Schlumberger Explains Bold Scope 3 Approach

Schlumberger was one of the first oil service companies to commit to net-zero emissions by 2050 this past June. This uniquely includes Scope 3 emissions from the use of products sold -- causing many companies, particularly oil producers, to feel uncomfortable as they only have limited influence on how their products are used. Schlumberger, by contrast, is selling technology over which it keeps "some control" during the use phase, Lees Rodionov, the company's head of sustainability, tells Energy Intelligence. "The question is how do we design it differently, how do we engage with customers for the use of it?" Some 75% of Schlumberger's Scope 3 emissions occur when customers use its technology, either in the form of venting and flaring or as power consumption during operations (NE Jan.21'21). They are part of the customers’ Scope 1 and 2 emissions, which plays in favor of Schlumberger because most oil companies, even the most conservative ones, are pursuing stated ambitions to curb flaring and methane emissions (NE Jan.21'21). "We feel our customers are aligned with us in trying to bring these down, and we have a 'transition technologies' portfolio to do so, such as zero-flaring during well tests," Rodionov points out. Digitalization will also play a big role. So far, the oil and gas sector has been lagging other industries because it is much less standardized and has been focused on efficiency and eliminating waste, Rodionov explains (NE Feb.27'20). "I would argue that the capital discipline that has been around the last several years has created an appetite for more standardization than previously existed in the industry. And anytime you have more standardization, there's the opportunity for automation, and if you're automating things, there are emissions associated with that, which will go out as well." Emissions reductions are an easy sell when they are associated with direct energy savings -- and therefore cost savings. When they involve additional costs, however, a system-based approach often shows they would bring indirect savings, says Rodionov. Schlumberger has, for example, a biodegradable drilling mud called Paraland that is slightly more expensive than standard drilling fluid. But "because it's 100% biodegradable, there's no waste stream to manage, so you save on costs, on logistics, and then on the emissions that would have been associated with managing that waste stream as well." Similarly, switching to renewable power may involve additional capital expenditure but operating costs are lower. Those low-hanging fruits, however, will go away, Rodionov warns. "I feel that in the near term, there are opportunities that do provide a neutral or close to neutral system cost. This gives us time to figure out how to attack the ones that don't." New Markets Beyond low-hanging fruits, Schlumberger is exploring several "new energy" markets including carbon capture and storage (CCS), geothermal, hydrogen and lithium (NE May6'21). "We chose businesses where we felt we could leverage our capability, but also that had large addressable markets." While the company is not disclosing ambitions in each of them separately, it believes they represent $50 billion-$75 billion in potential addressable market in the coming decade or so. "We certainly expect the New Energy division in aggregate to be our fastest-growing division over the coming decades," Rodionov emphasizes. CCS, without which it is "mathematically impossible" to achieve the Paris targets, is a business Schlumberger has been in since the mid-2000s (NE Nov.19'20). "We were involved in some form or fashion in the majority of the large projects that are around globally with geological storage." The company is currently involved in a joint venture with Chevron, Microsoft and Clean Energy Systems in California to create renewable gas from biomass, capture over 99% of the carbon generated from the process, and permanently store it. "We have this technology-centric approach in our carbon negative actions on the path to net-zero." This is in contrast with nature-based solutions such as forestry, which are "absolutely viable options" but rely on parameters outside of Schlumberger's control such as long-term management of plantations (NE Mar.5'20). Geothermal energy is another sector where Schlumberger can leverage drilling and subsurface skills. A new trend there will be to look at geothermal potential below existing oil and gas reservoirs, says Rodionov. "This way, not only can you leverage oil and gas competency in drilling and characterization techniques, you also have the opportunity to leverage and transition the supply chain, local relationships and workforce." Lithium is another good key plank of Schlumberger's transition strategy, and here, joint ventures play a big role as they allow investment to be spread across multiple opportunities without needing to be an expert in each one. NeoLith Energy was launched earlier this year and later announced a partnership with Panasonic, a leader in electric vehicle batteries (NE Mar.25'21). Without being a battery specialist, Schlumberger will bring subsurface and digital capabilities via its proprietary "direct lithium extraction" process that will be deployed at a pilot plant in Nevada (NE Nov.5'20). Emissions related to purchased goods and services account for about 12% of Schlumberger's Scope 3 total. They involve hard-to-abate and carbon-intensive inputs such as chemicals, cement and metals. "Those industries themselves have sustainability leaders with net-zero ambitions, so we need to make sure that we are aligning with strategic suppliers that share our ambitions," says Rodionov. Schlumberger's Scope 1 and 2 emissions are limited and not much different from those of any industrial or service company. Reducing them involves actions such as conversion to electric vehicles or to renewable power supply. Philippe Roos, Strasbourg