Energy and commodities markets information, benchmark and analytics provider S&P Global Platts announced today the launch of new products aiming to provide transparency into the emissions attributes into the carbon footprint of oil and gas production, including monthly carbon intensity calculations for 14 major crude fields around the world, and the first ever daily carbon offset premiums.
Deb Ryan, Head of Low Carbon Market Analytics at S&P Global Platts, said:
“Oil and gas will remain part of the energy mix for decades to come. In order for the world to meet ambitious emissions reduction targets, a premium value needs to be associated with the lowest carbon intensity oil and gas assets as these fossil fuels continue to play a role in the overall energy mix. By launching carbon intensity values and price premiums, Platts is bringing much needed transparency into the market. Awareness of carbon intensity values – while working in tandem with carbon markets, both voluntary and compliance-based, will accelerate investments into projects that will reduce or avoid greenhouse gas emissions for the future.”
According to Platts, the calculations are being introduced as investors, consumers and producers are increasingly looking to reduce their carbon footprint, leading to increased scrutiny of the upstream carbon intensity associated with the production of fossil fuels. Platts stated that “over time the carbon intensity of the production process can become its own attribute of the crude itself, like the density of the crude and how much sulfur is included.”
In order to determine carbon intensity, Platts considers production, flaring and venting, maintenance activities, production processing and transport to the storage hub, aiming to produce a calculation that measures the impact of greenhouse gas emissions from well production to the storage terminal. Platts will publish assessments of crude oil field carbon intensity in kilograms of carbon dioxide equivalent per barrel of oil equivalent, and transportation carbon intensity along one relevant route per crude in kilograms of carbon dioxide equivalent per barrel.
Platts will also provide Carbon Intensity Premiums, highlighting the premium that a buyer would pay to offset the GHG emissions generated through the production of each crude. Platts highlighted the impact of the carbon intensity of various major oil fields, with the high carbon intensity of the Cold Lake field in Canada generating an implied CI Premium of over $4/boe at a CI Premium assuming a $50 carbon price, compared to only $0.187/boe for the Johan Sverdrup field in Norway.
Paula VanLaningham, Global Head of Carbon at S&P Global Platts, said:
“Interest from the market on carbon intensity, and recent trades to account for carbon emissions are important steps in the right direction. Calculating carbon intensity for oil fields allows a greater understanding of the respective carbon footprint, which enables market participants to focus on utilizing the lowest carbon assets. Significantly reducing emissions generated from the oil and gas industry is critical to mitigating the effects of climate change. Our new upstream carbon intensity calculations provide new transparency in an important first step to drive further evolution in this area.”
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