Circular economy and sustainability initiatives for upstream operations in the Oil and Gas Industry

The present report aims to elaborate, analyze, and evaluate Circular Economy and Sustainability initiatives in upstream operations for companies in the Oil and Gas Industry. The project is conceived as an offering’s catalog for consulting projects and initiatives for this sector, as there is an increasing need for these companies to reduce their footprint while decarbonizing their operations. The starting point is the definition of the Oil and Gas Industry value chain and the upstream operations, the processes that involve the exploration and production of the oil and natural gas. Moreover, the main parameters implicated in Sustainability and Circular Economy are explained, as well as some relevant data about the status of the industry. Based on the previous definition, four different problematic situations that contribute to generating pollution during upstream operations are examined. For each one, a description of a suggested solution is made, accompanied by an analysis that considers the economic and environmental impacts that its implementation would have in a generic Oil and Gas company. This assessment is performed considering which value levers would be affected and to what extent. Finally, in order to evaluate the initiatives with a more accurate approach, the data of an Oil and Gas Major (Shell) previously selected is used to build a roadmap of the implementation process of the combination of all four initiatives. This roadmap contains the evaluation of the initiatives if implemented in this company, the timeline of the execution of the projects, the consulting guidance and team definition as well as the economic and environmental impacts. The proposed initiatives imply capturing and storing the carbon dioxide generated during upstream operations, decreasing the amount of gas flared connecting it to the supply grid, reducing methane leaks with an advanced maintenance system, and using renewable sources to power offshore platforms. Having assessed all of them and virtually implemented them in an existing company, it can be determined that with a total investment of 18.454 million dollars (excluding consulting costs), the carbon dioxide equivalent emissions will be reduced in 17,3% compared to 2019, while obtaining a positive Cash Flow of 629 million dollars each year as of July 2026 (with all initiatives implemented). With the obtained results it can be ascertained that, although the required financial investment is more significant than the economic savings obtained, the reduction in emissions is clearly determining. Reducing greenhouse emissions is a necessary step for companies in the industry, as they have set ambitious decarbonizing targets for 2050. Not only that but climate change is about to turn into a crucial part of every company’s strategy, as it is becoming increasingly more important for governments and shareholders. The implementation of the initiatives defined would have a positive impact on the environment and, although in a lesser extent, a diminishment in yearly costs. Therefore, it is highly crucial for these companies to invest in sustainability projects not only to meet their emissions reduction goals but also the urgent need for stopping climate change