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Energy Transition
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Midstream operators have an opportunity to leverage their natural gas pipelines.
Fuelling the
energy transition Rachel Schelble, head of corporate carbon management and infrastructure at Wood Mackenzie, looks at what midstream operators can do to support the energy transition. HE MIDSTREAM OIL and gas industry will play a central role in the energy transition. Operators have a unique opportunity to enable the shift to lowcarbon energy by connecting new and emerging value chains. To do so profitably and sustainably, midstream players will need to adjust their mindset and leverage their infrastructure in new ways.
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Enabling the use of renewable fuels The midstream industry participates in the renewable fuels value chain in two ways: transportation and blending of renewable natural gas (RNG) into its pipelines, and the production and distribution of renewable diesel. There is still much to be learned about the project economics of transitioning to renewable fuels. However, midstream operators are actively testing these new business models and progress is being made. Williams, Enterprise, and ONEOK are already blending RNG – biogas sourced from dairy waste and water treatment facilities – into their natural gas streams, for example. Meanwhile, Marathon and Phillips 66 are reconfiguring refineries to produce renewable diesel, with more facilities in the process of retrofit.
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Issue 2 2022
CCUS infrastructure, projects and partnerships Midstream companies are well placed to play a significant role in the full carbon capture, utilisation and storage (CCUS) value chain. First and foremost, operators can capture carbon dioxide at their own facilities. Firms can also employ their expertise to build, own and operate greenfield infrastructure. By developing sequestration partnerships, they can ensure captured carbon is either used or stored permanently.
Midstream companies are well placed to play a significant role in the full CCUS value chain.” Perhaps most interestingly, midstream operators can potentially repurpose existing, underutilised transmission assets to compress and transport CO2. However, carbon dioxide needs to be transported at pipeline pressures between 1,200 and 2,200 psi. With crude pipelines operating at 600-1,000 psi and natural gas pipeline pressures ranging from
500-1,400 psi, significant upgrading may be needed. Despite these issues, several projects and collaborations are already in the works. Williams is capturing emissions at its plants and facilities, for example, while Enlink, Enbridge and Enterprise are partnering with others on sequestration projects.
Providing hydrogen infrastructure Low-carbon hydrogen production has huge potential. However, there is a limited liquid market for hydrogen today and no widespread transportation infrastructure in place. Midstream companies have an opportunity to leverage their natural gas pipelines, but there are issues. For one thing, hydrogen can make steel pipelines brittle. What is more, as hydrogen molecules are smaller than methane it is more permeable, with a greater risk of leakage. As the midstream adapts to the energy transition challenge, finding ways to repurpose old infrastructure for hydrogen production and transportation is an opportunity for strategic differentiation. It will call for an entrepreneurial outlook and a willingness to pursue creative partnerships. We’re already seeing examples of this collaborative approach. MPLX is part of a
