WEC proposes major repurposing of oil & gas infrastructure in decarbonizing energy system

The ongoing world transition to a low- if not zero-carbon economy is not just about energy, or a switch from one fuel source to another, or the replacement of old for new generation technologies, in the view of the World Energy Council in a recently published discussion brief. Rather, what the WEC sees happening today in the energy sphere is a paradigm shift, something it calls the Grand Transition: “a move away from the core values of security, reliability, and robustness which existing energy systems were built on, to new values of sustainability, flexibility, and affordability, enabled by a completely new way of producing, delivering, and consuming energy.”

          One aspect of this transition is what to do with the tens of billions of dollars’ worth of existing infrastructure devoted to the extraction, processing, storage and transport of fossil fuels. In its brief, Energy Infrastructure: Affordability Enabler or Decarbonisation Constraint?, the WEC sees three options for existing infrastructure: straight decommissioning – simply returning a site to its original state; devaluation of stranded assets; or repurposing them to some “green” use, such as carbon capture and storage (CCS), or using natural gas infrastructure to transport and store “green” hydrogen. Given the immense sunk costs involved that would otherwise be written off, the brief contemplates what would be involved in repurposing.

          For its brief, the WEC interviewed some 22 experts from around the world, including senior oil and gas executives. As the brief notes, the overarching perspective emerging from the interviewees is that a successful energy transition depends on infrastructure; however, shared vision and long-term plans are not in place because infrastructure has become “an undiscussable challenge,” treated as an afterthought to decarbonising the supply of energy. Part of that, as most interviewees acknowledged, is that businesses are largely driven by short-term profit strategies. Those assets, with their long lifetimes, were not designed for the full lifecycle: technical and environmental issues of decommissioning, re-use, or repurposing, were not taken into account.

          Even so, a large majority of the interviewees consider that a “vast” proportion of existing assets in the energy sector have reached or are reaching their late asset lifecycle stage. Greater priority needs to be given to the ways in which aging assets can be better managed – “circular economy models” – as a major factor in defining and driving successful energy transition.

          In response, the WEC calls for an Energy Infrastructure Action Plan (EIAP), with shared goals and a flexible framework that can be adapted to the diversity of any region/country. The WEC proposes several key principles:

• Limiting negative impacts on the global economy caused by uncoordinated and untimely decommissioning and stranding of assets.

• Magnifying the benefits of supporting clean energy sources during the transition through repurposing and asset life-cycle extension.

• Correcting "profit-oriented short-termism" by maximizing dialogue between markets and governments for the definition of policies aimed at optimizing and coordinating asset life-cycle planning.

• Encouraging greater disclosure: currently, it says, there is not nearly enough information about the value of these assets that have supported fossil fuel production.

• Promoting cross-sector coordination.

          Major governmental commitment and policy will be needed to initiate the process, though governments should then leave it to the market to implement the vision “in a manner that stimulates healthy competition and business innovation.”

          In a recent webinar, the WEC asked several experts where they saw the biggest repurposing opportunities for existing energy infrastructure. Conversion of gas pipelines and oil fields for storage received the most votes. While 100% hydrogen would be technically challenging, it could begin with adding hydrogen, generated by hydrolysis using surplus wind or solar power, and added to the existing natural gas supply. An example of such a project is already under way in Ontario in a partnership between Enbridge and Hydrogenics.

          Some repurposing initiatives are already underway in Europe. The UK’s H21 project is proposing the gradual conversion of the UK gas distribution infrastructure to 100% hydrogen. CCS would be coupled to the production of blue hydrogen via autothermal reforming (ATR). The project addresses the issue of pipeline embrittlement by separating transmission from distribution. Distribution pipelines operate at very low pressures, the H21 study observes, and so conversion from natural gas to hydrogen is already possible “and would present risks comparable to those of natural gas.” By way of managing a smooth transition of the entire system, the study proposes the construction of dedicated transmission pipelines aimed at transporting hydrogen to initial anchor points, such as combined cycle power plants, industrial clusters or commercial and residential areas. Such an approach would allow the gradual conversion of natural gas to hydrogen, “appropriately meeting demand in time and allowing a smooth transition of the entire gas system.”

          The brief refers to California’s 2003 Energy Action Plan as an early example of a substantial, sector-wide undertaking to deal with what was understood to be a systemic energy crisis in 2000 & 2001 when the sixth largest economy in the world experienced electricity supply shortages.

          In a report released June 14, The International Energy Agency offered support for the idea. Among its suggestions:

• Building on existing infrastructure, such as natural gas pipelines;

• Making industrial ports the nerve centres for scaling up the use of clean hydrogen;

• Expanding the use of hydrogen in transport by using it to power cars, trucks and buses that run on key routes;

• Launching the hydrogen trade’s first international shipping routes.

“Hydrogen is today enjoying unprecedented momentum, driven by governments that both import and export energy, as well as the renewables industry, electricity and gas utilities, automakers, oil and gas companies, major technology firms and big cities,” said Dr. Fatih Birol, the IEA’s Executive Director. “The world should not miss this unique chance to make hydrogen an important part of our clean and secure energy future.”


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