When industry experts talk about innovative crude oil production, the application of solar energy is not the first thing that comes to mind. As a result solar energy tends to be underutilized as a viable strategy towards reducing both emissions and long-term operating costs. California’s Low Carbon Fuel Standard (LCFS) measure aims to change that trend with its incentive to create credits through innovative crude oil production projects. Under the AB 32 Scoping Plan, the California Air Resources Board (CARB) identified the LCFS as one of the nine discrete early action measures to reduce California's greenhouse gas (GHG) emissions that cause climate change. In this third installment of Innovations in Energy Solutions, we look at some of the more interesting ways solar energy can be an asset to the crude oil industry.
Q: What is the credit generating opportunity within this program? Solar energy can be used for steam generation, electricity generation or heat generation in the context of crude oil production – there are credit generation opportunities with all these applications. Currently, the most common application for LCFS credit generation is through the replacement of grid electricity utilized in the crude oil production fields with solar electricity. On average, solar electricity has the potential to replace between 20 to 35% of the grid electricity burden.
Q: What is the solar electricity generating technology required for crude oil production? Distributed photovoltaic (PV) panels with inverters to convert direct current (DC) solar power into alternative current (AC) power is the most common technology currently used for crude oil production in California.
Q: What is the capital expenditure for PV solar electricity? Based on 2015 data, capital expenditures for solar electricity ranges from $390 million (steady deployment) to $1,200 million (accelerated deployment).
Q: What is involved in the LCFS innovative crude oil production project application and LCFS credit generation? Project proponents must provide the following information: description of the innovative method, engineering drawings, GPS coordinates, and calculations to demonstrate that the solar project achieves a carbon intensity reduction of at least 0.10 gCO2e/MJ (relative to baseline) or an emissions reduction of at least 5,000 MT CO2e per year (Section 95459(c)(1)(E)). Once approved, the project proponent submits quarterly reports to CARB and LCFS credits (proportional to the emissions reductions) are banked into the project proponent’s account once quarterly third-party verification is performed and a positive verification statement is submitted to CARB.
If you would like to learn more about our services in this area, contact Irra Core at email@example.com or at (805) 764-6006.
Capital Expenditure Data Source: The Impact of Solar Powered Oil Production on California’s Economy, January 2015 https://www.seia.org/sites/default/files/resources/Solar_Powered_Oil_Production_California_Economy_0.pdf, accessed 07.13.2021