How Adnoc Will Drive Its Accelerated Net-Zero Strategy

Abu Dhabi National Oil Co. (Adnoc) has found itself in the climate crosshairs ahead of Dubai’s upcoming hosting of the UN COP28 climate conference, as questions encircle the oil exporting state’s ability — and commitment — to drive climate change policy. Adnoc has sought to quell concerns in part by adopting an accelerated target to achieve net-zero operations by 2045, five years earlier than the midcentury goals touted by most industry giants. Adnoc still intends to boost oil production capacity in the coming decades, meaning net-zero Scope 3 emissions targets are off the table. But in an exclusive interview with Energy Intelligence, Musabbeh al-Kaabi, Adnoc’s executive director of low-carbon solutions and international growth, opens up about how the state firm intends to at least offer some of the least emissions-intensive barrels around.

Q: How are you going to achieve the now fast-tracked timeline to reach net-zero operational emissions by 2045?

A: It’s clear that Adnoc is [already] one of the top when it comes to the lowest carbon intensity among our peers, if not the lowest — 7 kilograms per barrel. This came [from] a strategy that was executed for some time, so let me highlight a few of the initiatives.

One of them is to electrify … which is connecting our onshore operations with the grid and to tap into nuclear and solar power. Last year we announced a transformational project connecting the offshore operations with the grid in the future with an investment totaling almost $3.8 billion. I expect the project [will be completed] in the next two to three years. The target is we will be able to reduce our carbon footprint in the offshore by 50%. We are working on a few other initiatives to take that percentage much higher.

We have built the first commercial-scale carbon capture facility in the region and the first steel facility globally to have carbon capture — the Riyada project, with a capacity of 800,000 tons [per year]. The plan is to achieve a minimum of 5 million tons by 2030.

We are also spending a lot on new energies like hydrogen, be it blue [derived from natural gas using carbon capture] or green [using renewable electricity and electrolysis]. We are expanding our renewable energy, so our position in [state-backed renewable electricity giant] Masdar. Masdar is going from around 20-25 gigawatts of capacity now to about 100 GW by 2030. On top of that we are also looking at every single process in our operations, [like] heat recovery initiatives that will enable us to minimize our power requirements, with a potential of 230 GW of self-generation from heat recovery.

We feel that we sit nicely among our peers to achieve that [2045] target.

Q: What is the budget that has been allocated to achieve your net-zero target? Is there any scope it will be increased?

A: We have announced an initial investment of $15 billion [by 2030] — that’s around 55 billion dirhams. But if we mature certain technologies, I can see more capital commitment to low carbon.

Q: What are you doing reduce methane emissions at Adnoc?

A: In 2022, we announced our methane intensity was 0.07%. I think for methane we are already in a good spot. But we are deploying more technologies, monitoring primarily with [artificial intelligence], satellite imagery, utilizing drones and utilizing infrared cameras. We already committed to a zero-methane target by 2030, and we think it’s doable.

Q: In your view, what are the most commercially viable technologies out that would enable Adnoc to reach its net-zero target?

A: Let me start with carbon capture. We are testing two emerging [technologies] … one of them is CO2 mineralization. This is a technology we are currently running in Fujairah. The idea is you mix the CO2 with sea water and inject it in certain geological formations with a certain mineralogy. In nature, it may take maybe 100 years to crystalize the CO2 … but with this new technology, under certain circumstances, we can reduce that to potentially a few months. The CO2 will crystallize, fill the pore space in the subsurface and remain there for millions of years in a stable form.

The other technology we are testing is we traditionally use CO2 for enhanced oil recovery. Now we are testing storage. We picked one geologic formation in Abu Dhabi with a huge potential for storage, a saline aquafer. We are going to inject CO2 and monitor it for some time and see how stable it is to validate our assumption that this is a suitable subsurface storage.

Q: Are you also looking at using CO2 in industrial materials, such as cement?

A: Yes. Potentially if we see a world in 20 to 30 years where CO2 becomes a liability and people will be able to pay you to get rid of it, I think there’s a very interesting business model. But I think that’s one of these discussions that would require further collaboration.

Q: Are there any other decarbonization initiatives you are testing?

A: Geothermal. We conducted the initial assessment of two wells in Masdar City. We are going to use them for district cooling instead of power generation. For power generation, you need very high temperatures. That means that we need to drill deep … in the subsurface, which is very costly. For district cooling, you need a much lower temperatures. The two wells proved two things. They are the right temperature and the right productivity, so we are working with [local utility] Tabreed to equip them with the chillers. Hopefully before COP28 we will announce the results of this experiment. It looks very promising, and it’s very adjacent to our business because we are in drilling activities. So drilling geothermal wells and decarbonizing district cooling would be an ultimate goal.

Q: Doesn’t low-carbon technology deployment add to production costs and lower the margins for barrels being exported?

A: It depends. Sometimes you deploy technologies to increase efficiencies, meaning that it’s profitable. Sometimes you do things because it’s good and it shows that you are a responsible producer of energy. When you look at technologies like carbon capture, [it] might be costly, but if you have a regulatory framework that enables you to embrace carbon capture, it should be profitable. But ultimately I think everyone is encouraged and inspired to reduce their carbon footprint, so I see the decarbonization agenda getting more relevant in our operations.

Q: Are you working with other oil producers on decarbonization?

A: Most of the [international oil companies] that are working here in Abu Dhabi, we work with them to identify any decarbonization initiatives. We just recently signed an agreement with [Occidental Petroleum] to evaluate direct air carbon capture. I think the challenge now is the cost, but hopefully with time we will see a significant reduction.

With other countries, we are more than happy to share our experiences. I mean zero flaring, the methane emissions reductions, all the sustainability initiatives we put in the system. We are an open book because our goal, similar to many others, is to help accelerate decarbonization going forward.

Q: How is the United Arab Emirates addressing criticism that its position as an Opec member and major oil exporter is not compatible with being the host of COP28?

A: To start with, I don’t think we are a petrostate. We are an Opec member. But if you look at our economic diversification journey, in the 1970s, around 90% of our GDP was from oil and gas. Today, it’s less than 30% — and dropping. We were the first country to sign the Paris [Climate] Agreement in the region, the first country to set a target of net-zero [Scope 1 and 2 emissions] by 2050 in the region, [and] the first country to embrace renewable energy in the energy mix. We built Masdar in 2006. People were asking themselves, “Abu Dhabi? UAE? Renewables? Give me a break!”

But we had the conviction at that time that renewable energy should play a bigger role in the energy mix going forward, and that conviction? Ninety-nine percent of people around the world believe in it now. But we saw it earlier. We embraced nuclear power generation … one of a kind in the region, which is up and running now. So these initiatives position the UAE in a different light. It’s unfair to call us a petrostate. We are a proud young nation that will prove to the world that the sky is the limit.