The Future of Fuel in Offshore Drilling: Decarbonization Efforts and Green Alternatives

As the offshore energy industry continues its gradual shift to low-carbon and renewable energy sources, offshore drilling players are intensifying their efforts to slash emissions on the path to a sustainable future. While drilling rigs largely run on diesel, which creates electricity to power the motors, rig owners are exploring ways to harness low-carbon and green alternatives. In this fast-changing landscape, which fuel will dominate the rig market and power offshore drilling rigs in the years ahead?

Main takeaways:

• Offshore drillers exploring low-carbon technology options as part of sustainability frameworks to find cost-effective and sustainable power sources
• LNG wins majority vote as key rig fuel to slash emissions in years ahead
• Rig owners looking into running their rigs on alternative fuels
• Hydrogen, methanol, and biofuels among future contenders to power drilling rigs in Seadrill and Saipem’s view, respectively
• Efforts to decarbonize rig operations not yet at ‘in with the new greener fuels out with the old fossil ones’ stage
• Embracing change and optimize drilling operations is work in progress
• Odfjell Drilling places green fuels at the heart of its zero-emission drilling mission
• Valaris’ emission reduction recipe: electrification and biofuel blends
• Noble pinpoints green methanol as promising rig fuel for GHG emission cuts
• Transocean’s strategy: oil and gas alongside renewables

The Decarbonization Movement in Offshore Drilling

With decarbonization sweeping over every corner of the offshore energy industry, the oil and gas sector is working to curb its greenhouse gas (GHG) emissions footprint. The offshore drilling industry has also embarked on the energy transition journey, as rig owners pursue innovation, digitalization, artificial intelligence (AI), and emission reduction tools to ensure more sustainable fleet operations.

While popular decarbonization methods on offshore platforms tend to include offshore wind farms and subsea cables connected to onshore power sources, the GHG emission reduction quest for the vast majority of offshore drillers entails finding a suitable replacement for diesel engines, which usually require 20 to 45 cubic meters of diesel fuel per day, depending on rig type, environment, and operations being performed.

In light of this, an anchored rig will use less diesel than a dynamic positioning one. According to the U.S.-based Noble Corporation, one of the serious emerging contenders for the job seems to be green methanol, as using this fuel instead of traditional diesel fuel on a jack-up rig is said to have the potential to result in up to 95% CO₂ emission reductions.

Drillers Pursuing Energy Efficiency Tools

The International Petroleum Industry Environmental Conservation Association (IPIECA) has spotlighted several measures and equipment with the potential to boost energy efficiency, encompassing well-planned drilling operations, design and maintenance of the drilling rig, positioning and transit of the drilling rig, choice of heave compensation system, enhanced flexibility of energy production on the rig, closed bus, peak shavings of drilling loads, heat recovery systems, along with heat tracing.

IPIECA has also mentioned the optimization of cooling water systems, along with energy storage systems (ESS), the introduction of a combined hydrogen and methanol injection system, incentives in contracts with rig owners to reduce fuel consumption, data analytics and digitalization in internal emission monitoring, and alternative fuel or power sources.

Aiming to shed more light on the potential fuel that will – to a large extent – replace diesel to power drilling rigs, Offshore Energy created a poll to get industry professionals’ views on the issue, asking: ‘As the search for solutions to pave the way for further emission cuts gains ground, which fuel will drilling rigs mostly run on in the future?’

The participants had four options to choose from, which encompassed LNG (50%), green methanol (10%), ammonia/hydrogen (19%), and biofuels/alternative fuels (20%). As half of the votes went to LNG, the results of our research show that this fuel will likely play the biggest role in the rig decarbonization game, followed by biofuels and the rest of the alternative fuels on the menu.

Rig Owners Embracing Green Solutions

All offshore drilling players are seeking to slash their GHG footprint. In line with this, Switzerland-headquartered Transocean intends to reduce operating emissions intensity by 40% relative to 2019 levels by evaluating and pursuing projects that support alternative energy sources.

The U.S.-based Diamond Offshore, which was also looking into ways to curb its emissions, saw the use of biofuels as an opportunity to achieve a reduction in GHG emissions in its business since the ones made up of bio-waste projects are said to have the potential to downsize lifecycle GHG emissions by 20% or more. This drilling player is now part of Noble Corporation.

On a mission to diversify energy sources and minimize the carbon footprint across offshore operations, Saipem disclosed plans to combine forces with Eni to enrich its decarbonization arsenal with renewable fuels, intending to employ biofuels on its drilling and construction vessels, with particular attention to operations in the Mediterranean Sea.

While embracing energy efficiency, Seadrill was trialing hydrogen and methanol injection technology in its fleet. The offshore drilling player claims the injection of a precise blend of hydrogen, oxygen, methanol, and water into three different air intake locations of its main diesel engines enables it to optimize the combustion process.

Seadrill previously said emerging technology opportunities could address and bring down GHG, NOX, SOX, and PM emissions, signaling its willingness to pursue carbon capture and utilization storage (CCUS) alongside opportunities to improve onboard systems, such as alternative fuels and hybrids.

Odfjell Drilling’s Zero-Emission Mission

Like its peers, Odfjell Drilling is determined to respond to the climate change challenge of transitioning away from fossil fuels to usher in a net-zero era. In pursuit of a green shift, the Aberdeen-based offshore drilling player has set interim emission goals to reach a 40% emission reduction by 2026 and 70% by 2035 on its journey to be a net-zero emission company by 2050.

In a move designed to bring it closer to zero-emission drilling operation, the rig owner pooled resources with its suppliers to bring battery- and hybrid solutions to its MODU fleet, resulting in new technology being retrofitted to its fleet, which led to the downturn in emissions. The firm considers energy efficiency and alternative energy sources as essential tools paving the way to net zero goals.

Two years ago, the company outlined four routes toward zero emissions, which entailed performing studies on alternative fuels such as ammonia and piloting biofuel onboard the Deepsea Atlantic semi-submersible rig, carbon capture solutions, a concept for drilling using shore power from a field center, and renewable power generation by floating wind turbines in close collaboration with its sister company, Odfjell Oceanwind.

The UK-based rig owner’s journey toward zero-emission drilling is divided into four phases covering operational awareness; increasing energy efficiency with peak shaving, redundancy, and spinning reserve projects alongside direct power reducing projects; optimizing solutions; and zero emission ready phase.

This fourth and final stage identifies green fuels as the key to unlocking GHG emission reduction targets set for 2035. In line with this, Odfjell Drilling participated in a study on ammonia as a marine fuel in 2022, initiated by Equinor and carried out by the UK-headquartered rig owner, Wärtsilä, and KBR, which created a dual fuel concept for retrofitting a GVA7500 rig to utilize ammonia as fuel, with an estimated CO2 reduction of 58% during moored operations.

Offshore Driller Exploring Renewable Fuel Avenues

Furthermore, the offshore drilling firm recently highlighted that renewable biofuel, piloted onboard its Deepsea Atlantic rig using hydrotreated vegetable oil (HVO) produced from waste oil in 2022, proved to be a suitable drop-in fuel, achieving carbon curbs of over 80% compared to a fossil fuel comparator. This prompted the firm to conclude that its MODUs are ready to operate on HVO biofuel to slash emissions but employment of such fuels depends on the availability and costs.

While confirming that shore power supplied to a rig through a nearby field center powered from shore is possible, Odfjell Drilling describes this decarbonization option as costly and explains that a plan for re-use of the cable would need to be devised once the drilling operation is finished.

Moreover, the rig owner points out that a concept study on renewable energy supply from a mobile offshore wind unit (MOWU) to a MODU, completed in 2022, includes an optional WindGrid solution with short-term energy storage, opening the door to emission reductions of up to 66% on the MODU while throwing biofuel use into the mix puts further cuts on the table.

Odfjell Drilling’s scenario for zero-emission operations envisions the possibility of a rig running on a combination of marine gas oil (MGO) and biofuel along with carbon capture and storage technology to capture the CO2 from the engines. Despite steps taken to enable retrofitting the rig to capture, temporarily store, and load the CO2 onto ships for further processing, the rig owner does not expect CCS to be commercially available soon.

Valaris Sets its Cap Multifaceted Approach to Tackle GHG Emissions

Valaris is another offshore drilling player determined to reduce emissions. To this end, the company began implementing rig engine optimization projects, using biodiesel fuel in a jack-up rig, and conducting engineering studies on rig electrification, alternative fuels and additives, and other carbon reduction technologies.

The firm’s Scope 1 emissions were 703,674 metric tons of CO₂ equivalent (mt CO₂e) in 2023, an increase of 12% from 2022 due to increased mobilizations throughout the year and rig reactivations prompted by improved market conditions. However, the rig owner underlines that these emissions are 27% lower than those from its base year of 2019, thanks to lower active rigs in 2023. Valaris’ fleet intensity ratio is 15% higher than in 2019 because of a fleet makeup of more floaters.

While contemplating climate-related opportunities, the offshore drilling giant emphasizes the use of lower-emission sources of energy such as biodiesel and green electricity and the transformation of its energy generation to low-emission alternatives such as wind, solar, wave, tidal, hydro, geothermal, and biofuels, along with the access to new markets and new assets servicing the energy transition such as carbon capture and sequestration.

Fighting GHG Emissions with Biofuel Blends and Electrification

Valaris, which has been using biofuel blends on the Valaris 106 jack-up rig in Indonesia, claims that these fuels enable a significant reduction of GHG emissions, subject to the carbon content of such biofuel. However, such fuels are not widely available across all geographies for use onboard the firm’s offshore fleet. Since the offshore driller’s customers provide the fuel for its rigs, replacing diesel with low-emission alternatives will require their active participation in switching to biofuel blends.

Therefore, the firm’s customers would not need to purchase the biofuel blend, ensure its bunkering onshore, and contract supply vessels and other logistical services to deliver it to its rigs. Valaris perceives the customer-provided logistical ecosystem as essential for switching from diesel to biofuel blends for its fleet.

While the rig owner is interested in electrifying its jack-up units, it underlines that the required access to electricity is not yet available for its jack-up operations offshore. The firm is convinced that powering its jack-up rigs using a local electric grid or other sources, such as offshore wind farms and offshore platforms, would bring a significant reduction in its GHG emissions.

“As is the case for biofuel blends, electrification will require the provision of electricity by our customers. Wider access to this technology will also require the participation of other stakeholders, including regulatory bodies and local authorities,” underlined Valaris.

Noble’s Decarbonization Endeavors Yield Results

Just like its offshore drilling peers, Noble Corporation is leaving no stone unturned in its quest to curb its GHG emissions level. Given its aspiration to slash carbon intensity by 20% by 2030, the firm is employing methods within energy consumption monitoring, energy management plans, sustainable behavior programs, and matured energy efficiency upgrades to achieve its aims.

Noble sees itself as a link at the front end of the oil and gas value chain, thus, it is determined to address the climate challenge, as hammered home by its emissions reduction initiatives, including what it claims to be the world’s first rig operating on shore power and the world’s first hybrid, low-emission rig upgrade. The firm also entered a carbon capture and storage (CCS) consortium and is testing to run its rigs on 100% sustainable fuels.

The drilling heavyweight’s Scope 1 emissions were 858,065 metric tons of CO₂ equivalent in 2023 with 750,460 MtCO₂e from rigs on contract and 107,605 MtCO₂e off contract, respectively. The company’s carbon intensity, measured as MtCO₂e per contracted day, was 38.05 for jack-up rigs and 120.27 for floaters, representing a 5 and 1.5% reduction over the respective carbon intensity in the baseline 2021 year. Noble’s Scope 2 emissions were 1,038 MtCO₂e in 2023 and accounted for less than 1% of its total emissions.

Noble continues actively exploring alternative power sources as key to decarbonizing the offshore drilling industry. The rig owner 4kl closely with our customers to explore using climate-friendly fuels on our drilling rigs. In offshore drilling, the industry standard is for the customer to take responsibility for the supply and cost of the fuel used during drilling campaigns.

As a result, Noble is dependent on collaboration with customers to achieve emissions reductions from alternative fuels. The company’s zest to move to more sustainable operations is illustrated by the rollout of the Energy Efficiency Insights (EEI) across all 29 marketed rigs. This energy consumption monitoring solution is believed to have the potential to deliver 6–10% reductions in fuel consumption and derived emissions.

Jorgen Schaffer, Rig Manager at Noble Venturer, outlined: “EEI is a game changer that we use actively to track our energy consumption patterns and overall environmental footprint. We host a bi-weekly ‘green meeting’ with our customer and EEI forms the base for discussions that have resulted in optimizing fan settings, thruster operations, and drilling equipment utilization, amongst others.”

Noble is adamant that its strategy is designed to embed decarbonization into its business model, allowing it to offer its customers decarbonization solutions to help them meet their GHG emissions reduction targets with the use of advanced monitoring equipment on rigs to seek to optimize fuel consumption and test what it deems as climate-friendly fuel types like green methanol and 100% sustainable diesel.

With the low-carbon and sustainable world in mind, the offshore drilling player thinks that transitioning to lower-emission energy sources such as biodiesel, renewable sources for electricity, rig electrification, and/or hybrid energy systems will result in a drop in its GHG emissions and create operational cost savings in the medium to long-term.

Building upon its renewable diesel test on the Noble Interceptor jack-up rig in 2022, Noble collaborated with Shell to test hydrotreated vegetable oil (HVO) in 2023 on the Noble Globetrotter II drillship in the U.S. Gulf of Mexico to provide comparable dynamic positioning system performance and engine response when using 100% HVO instead of conventional marine diesel.

While describing the performance results as satisfactory, the firm notes that this opens the path to using HVO and HVO blends in its floater rigs when its customers can supply them.

Noble’s Diversification Trump Card: Decom and CCS

Since the transformation to a low-emission economy is giving rise to a growing demand for plug and abandonment (P&A) services in decommissioning oil and gas infrastructure, Noble is convinced that making its rig fleet ready for P&A activities holds significant market potential. In addition, the firm underscores that offshore drilling operations can tap into the emerging CCS value chain.

The company anticipates future demand for its services to entail drilling wells in reservoirs where CO₂ injection is already being executed at an industrial scale. Driven by this belief, the firm joined forces with DNV and BP to define the requirements for qualifying an offshore rig to be ready for CO₂ drilling operations.

This marriage of experience DNV has within CO₂ risk management, BP within CO₂ injection for enhanced oil recovery, and Noble from participation in the Greensand project enabled assessment of equipment upgrades and management system modifications required to perform drilling operations with a risk of encountering a high concentration CO₂ event.

Based on the rig owner’s data, the CO₂ rig project finished the initial phases of technology qualification, technology assessment, and threat assessment in 2023. Equipment testing followed this, providing the basis to complete full equipment and management system recommendations in December 2023.

Green Methanol Coming to the Rescue in GHG Emission Battle

While the energy transition story presents a wide palette of low-carbon and sustainable fuels for offshore drillers to try, green methanol is lately being signaled out in the shipping and maritime world as a decarbonization enabler on the path to net zero operations. Is it possible for an offshore drilling rig to run on this fuel and what will it take to equip a harsh environment jack-up with this option?