Asia-Pacific is now at the center of global attention regarding reducing upstream emissions in the oil and gas sectors. The region, largely dependent on fossil fuels, is seeing its carbon dioxide (CO2) emissions increase, particularly those from natural gas. These emissions, produced during extraction and processing, include the ventilation of CO2 from reservoirs, which represents a major challenge in achieving the region’s climate objectives.
Carbon capture and storage (CCS), a technology capable of capturing CO2 directly at the source and then injecting it into underground geological formations, is seen as a viable solution. According to data from S&P Global Commodity Insights, CCS could reduce lifecycle emissions from oil and gas assets by 60%. However, this reduction depends on many factors, such as the CO2 content of resources and the speed of setting up capture infrastructure.
A limited but essential regulatory framework
Currently, only Australia has dedicated regulations requiring operators to limit CO2 emissions from reservoirs for new gas fields. This policy forces operators to use CCS or other methods to reduce emissions, otherwise they will have to purchase carbon credits to offset their impact. This Australian safeguard mechanism establishes a zero emissions threshold for reservoir CO2, a precedent in the region. However, this regulation remains unique in Asia-Pacific, where no comprehensive framework has been put in place to encourage or force other countries to adopt similar measures.
For companies, this situation could favor fields with low CO2 contents, but it also imposes additional costs and can limit the supply of affordable energy, which raises questions of national priorities for some governments. Balancing environmental regulations and national energy needs becomes crucial to moving towards a more sustainable energy model.
Projects and perspectives for upstream carbon capture
CCS in the upstream oil and gas sector is intended to account for 18% of global capture capacity by 2035, with an estimated capacity of 70 million tonnes per year. Asia-Pacific leads the region in terms of construction projects and advanced development in this area, followed by North America and the Middle East. To date, the region has 5 million tonnes per year of CCS capacity under construction, with an additional 7 million tonnes in advanced stages of development.
The planned capture capacity could reach 23 million tonnes per year by 2035, a significant figure but still insufficient to meet the region’s emissions reduction needs. Without CCS, emissions from upstream CO2 ventilation in Asia-Pacific could reach 75 million tonnes per year by 2035, illustrating the urgent need for additional capacity to curb rising emissions in the sector.
The dynamics of emissions in high CO2 fields
High-CO2 fields account for a significant portion of hydrocarbon production in Asia-Pacific. In order to meet commercial specifications for the gas, a significant portion of CO2 must be separated from the hydrocarbon gas, leaving highly concentrated CO2 residues which are then vented to the atmosphere. This ventilation is now the largest source of upstream emissions in the region, surpassing other activities like flue gas burning, flaring and methane leaks.
Projections indicate an increase in CO2 emissions in this region if unsanctioned projects do not integrate the CCS. These unsanctioned assets, which have not yet received a final investment decision, could represent 58% of the region’s total production while generating more than 80% of upstream emissions in 2050.
Carbon capture hubs, a regional opportunity
Unsanctioned assets are concentrated in the region’s major basins, such as the East Natuna and Malaysian basins in Indonesia, Malaysia, Thailand and Vietnam. These areas present opportunities for the development of CCS hubs, capable of not only capturing emissions from oil and gas field reservoirs, but also reducing emissions from other nearby industries. These hub projects are considered strategic levers to minimize costs while expanding capture capacities in a region undergoing rapid industrial expansion.
