Maintaining our leading position in carbon efficiency

External benchmarks document that Statoil is today one of the most efficient upstream producers in the conventional oil and gas industry. In the 2011 International Association of Oil and Gas Partners (OGP) benchmark, the average emission intensity for 35 companies was 23 kilograms of carbon dioxide/barrel of oil equivalent (kg CO2/boe) , while Statoil's average was 9 kg CO2/boe (based on the "operational control" principle). However, our business plans forecast that this figure will increase towards 2020, driven by growth in the international portfolio, maturing assets on the Norwegian continental shelf (NCS) and a growing share of heavier oil.

We have chosen a comprehensive approach to the industry leader in carbon efficiency concept . Based on the different segments in which we operate, we have established 2020 carbon intensity targets for both operated and non-operated assets (CO2 equity share). Such targets are expected to incentivise energy efficiency and CO2 emissions reduction projects in each of the seven segments. Since the end of 2011, these targets have been included as part of Statoil's performance system (Ambition to Action) and from 2012 onwards, each of our business areas will have to report progress towards meeting these targets on a regular basis.

Being an industry leader in carbon efficiency implies to measure ourselves and be compared against our peers. There are, however, several obstacles to this - including the lack of reliable benchmarks. Statoil is working closely with industry associations such as OGP and IPIECA to ensure that relevant cross-industry benchmarks will be developed in the coming years.

Carbon efficiency performance targets 2020

Segments   Definition/comments   Performance targets for 2020 (including CO2 intensity target when possible[1])
         
Upstream conventional oil and gas -This segment represents about 90% of all Statoil hydrocarbon-producing assets and around 58% of Statoil's equity greenhouse gas emissions in 2011   In a "no-action" scenario, CO2 emissions per energy produced in this segment are expecting to grow towards 2020 mainly due to field maturation. For our existing portfolio this is about operational excellence and fuel switching when possible. For the growth portfolio this means use of BAT (best available techniques).  

Performance target is to remain among the top 10% most carbon-efficient upstream companies. 2020 intensity target for both operated and non-operated assets:11 kg CO2/boe 

For our assets on the Norwegian continental shelf, the target is set by the Konkraft report (see paragraph below).

Heavy oil - This segment represents less than 1.5% of Statoil's equity greenhouse gas emissions in 2011   There is no external benchmark available for this segment at present. Heavy oil assets are sensitive to tail-end production and on average are more energy intensive than conventional oil. Towards 2020, this segment is expected to cover an increasing share of Statoil's CO2 emissions and therefore requires the implementation of key energy-efficiency projects.   2020 intensity target for both operated and non-operated assets: 17 kg CO2/boe
Extra-heavy oil (including oil sands) - This segment represents 2% of Statoil's equity greenhouse gas emissions in 2011   Statoil has established a technology road map for oil sands, with the goal of reducing CO2 emissions by 25% by 2020 and 40% by 2025 in comparison to a "no-action" scenario.   2020 intensity target for both operated and non-operated assets: 50 kg CO2/boe
Shale gas - This segment represents less than 1% of Statoil's equity greenhouse gas emissions in 2011   Shale gas is a new business segment for Statoil. Our ambition is to be among the leading industry players when it comes to limiting the climate and environmental impacts of our shale gas operations. The industry needs to collaborate further to develop relevant benchmarks for the segment.   2020 intensity target for both operated and non-operated assets: 6 kg CO2/boe
Refining and processing - This segment represents around 34% of Statoil's equity greenhouse gas emissions in 2011   This segment includes our downstream operations. Initiatives include operational excellence, product mix and continued work on CCS (Mongstad refinery).   2020 performance target: Place in the top quartile (based on the Solomon/EU ETS index)[2]
LNG - This segment represents around 3.5% of Statoil's equity greenhouse gas emissions in 2011   Today, Statoil is already "best in class" in the LNG segment thanks to CO2 injection in the Snøhvit project. Our ambition is to retain our industry leader position and work with OGP to mature benchmark LNG intensities based on ambient temperature   2020 intensity target for both operated and non-operated assets: 24 kg CO2/boe
Others (including office buildings, IT, procurement, power, methanol, and transportation)   Statoil is in the process of setting absolute emissions targets for procurement and supply chain, office facilities, IT and transportation (ship transport; pipelines systems, and air transport)   Our objective is to reduce the energy consumption in our office buildings by 12% by the end of 2012 (compared with 2008 consumption). For our new office buildings, our objective is to be a top-quartile energy-efficiency performer in the host country. For methanol, our ambition is to be in the top quartile based on external benchmarks.
 
[1] Field lifetime emissions for the individual assets are expected to be higher than the 2020 targets per segment
[2] Solomon Index is a benchmark index calculated by an independent company (Solomon Associated) and has been widely used by most companies in the downstream sector for energy-efficiency performance benchmarking over the last 20-30 years

Very efficient production on the Norwegian continental shelf (NCS)

Statoil's energy management on the NCS is based on field-specific energy-efficiency plans. The plans are continuously updated, and consist of more than 150 different operational, maintenance and modification actions. We are committed to contributing to the overall industry goal of achieving improved energy efficiency on the NCS equivalent to carbon emission reductions of one million tonnes by 2020, compared with 2007.(This is the result of work on the Konkraft report No 5 (2008) and later follow-up of the report). Since Statoil is the largest operator on the NCS, we have an internal target to contribute 80% of the petroleum industry's pledge for 2020. By the end of 2011, we had already achieved approximately 500,000 tonnes of carbon dioxide reductions, but, since many of the large projects have been completed (e.g. new power turbines on the Heimdal installation), the remaining 300,000 tonnes will be a more complex challenge.

Since the early 1990s, we have implemented energy-efficiency measures that have helped us to reduce our carbon dioxide emissions by approximately 40 million tonnes on the NCS compared with a business-as-usual scenario. All new installations and large modifications of existing installations will base their energy solutions on our vast experience from earlier energy-efficiency measures.

"No production flaring" policy

Pursuant to our internal technical requirements, we do not accept continuous flaring for gas disposal purposes (production flaring) in our operations. For safety reasons as well, process systems must be designed to minimise sporadic flaring. These are among our main successes on the NCS since the carbon tax was introduced in 1991. The result is that current flaring levels are less than 0.4% of global gas flaring volumes. We are now bringing this success to our international projects and collaborating with our partners through technology and business development to find value for associated gas.

Statoil was a funding partner when the World Bank established the Global Gas Flaring Reduction (GGFR) initiative in 2002, and we are still one of the funding partners. The GGFR's mission statement is to be a catalyst for policy change and project implementation and a facilitator for investments that reduce the wasteful practices of gas flaring and venting of associated gas. Satellite data for 2010 show a global gas flaring level of 134 billion cubic metres, compared with approximately 0.5 billion cubic metres on the NCS. Among the first efforts of this partnership was the creation of an international agreement - the International Standard for Flaring and Venting Reduction - which calls for operator and government planning to identify and execute flare reduction projects. GGFR has gained considerable experience in the generation and execution of these plans and the facilitation of government-operator collaboration to maximise success. Furthermore, in the context of its participation in the UN Secretary-General High-Level Group on Sustainable Energy for All, Statoil has called for a global industry effort to reduce gas flaring in oil production as one example of a win-win measure to increase energy efficiency, reduce carbon emissions, and potentially increase energy access for more people. Statoil will lead this initiative together with the GGFR.

A collaborative project between Statoil and Pemex to reduce gas flaring on the Tres Hermanos oilfield in Mexico was registered under the United Nations Framework Convention for Climate Change's Clean Development Mechanism (CDM) in 2010. This was the first gas flaring reduction project to be registered as a CDM by the UN and opens up interesting funding opportunities for similar projects globally.

The right policy signal needed

Statoil is one of the companies in the world with the highest exposure to carbon emissions costs - this is mainly due to the carbon tax regime in Norway. In that context, Statoil works with governments, businesses and other stakeholders to support viable worldwide policies and regulatory frameworks encouraging carbon-efficient solutions and the development of low-carbon technology. We believe that the most efficient vehicle for promoting energy efficiency is to establish a sufficiently high worldwide price for carbon. A global framework for carbon prices would create a level playing field for the industry to reduce emissions.

Statoil strongly supports the development of international carbon markets through clean development mechanisms and future international climate offset mechanisms. We believe that international trading in emission credits will not only improve the environment but also result in greater financial freedom of action in countries that sorely need economic growth and sustainable development.