Decarbonization Will Not Come for Free: Asset-M Marginal Abatement Cost Curve

Abstract

The Net Zero pathway is critical for the sustainability and life quality on Earth, yet the decarbonization efforts will not come for free. In this paper, the in-depth investigation of all the applicable decarbonization levers for Asset-M has been investigated. Worth to mention that Asset-M is the second Largest Asset for Oil production in Petroleum Development Oman (PDO), which is located to the East region of Dhofar in the South of the Sultanate of Oman. The work presented here will illustrate the decarbonization cost for the different projects from a qualitative screening point of view. PDO as the main oil and gas producer in the Sultanate of Oman has pledged to reduce its Source 1 & 2 emissions by 50% in 2030 and to achieve net zero emissions by 2050. A mission that is not only difficult with the current available technologies but also very expensive and require a lot of funding and collaboration between the different research and governmental entities. The first step in this decarbonization exercise was to pinpoint the sources of emissions, for Asset M these are mainly characterized in Flaring, Power consumption, Fuel gas for crude processing and other emissions associated to the infrastructure such as stationary combustion, transportation and fugitives. A benchmark exercise was conducted to understand the cost of the different technologies capable to decarbonize Asset-M based on the different sources available. A Marginal Abatement Cost Curve (MACC) analysis was used to screen the different decarbonization levers from a comparison point of view. The analysis does illustrate options with viable commerciality yet for those options which appear noneconomical it does highlight the cost of Carbon per ton needed for the projects to fly either through government tax credit or other type of subsides. It is clear from the MACC analysis conducted based on global benchmark data of Renewables, batteries cost, gas and oil prices and others; that the decarbonization towards net zero emission will not come for free. Billions of Dollars will have to be spent for two main good reasons: The technology cost is still high due to the current level of maturity and scale (e.g. CCUS, Hydrogen, Renewables, batteries and more) Carbon is still not taxed in many countries and hence the attitude of the Oil and Gas industry is yet to pick up the momentum and urgency to accelerate new technologies trials which will help in unlocking more sustainable but economical solutions for decarbonization. The information presented here will be published for the first time specially when it comes to the potential of Carbon cost escalation if net Zero emission pathway is mandated, and under any circumstance, Decarbonization will not come for Free.