methane emissions in the natural gas supply chain: a strategic analysis of the feasibility of...
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METHANE EMISSIONS IN THE NATURAL GAS SUPPLY CHAIN: A
STRATEGIC ANALYSIS OF THE FEASIBILITY OF VOLUNTARY
STANDARDSADAM L REED, J.D., UNIVERSITY OF COLORADO BOULDER
DAVID BERNELL, PH.D., OREGON STATE UNIVERSITY
JACKSON CASSADY, DIRECTIONAL DRILLING CONSULTANT, SAGEBOX LLC
KEVIN DORAN, J.D., UNIVERSITY OF COLORADO BOULDER
STUART FELDMAN, PH.D., MBA, SFL CONCEPTS LLC
METHANE EMISSIONS – WHY CARE?
• Clean Power Plan uses NG generation as “building block 2” for states, who may order displacement of coal-fired generation and count emissions savings
• We’ve already dropped CO2 emissions from the power sector by 15% since 2005 from generation switching.
• BUT Emissions rates of methane from wellhead to end use are a subject of considerable scientific controversy.
• 20x more potent than CO2 over a 100 year time horizon
• If methane emissions along the NG supply chain are high enough, they could cancel out the benefits of switching from coal to gas generation, or worse.
Artist’s rendition of a “fugitive” molecule of methane…
MAJOR SOURCES OF METHANE LEAKAGE FROM NG SYSTEMS
• EPA’s inventory of US GHG Emissions and Sinks identifies 3 categories
• Normal Operations: Uncombusted exhaust from NG engines, bleed and discharge from pneumatic devices, fugitive emissions from various components
• Routine Maintenance: emissions that escape during maintenance and repair of wells, pipelines, equipment
• System Upset: emissions that escape during accidents and in the use of failsafe procedures, such as pressure surge relief systems
Credit: Blue Source, Inc.
HOW MUCH ARE WE TALKING ABOUT HERE?
• Short answer: we don’t really know.
• Prior to the shale gas boom, a handful of papers examined leakage from transmission and distribution systems: Barroso 2009; Kirchgessner 1997; Lelieveld 2005; McRae 1995; Shorter 1997.
• In 2011, Howarth et al. published a paper suggesting use of shale gas used for power generation had a 20-100% greater carbon footprint than coal-fired generation, when methane leakage at the wellhead was included.
• Since then, research has focused extensively on hydraulic fracturing and upstream emissions in an effort to support or detract from Howarth’s claim.
TYPES OF METHANE STUDIES Direct or Modeled?
• Direct Measurement: These studies employ on-site technologies to physically measure emissions. Because such methods are time-consuming and expensive, they are generally limited to specific sites or transmission systems, and pose challenges to broader extrapolation for the sector.
• Modeling and Estimation: These studies estimate leakage rates from various components of the supply chain, and attempt to create sector-level models to estimate total leakage. The nature and diversity of the supply chain makes these estimates unavoidably uncertain, and there is significant disagreement over what constitutes an appropriate leakage rate estimate.
On the Ground or From the Air?
• Bottom-Up: Results are derived by summing leakage estimates from government or industry inventories or extrapolations of direct measurements of particular types of equipment.
• Top-Down: Analysis of ambient air concentrations of methane in particular areas, often taken by airplane. Notably, top-down studies have found methane and other chemical concentrations suggesting dramatically higher leakage rates than those suggested by bottom-up modeling. Work is currently underway to better reconcile top-down and bottom-up approaches.
WE GET IT… WHAT DO THEY SAY???
BOTTOM UP STUDIES – 0.5% TO 7.9% OF PRODUCED GAS IS LOST
• EPA/Gas Research Institute (modeled): 0.16% in 2010; 1.42% in 2011-2012; then back down to 0.88% in 2013 after an industry report on liquids unloading challenged estimates. (Karion 2013)
• Howarth et al (2011, 2012, 2014) (direct measurement) consistently argue that EPA/GRI estimates are not relevant to wellhead leakage rates from hydraulically fractured wells, which Howarth’s direct measurements peg at 3.6 to 7.9%
• Cathles (2012) found production leakage rates of 1.5%
• Dale (2013) found no significant leakage difference between unconventional and conventional gas production in the Marcellus, suggested that efforts should focus on midstream and transport sectors
• Allen et al (2013) (direct measurement) place gas production leakage rates at 0.42% based on direct, bottom-up measurements of 190 sites. Found that with proper controls and well-trained workers, 97% of methane leaks from well completion could be prevented.
• Other wells, however, had leakage rates up to 67% higher than EPA estimates.
TOP DOWN STUDIES – 9% AND UP IS LOST
• Schneising (2014) estimates leakage in the Bakken and Eagle Ford shales at 10.1% and 9.1%, respectively.
• Caulton (2014) argues that EPA/GRI estimates were far too low to account for the concentrations of methane found in the ambient air around drilling sites. Marcellus sites exhibited concentrations implicating leakage rates 2-3 orders of magnitude above EPA estimates.
• What gives? How can these estimates differ so widely? Working groups of BU/TD scientists theorize that highly significant amounts of methane are coming from a small number of exceptional sources, which may emit 100-1000 times more methane leakage than regular sources and may do so interstitially.
Credit: Sonja Wolter, appears in University of Michigan News article, “Flight of the Methane Hunters” (Apr. 22, 2015)
STANDARDS AND TECHNOLOGIES – OUR THOUGHTS AFTER LIT REVIEW
• Means-oriented strategies involving particular technologies (plunger lift systems, leak monitoring equipment, etc.) may be more appropriate than a results-oriented emission standard.
• The top-down studies suggest that downstream leakage may be substantial. Everything we save upstream may end up lost anyway later on, unless there are better incentives to lower leakage in the transport and distribution sectors.
• Best resources for guidance on leak detection and measurement tech:
• Bradbury et al (2013) (WRI) – identifies 10 key technologies, 8 of which would affect midstream/transport/downstream
• Harvey (2012) (NRDC)
• ICF Int’l (2014) (EDF)
1% LEAKAGE IS “ALMOST ACHIEVABLE”
• General agreement that a leakage rate of around 1% would be safe, guaranteeing that a fuel switch from coal to gas in the electricity sector was a climate-positive move.
• “…a 1 percent methane leakage rate is almost achievable, according to our analysis of the implications of the recent EPA [NSPS] rule and with additional reductions through the adoption of three additional cost-effective technologies. . . However, we also know that more cost-effective reduction opportunities are available, so more could be done to further reduce emissions throughout the natural gas life cycle.” (Bradbury et al 2013, at 29).
• Most technologies and approaches identified in the literature on leak mitigation are mature and proven, thus good candidates for standards development
OBAMA ADMIN REGULATIONS PROPOSED
• New EPA regulations to cut methane emissions from the oil and gas sector are in the proposal stage. A final rule is due in 2016.
• Room for voluntary measures?
• “Voluntary efforts to reduce emissions in a comprehensive and transparent manner hold the potential to realize significant reductions in a quick, flexible, cost-effective way. Achieving significant methane reductions from these voluntary industry programs and state actions could reduce the need for future regulations. The Administration stands ready to collaborate with these and other voluntary efforts, including in the development of a regime for monitoring, reporting and verification.” (White House 2015).
Yes, this is an ACTUAL toy in Japan. Yes, Obama dual-wields katanas – obviously.
POTENTIAL MODELS FOR MORE SUCCESSFUL VOLUNTARY STANDARDS
• Environmental Energy Credits model
• “Responsible gas credit” system similar to renewable energy credits (RECs) within state renewable portfolio standards. Producers following a variety of standards could sell gas to utilities as part of “cleaner gas” programs that could be marketed to retail gas/electric consumers or even required by utility regulators.
• North American Electric Reliability Council (NERC) model
• Internal, industry-led model for developing and enforcing voluntary standards as a means of addressing a collective problem or forestalling undesirable government regulation. Can lead to ultimate federal enforceability of industry-developed standards, as it did with NERC.
• Soft-Law model
• A “governance” approach involving a leadership role for a large industry player to create and adopt a standard that becomes commonly used by all participants. Sustainable forestry practices proposed in the 1990s were ultimately adopted by the Home Depot, which received positive feedback and goodwill from environmentalists. It was so popular that Lowes was forced to adopt the standard simply to stay competitive. Over time, the system developed a sophisticated regulatory structure for monitoring, enforcement, and verification.
• This is already happening with respect to methane emissions from the NG industry through the Climate and Clean Air Coalition.
CLIMATE AND CLEAN AIR COALITION
• Leadership from the UN Environmental Program (UNEP), and participation from governments, NGOs, and intergovernmental organizations
• Companies commit to voluntary standards to survey emissions levels and evaluate technologies that can mitigate emissions leakages.
• Includes 7 global energy companies:• BG-Group• Eni• Pemex• PTT• Southwestern Energy• Total• Statoil
ELEGANCE• Something can be considered elegant if “it is assessed
to be highly usable and if the presence of complexity-masking aesthetic characteristics can be readily observed” (Feldman 2014)
• Usability aspects • Financial Impact of adopting standards• Management feasibility• Technology feasibility
• Visible effects aspects• Environmental performance• Social Feasibility -- who will support the standard?• Political Feasibility
IMPLEMENTATION RISK
5– small environmental impact (worse)
1– large environmental impact (better)
ENVIRONMENTAL ENERGY CREDIT MODELCAVEAT: These are starting points based on our own analyses and interviews, and are thus essentially demonstrative rather than conclusive. The models are meant to go through multiple iterations among larger and more diverse stakeholder groups who would debate the various parameters.
NERC MODEL
SOFT LAW MODEL
