Oil and Gas Trends

Upstream Industry Highlights

U.S. Crude Production Growth: U.S. crude production is forecast to grow by 120,000 barrels per day, reaching 13.5 million barrels per day by the end of 2025. The Permian Basin will drive much of this growth, contributing 230,000 barrels per day.

Carbon Capture & Storage (CCS) Expansion: CCS technologies are playing an increasingly critical role in helping oil and gas companies meet emission reduction targets. Projects like the Alberta Carbon Trunk Line in Canada and various initiatives in the U.S. are paving the way for large-scale carbon capture adoption.

Permian Basin Challenges: The Permian Basin faces challenges related to natural gas takeaway capacity and infrastructure constraints. However, recent pipeline completions like the Matterhorn Express Pipeline are expected to alleviate some bottlenecks, supporting stable production and reducing price volatility.

Oil Price Projections: Analysts project oil prices to hover between US$70/bbl and US$80/bbl in 2025, with a potential uplift of US$10/bbl if geopolitical tensions escalate.

Carbon Capture & Storage  

Carbon Capture and Storage (CCS) has emerged as a critical technology in the upstream oil and gas sector, enabling operators to reduce their carbon footprint while maintaining production levels. With the industry responsible for over 90% of operational CCS capacity worldwide, CCS is uniquely positioned to lead the transition towards lower emissions. According to the Global CCS Institute's 2023 report, CCS could mitigate up to 17% of global CO₂ emissions by 2050. This edition explores how CCS is reshaping upstream operations in 2025, focusing on technical advancements, economic implications, and strategic opportunities for E&P companies.

CCS in Upstream: Beyond Emissions Reduction

CCS is becoming integral to upstream operations, offering more than just emissions reduction. High-CO₂ fields that were previously uneconomical or environmentally challenging can now be developed. For instance, the Sleipner field in Norway, with 9% CO₂ content, has been economically viable since 1996 due to CCS integration, storing over 20 million tonnes of CO₂ beneath the North Sea. As noted by the Energy Transitions Commission, CCS plays a crucial role in achieving net-zero emissions by enabling the continued use of fossil fuels while reducing their environmental impact.

Key CCS Technologies Reshaping Upstream

1. Enhanced Oil Recovery (EOR) with CO₂: CO₂-EOR is proving to be a win-win, increasing recovery rates while storing CO₂. The Permian Basin alone is projected to store 100 million tonnes of CO₂ annually by 2030 through EOR operations, according to the Energy Information Administration (EIA). This technology is particularly effective in mature fields, where it can extend field life and enhance recovery rates.

2. High-CO₂ Field Development: CCS is enabling the development of fields once considered stranded assets. Malaysia's K5 field, with 70% CO₂ content, is now viable thanks to CCS technology, potentially adding 80,000 barrels of oil equivalent per day to Petronas' production. As highlighted by the Global CCS Institute, CCS applications in the oil and gas industry are expanding rapidly, driven by technological advancements and economic incentives.

3. Offshore CCS Hubs: The concept of offshore CCS hubs is gaining traction. The Northern Lights project in Norway aims to store 1.5 million tonnes of CO₂ annually by 2024, with plans to scale up to 5 million tonnes. This model could be replicated in other mature basins, offering new life to aging infrastructure. According to S&P Global Commodity Insights, such hubs are crucial for scaling up CCS capacity globally.

Industry Case Studies

1. Gorgon LNG (Australia): This $54 billion project captures 3.4 million tonnes of CO₂ annually from gas processing. Despite initial delays, it demonstrates the scalability of CCS in large upstream operations. As reported by the Global CCS Institute, Gorgon LNG is one of the largest CCS projects globally, showcasing the feasibility of integrating CCS into major LNG developments.

2. Qatar North Field Expansion: QatarEnergy's ambitious LNG expansion incorporates CCS, aiming to capture over 7 million tonnes of CO₂ annually by 2030. This project sets a new standard for integrating CCS into greenfield developments. The International Energy Agency (IEA) notes that such large-scale projects are essential for meeting global emissions targets.

3. Permian Basin Direct Air Capture: Occidental Petroleum's 1PointFive project aims to capture 1 million tonnes of CO₂ directly from the atmosphere annually, showcasing how upstream operators can leverage DAC for negative emissions. This aligns with the Energy Transitions Commission's emphasis on CCUS technologies for achieving net-zero emissions.

Technical & Economic Challenges

1. Reservoir Characterization: Ensuring long-term CO₂ storage integrity requires advanced seismic imaging and reservoir modeling. Companies like Schlumberger are developing AI-driven tools to enhance storage site selection and monitoring. As noted by Global Market Insights, advancements in technology are crucial for reducing CCS costs and improving efficiency.

2. Cost Optimization: CCS adds $5–15 per barrel of oil equivalent to production costs. However, innovations in capture technology, such as Svante's solid sorbent technology, promise to reduce capture costs by up to 30% in the next” five years. According to the Energy Transitions Commission, cost reductions are essential for scaling up CCS deployment.

3. Infrastructure Development: The IEA estimates that CO₂ transport and storage capacity needs to increase 100-fold by 2050. This presents both a challenge and an opportunity for upstream operators to repurpose existing infrastructure. S&P Global Commodity Insights highlights the importance of infrastructure development in meeting CCS growth targets.

Strategic Opportunities for Upstream Operators

1. Carbon Storage as a Service: Basin-wide storage hubs offer new revenue streams. The Oil and Gas Climate Initiative (OGCI) predicts this market could reach $100 billion annually by 2040.

2. Low-Carbon Production Premium: Morgan Stanley reports that "green" LNG cargoes are fetching premiums of 5-10%. Similar premiums for low-carbon oil could emerge, benefiting early CCS adopters.

3. Regulatory Advantages: In regions with carbon pricing, like the EU ETS where carbon prices exceed €80/tonne, CCS can significantly improve project economics.

Final Thoughts

Carbon Capture and Storage is no longer just an emissions reduction tool—it's becoming a core competency that can unlock new reserves, extend field life, and create new business models. By 2030, up to 75% of new upstream projects may need CCS to be economically viable under aggressive carbon pricing scenarios. Early movers in CCS integration are likely to see enhanced asset values, improved market access, and a competitive edge in an increasingly carbon-constrained world. The question for E&P companies is no longer “if”, but how quickly they can scale up CCS across their operations.