemicals

120,000

1,000 1,200 1,400 1,600 1,800 2,000

Pipeline Chemicals

Production

100,000

80,000

3

60,000

0 200 400 600 800

40,000

Production (Million boe)

20,000

Chemicals Discharged (Tonnes)

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: EEMS October 2018

Composition of Chemicals Discharged In 2017, 71 per cent of chemicals discharged to sea from offshore oil and gas operations were PLONOR and just 7 per cent were SUB chemicals. Operators were obliged to phase out, where practical, the use of all SUB chemicals by the end of 2017. 5 Operators continue to look for suitable alternatives to these chemicals, but often there is not a similar substance readily available that can meet the technical requirements for operational or safety reasons. In these cases, operators are permitted to continue to use these SUB chemicals. While 2017 shows a very small increase in the volume of SUB chemicals discharged to sea, the number of different types used continues to fall, from 216 in 2011 to 211 in 2017. Whilst operators encourage suppliers to look for and develop replacements to these chemicals, in some cases it is not currently technically feasible to use an alternative.

International Comparison Just over 139,000 tonnes of chemical additives were discharged on the Norwegian Continental Shelf in 2017 from upstream oil and gas operations, 14,500 tonnes less than the previous year. Eighty-nine per cent of these chemicals fell into the green category, 11 per cent yellow and just 96 tonnes and 5 tonnes were discharged from the red and black categories, respectively. 6

5 See http://www.ospar.org/documents?v=7336 6 Norwegian classifications do not match directly with that of PLONOR and SUB of the UK. For more information, see Norsk Olje & Gass Environment Report 2018 . Red and black are used to designate environmentally hazardous products.

15

ENVIRONMENT REPORT 2018

Figure 6: Breakdown of Drilling and Production Chemicals Discharged by Classification

PLONOR

SUB

120,000

Other*

No Hazard Label

100,000

80,000

60,000

40,000

20,000

Chemical Discharge (Tonnes)

0

Drilling

Drilling

Drilling

Drilling

Drilling

Drilling

Drilling

Production 2013

Production 2014

Production 2015

Production 2016

Production 2017

Production 2011

Production 2012

Source: EEMS October 2018 *Other includes those chemicals reported in EEMS that are not classified as PLONOR or SUB but contain hazardous materials listed under OSPAR Annex A. Figure 7: Breakdown of Pipeline Chemicals Discharged by Classification

3,000

Other* No Hazard Label

SUB PLONOR

2,500

2,000

1,500

1,000

Chemical Discharge (Tonnes)

500

0

2011

2012

2013

2014

2015

2016

2017

*Other includes those chemicals reported in EEMS that are not classified as PLONOR or SUB but contain hazardous materials listed under OSPAR Annex A.

Source: EEMS October 2018

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3.4. Drill Cuttings Drill cuttings are rock fragments generated during well drilling. They are brought to the surface by drilling fluids which surround the wellbore and are either water- or oil-based, depending on geological, safety and environmental factors. The cuttings, which are coated in the chosen drilling fluid, are disposed of according to the fluid type. Water-based fluid drill cuttings pose a lower environmental hazard and are generally permitted for discharge to sea. Oil-based fluid cuttings cannot be discharged to sea unless they are treated to reduce the oil-on-cuttings content to below 1 per cent of the total mass. Whether oil- or water-based, as part of the permitting process, operators must conduct stringent environmental assessments to determine the risks posed by cuttings discharged. As with drilling chemicals, the mass of cuttings discharged to sea is closely related to drilling activity. At 47,200 tonnes, 2017 saw an increase in drill cuttings discharged in comparison with the previous two years. With 320 kilometres drilled on the UKCS in 2017, this represents 147 tonnes of cuttings discharged per kilometre drilled. The peak in 2013 (shown in Figure 8 overleaf) is due to more complex wells being drilled. Of the 32,400 tonnes of cuttings coated with water-based fluids, less than 1 per cent were returned to shore for treatment and disposal, with the rest discharged to sea as permitted. Of the 39,100 tonnes of oil-based fluid cuttings, 54 per cent (21,000 tonnes) were returned to shore for treatment, down from 66 per cent in 2016. Around 15,000 tonnes were thermally treated offshore to reduce their oil content to below 1 per cent and discharged to sea; the remainder were injected into the reservoirs.

3

17

ENVIRONMENT REPORT 2018

Figure 8: Drill Cuttings Discharged to Sea

250

70,000

Cuttings from Oil-Based Fluids Cuttings from Water-Based Fluids Well count

60,000

200

50,000

150

40,000

30,000

100

20,000

Total wells drilled on the UKCS

Cuttings Discharged to Sea (Tonnes)

50

10,000

0

0

2010 2011 2012 2013 2014 2015 2016 2017

Source: EEMS October 2018

International Comparison

90,800 tonnes of water-based fluid cuttings were discharged to the sea during oil and gas production in Norway in 2017. Of the 97,100 tonnes of oil-based fluid cuttings generated, 35 per cent were reinjected, 65 per cent transported to land, and none were discharged to sea.

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3.5. Atmospheric Emissions The extraction, stabilisation and export of hydrocarbons involves several processes that give rise to atmospheric emissions. These include: combustion to provide electrical power and drive compressors and pumps; flaring of excess gas for safety and/or during well testing; tank loading; and incidental releases from firefighting and refrigeration equipment.

Combustion and flaring result in emissions of carbon dioxide (CO 2

), carbon monoxide (CO), methane (CH 4

) and

oxides of nitrogen (NO x

) and sulphur (SO x

). Small amounts of nitrous oxide (N 2

O) are also emitted. Releases of

volatile organic compounds (VOCs) and CH 4

may occur during tank loading or from firefighting equipment.

3

Upstream Oil and Gas Emissions in a Broader UK Context The Kyoto Protocol defines six greenhouse gases (GHGs) including CO 2 , CH 4 , N 2

O, hydrofluorocarbons (HFCs),

perfluorocarbons (PFCs) and sulphur hexafluoride (SF 6

). GHG emissions stem from various sources and it is widely

accepted that these emissions are contributing to anthropogenic global climate change.

A changing energy supply is helping to decarbonise the UK’s energy mix. Country-wide, an estimated 456 million tonnes of CO 2 equivalent (CO 2 e) GHG emissions were emitted in the UK in 2017, representing a 3 per cent fall from 2016 (468 million tonnes CO 2 e). 7 The reduction largely reflects changes in the power generation sector. The replacement of coal by gas and increased renewable capacity are key drivers and overall have led to a 43 per cent reduction in GHG emissions since 1990.

Upstream oil and gas operations contributed 3 per cent (15.7 million tonnes CO 2

e) of total UK GHG emissions in

2017, as shown in Figure 9.

Figure 9: Total Greenhouse Gas Emissions from Upstream Oil and Gas Operations

25

20

15

5 GHG Emissions (CO 2 Equivalent Million Tonnes) 10

0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: EEMS October 2018

7 Provisional UK greenhouse gas emissions national statistics 2017 are available at https://www.gov.uk/government/statistics/provisional-uk-greenhouse-gas-emissions-national-statistics-2017

19

ENVIRONMENT REPORT 2018

UKCS Carbon Dioxide Emissions Hydrocarbon production increased by almost 13 per cent between 2014–17, and over the same period CO 2 emissions saw a 12.5 per cent increase. 2017 saw increasing CO 2 emissions on the UKCS with a rise from 13.1 million tonnes to 14.2 million tonnes. Offshore installations are not connected to the national grid for power supply. Power is generated offshore to run pumps, equipment used in production processes, for electricity used for cooking, lighting and heat, as well as for compression equipment so that oil and gas can be transported onshore. CO 2 is also emitted during flaring and venting offshore, which are necessary for maintenance, well testing and, crucially, for the safety of offshore workers. Seventy-one per cent of CO 2 emissions (10.1 million tonnes) in 2017 were generated from fuel consumed by combustion equipment to provide electrical power and drive compressors for oil and gas export.

Figure 10: Carbon Dioxide Emissions by Generation Source

18

16

Flaring 26%

14

12

Venting 1%

10

14.2 million tonnes

8

Heaters 1%

6

CO 2 Emissions (Million Tonnes)

Turbines 64%

Engines 8%

4

2

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: EEMS October 2018

Source: EEMS October 2018

20

Other Emissions Methane, a GHG, is estimated to be up to 34 times more potent than CO 2 over 100 years, in terms of its ability to absorb heat and contribute towards global warming. However, it has a shorter life span in the ozone layer. Methane emissions from UKCS operations rose from 40,800 tonnes in 2016 to 43,300 tonnes in 2017 (this is around 1.47 million tonnes CO 2 e, or 9 per cent of the total GHGs emitted by the industry). Emissions of Volatile Organic Compounds (VOCs) were also up 22 per cent, to just over 38,000 tonnes. NO x and SO 2 emissions also saw increases.

Figure 11: Offshore Emissions of Nitrogen Oxides, Carbon Monoxide, Sulphur Dioxide, Methane, Volatile Organic Compounds, and Carbon Dioxide

3

100,000

2000

Production Noᵪ Emissions CO Emissions SO₂ Emissions CH₄ Emssions VOC Emissions

90,000

1800

80,000

1600

70,000

1400

60,000

1200

50,000

1000

40,000

800

Production (Million boe)

Emissions (Tonnes)

30,000

600

20,000

400

10,000

200

0

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: EEMS 2018, OIl & Gas UK

21

ENVIRONMENT REPORT 2018

Associated Gas Associated gas is produced along with other hydrocarbons in parts of the UKCS, predominantly as a by-product of oil production. Where possible, associated gas is either used offshore for power generation or exported to nearby installations or to shore. Figure 12 compares the associated gas produced with the amount subsequently flared and vented. For offshore installations, flaring is an important safety feature used to: burn gas that cannot be recovered; prevent over-pressurising; and to rapidly remove the gas inventory during an emergency. It is primarily carried out on oil-producing installations. Flaring is likely to be planned for during start-up or shutdown of an installation, but also occurs during unplanned events. Gas venting, similar to gas flaring, releases natural gas associated with production directly to the atmosphere, but without ignition. Venting is largely used as a safety mechanism to release gas pressure when a safe level may have been exceeded. While the amount of flaring and venting of associated gas increased in 2017, the ratio of associated gas flared or vented versus associated gas production continued to fall, having plateaued during 2013 and 2014. In 2017, 5 per cent of associated gas was flared or vented. This highlights the improvedmethods and technologies operators are developing for use on newer installations that minimise flaring and venting where practicable.

Figure 12: Associated Gas Production versus Flaring and Venting

Associated Gas Production Associated Gas Vented

Associated Gas Flared

% of Associated Gas Flared/Vented

250

8%

7%

200

6%

5%

150

4%

100

3%

2%

Associated Gas (Million boe)

50

Associated Gas Fared/Vented (%)

1%

0%

0

2010

2011

2012

2013

2014

2015

2016

2017

Source: EEMS October 2018

22

Gas Flaring Gas flaring is subject to consent under the PetroleumAct 1998, which aims to conserve gas by avoiding unnecessary wastage during hydrocarbon production. Operators are expected to minimise flaring as far as possible and all flaring activity must be reported in EEMS, with consents for specific flare volumes over a limited timeframe granted by the Oil and Gas Authority (OGA). As part of the World Bank’s Global Gas Flaring Reduction Partnership, there is a proposal to revise gas flaring definitions into routine flaring, safety flaring and non-routine flaring. 8 An initiative under this partnership aims to eradicate routine flaring by 2030 and has been endorsed by companies and governments globally. The UK is signed up through membership with the EU and seven operators in the UK are also partners in the initiative. e) were flared on the UKCS in 2017 – a 5 per cent increase on 2016. While operators continually look to reduce the amount of gas they flare, the majority of installations are fitted with technology that allows for routine flaring, in line with policy at the time of design and commissioning. Retrospective changes to the design of these installations would be difficult due to limited physical space and the additional costs may be disproportionate to the environmental benefit. Flare gas is reported under EEMS as either routine, maintenance, process upsets, well testing or gross, as shown in Figure 13. Gross is reported when a breakdown is not available and could therefore be the result of any of the categories. Just over 1.3 million tonnes of gas (around 3.7 million tonnes of CO 2

3

Figure 13: Breakdown of Gas Flaring by Source

Well Testing Upsets/Other

Routine Maintenance Gross

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000 Total Gas Flared (Tonnes)

200,000

0

2010

2011

2012

2013

2014

2015

2016

2017

Source: EEMS October 2018

8 See www.worldbank.org/en/programs/gasflaringreduction

23

ENVIRONMENT REPORT 2018

Gas Venting Venting is also subject to consent under the Petroleum Act 1998 through application to the OGA. All applications undergo a detailed review and all venting activity must be reported in EEMS. Just under 62,000 tonnes of gas were vented on the UKCS last year, a 40 per cent increase on 2016. Nearly one-thirdof the2017 total was due toa single installationwhichhas beenunable to flaredue to incombustible gas emissions, where the carbon dioxide content was too high to enable ignition. Gas venting is reported under EEMS as either operational, maintenance, emergency or gross. Gross is reported when a breakdown is not available and could therefore be any of the other categories; the majority falls into this category, as shown in Figure 14.

Figure 14: Breakdown of Gas Venting by Source

Operational

Maintenance

Emergency

Gross

70,000

60,000

50,000

40,000

30,000

20,000

Total Gas Vented (Tonnes)

10,000

0

2010

2011

2012

2013

2014

2015

2016

2017

Source: EEMS October 2018

24

Fluorinated Gases Fluorinated gases (F-gases) are a known GHG and contribute towards global warming. Their use is regulated under the 2014 EU Fluorinated Greenhouse Gas Regulation as part of the Kyoto Protocol. Offshore, F-gases are used for industrial applications such as refrigeration, air conditioning and, to a lesser extent, fire protection systems and electrical switch gears. F-gases are not emitted as a direct result of upstream activity, but fugitive emissions may be released from equipment such as valves and pipework.

Figure 15 shows that despite a 6 per cent increase in F-gas releases since 2016, the total released remains 15 per cent lower than in 2015.

3

Figure 15: Fluorinated Gas Releases versus Reporting Installations

18,000

250

Hydrofluorocarbons Number of platforms reporting

16,000

200

14,000

12,000

150

10,000

8,000

100

6,000 CO 2 Equivalent (Tonnes)

Number of Platforms

4,000

50

2,000

0

0

2010 2011 2012 2013 2014 2015 2016 2017

Source: EEMS October 2018

25

ENVIRONMENT REPORT 2018

3.6 The Role of Oil and Gas in Meeting Future Emissions Targets Climate change is a global challenge that requires a collective response with major shifts in energy efficiencies and the fuel mix to deliver a lower-carbon future. To combat the risks of climate change, the UK has set ambitious targets to reduce emissions by 80 per cent of 1990 levels by 2050 Under the Climate Change Act (2008). The ratification of the Paris Agreement in 2016 by the UK Government builds on these domestic targets, which are outlined in legislated Carbon Budgets. With the initiation of the Oil & Gas UK Energy Transition project to examine the future role of indigenous oil and gas supply, there must remain a balance between meeting GHG emission reduction targets via a measured, cost- effective approach and delivering an affordable, secure domestic supply of energy required for economic growth. The UK offshore oil and gas industry is committed to playing its part in building a sustainable industry that is progressively lowering its emission intensity. In recent years, the average CO 2 emissions per unit of production on the UKCS (known as carbon intensity) has been falling due to: a fall in oil and gas output; improved operational management; tighter regulations; the decommissioning of older, more emission-intensive installations; lower emissions from new fields with more efficient technology; and participation in the EU Emissions Trading Scheme (EU ETS). However, 2017 saw an increase in average emissions (see Figure 16). In 2017, CO 2 e emissions from UK offshore oil and gas production contributed 3 per cent of total domestic CO 2 e emissions. On average, production efficiency on existing installations continues to improve, from 60 per cent in 2012 to 74 per cent in 2017. Meanwhile, greenfield projects are integrating modern, energy-efficient technologies for power generation offshore and to reduce routine flaring altogether. The industry has implemented several operational initiatives aligned with reducing emissions such as the creation of the Production Efficiency Task Force; innovative design choices for new installations and facilities; monitoring and reporting of energy usage and GHG emissions; reducing system leakages (e.g. to flare stack); upgrading and altering equipment to maximise operational and energy efficiency; and proposed funding for the Oil & Gas Technology Centre (OGTC) to research, develop and deploy new low-carbon technologies.

26

International Comparison In comparison with international counterparts, the UKCS’ maturity means that it is expected to have a higher carbon intensity. The recent gains in this area outlined previously highlight the positive work by companies on the UKCS during late-life asset management.

In 2017, the UKCS emitted 14.2 million tonnes of CO 2

. This is comparable to Norway which released a total

of 12.2 million tonnes of CO 2 , down from 12.8 million tonnes in 2016. However, Norway’s production was over twice that of the UK in 2017, meaning it produced at a lower carbon intensity. More assets producing from smaller fields, combined with the fact that the majority of UKCS assets are reaching the mature phase of their life cycle, has led to a higher carbon intensity over the long term, compared with the Norwegian Continental Shelf. The latter is less mature and home to a smaller number of installations producing from larger fields. However, while UKCS’ carbon intensity may be higher than that of its North Sea neighbour (see Figure 16 below), this does not take into account emissions generated during importation of gas to the UK.

3

Figure 16: Carbon Intensity International Comparison

30

90%

UK

Norway

European Average

UK Production Efficiency (RHS)

80%

25

70%

20

60%

50%

15

40%

10

30%

20%

Production Efficiency (%)

5

10%

Carbon Intensity (Kilotonnes of CO₂ per Million boe)

0

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: EEMS October 2018, Oil & Gas UK, IOGP, NOROG

27

ENVIRONMENT REPORT 2018

EU Emissions Trading System The EU ETS is a central pillar of Europe’s long-term decarbonisation policy. By setting an effective carbon price, the scheme aims to changes the behaviours of the member states it applies to, without damaging EU industries. Since the recession in 2008–09, ETS carbon prices have not been high enough to induce companies to switch to lower-carbon fuels or to promote the intended investment in low-carbon energy sources. These lower prices have led to EU action to reform the market through ‘backloading’ (reducing the availability of free carbon allowances in later years). In the period since the UK’s referendum on EU membership there has been an increase in the carbon price from approximately €6 to a peak of €25 per tonne, as shown in Figure 17. Almost all of the UK’s upstream industry, comprising offshore installations and onshore terminals, falls within the scope of EU ETS. Installations responsible for any CO 2 emissions are required to monitor and verify such emissions and surrender allowances to cover them each year. Since the industry is deemed to be at risk of carbon leakage, installations receive some free allowances based on historical performance relative to an industry benchmark. However, there are no free allowances allocated for emissions from electricity generation. Offshore installations are not connected to the onshore grid, so they must generate their own electricity using produced fuel gas for all operational needs. emissions from UK offshore installations. The effect of the ineligibility of emissions from electricity generation is that, uniquely among the six largest industrial sectors in the ETS, upstream oil and gas is short of allowances and must purchase them in the market each year to meet its ETS obligations. Such energy generation accounts for more than half the total CO 2

28

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