Performance Metrics Drive Supply Chain Change

Pressure to quantify emissions data is set to grow for engineering, procurement and construction companies, and breakbulk firms involved in major industrial projects as clients increasingly focus on new critical performance measurements, according to project analysis firm IPA Global.

The introduction of tighter performance metrics for industrial projects over the coming decade is expected to transform the nature of supply chains and change many of the dynamics within sectors. To help, delineate some of the challenges faced in the energy industry, IPA recently launched its Carbon Working Group (CWG) to focus on the key metrics and issues for exploration and production firms.

“The focus of the E&P industry so far has been on the Scope 1 & 2 Operational emissions,” Adi Akheramka, Team Lead for Carbon Management at IPA Global, told Breakbulk. “However, we are seeing the focus include the earlier FEL and Execution phases as well, in addition to Scope 3 emissions including supply chain and fabrication interfaces. As this becomes more common, EPC firms will have to provide reliable data to measure their contribution to the owners’ low-carbon targets, positive or negative, and help optimize GHG performance through better practices.”


Standardized Frameworks

Launched in 2020, the CWG has grown to include 15 integrated E&P and energy firms with interests extending to chemical and mining sectors as well as carbon capture, utilization and storage (CCUS) and other abatement options.

“The CWG started with several IPA clients highlighting the increasing importance of GHG emissions as a critical performance measure in capital project decision making. To help business sponsors and project teams improve their GHG performance, the IPA metrics focus on assessing the competitiveness of GHG intensity (project outcomes) and on the readiness of a project team to deliver its low-carbon target (project drivers & practices),” Akheramka said.

This link between investment decisions and project operations is one that Akheramka sees strengthening and one that will be of vital importance for breakbulk operators in future as they support the supply chain of major projects.  Akheramka predict that EPC firms will “benefit from the standardized frameworks/methodologies developed by the IPA CWG” and collaborate to extend these “to address emissions during project development and Scope 3 emissions.”


GHG Toolkit

The company has published a detailed Greenhouse Gases (GHG) Toolkit to help firms benchmark estimates and actual emissions as well as conducting trade-off analysis between low-carbon and low-cost performance to calculate Carbon Capital Effectiveness, or CCE.

“EPC firms can benefit from the findings of the IPA CWG is by understanding how owners/operators implement their GHG reduction strategies,” Akheramka notes, “After evaluating GHG performance and readiness of several E&P project teams using the IPA GHG Toolkit, the decarbonization levers in front of a project team can be categorized into three distinct steps.”

The first of these steps involved design optimization and Best Available Technology (BAT) selection to reduce energy demand for the project, taking into account all available data points. Once this is complete, the project managers must then choose the cleanest form or source of energy to service remaining energy demand. A final stage will typically involve the deployment of carbon reduction and carbon removal scopes to address any remaining GHG emissions.

“EPC firms are already responding by launching new business divisions to help E&P companies with these three decision areas, but more can be done by sharing real performance data and by collaborating with independent firms like IPA to identify lessons learned and best practices,” Akheramka said.

Further aspects to the GHG toolkit include a GHG Estimate Maturity Index and Carbon Optimization & Readiness Assessments.


Carbon Capture
 
The last of the stages in the IPA’s analysis may offer additional opportunity for breakbulk operators, as the construction major new cabron capture and storage facilities drives demand fro cargo transport.

“Carbon capture is an integral part of most decarbonization strategies we see from CWG member companies. While several of the commercial or large-scale demonstration projects in operation today use amine-based separation, other technologies like membrane and adsorption are being considered for CO2 capture scopes across onshore and offshore opportunities.

Breakbulk carriers can play an important role in the growth of the CCUS sector by feeding back findings from early projects to help the sector as a whole to grow, with  Akheramka noting that a key challenge “is the availability of real performance data from completed projects” to help in the early-phase screening and technology selection.

The group is working on a multiclient research study to address this issue and develop learning curves for cost performance of these technologies based on similar commercialization journeys in the past.

Early data on the contributions of the EPC stage to overall project emissions remain largely variable and hence the need to measure and specifiy operations is paramount.

“There is significant inconsistency in the definition and boundary conditions used to generate these estimates. These inconsistencies exist not only between different companies, but also between projects from the same company in different regions. IPA is working to resolve this issue by developing standardized GHG estimate breakdown structures for project teams and benchmarking them to improve competitiveness and predictability,” Akheramka concluded.