The Economic and Climate Implications of Methane Emissions from the Oil & Gas Sector

The Environmental and Energy Study Institute (EESI) held a briefing examining methane emissions from the oil and gas sector. The Environmental Protection Agency (EPA) estimates that gas leaks from this sector are responsible for 29 percent of U.S. methane emissions, although some think this estimate is low. Methane is a powerful climate warming pollutant – at least 84 times more powerful than carbon dioxide over the first 20 years after it is emitted. Methane emissions from the oil and gas sector occur in every segment of the industry, from production sites to distribution systems. Estimates of how much leakage is occurring continue to be refined, meanwhile there are a range of technologies that could lead to substantial reductions in methane emissions.

• Dr. Amanda Staudt, Director of the Board on Atmospheric Sciences and the Climate Polar Research Board, National Research Council (NRC), National Academy of Sciences (NAS), stated that we know that human activities are changing climate and why CO2 and other greenhouse gases cause warming.
  • CO2 has increased by 40 percent and methane has increased by 150 percent since the beginning of the industrial age.
  • CO2 levels are now higher than at any time in the last 800,000 years.
  • Ice and snow are decreasing; ocean heat and sea levels are increasing.
• We know that the planet has warmed 0.8 degrees Celsius (1.4 degrees Fahrenheit) since 1900 and that we can expect more warming as CO2 and other greenhouse gases increase. A few degrees of warming is a cause for concern as that is enough to provoke important changes in temperature, precipitation, and weather extremes. It is already impacting human societies and the natural world.
• Methane is a short-lived climate pollutant (SLCP) that EPA estimates comprised 8.7 percent of U.S. greenhouse gas emissions in 2012. There are many sources of methane (energy, agriculture, waste, land-use, industrial processes, etc…).
• Controls on CO2 and SLCP emissions are both necessary if we want to slow the rate of warming and limit total warming. Because of the potency of methane in the atmosphere (it has 87 times the impact of CO2 over 20 years), reducing methane emissions (and other SLCPs) can reduce the rate of warming substantially in the near term.
  • SLCP reductions slow the rate of warming and are important because we are already seeing the impacts of warming.
  • CO2 reductions limit long-term warming.
• Elgie Holstein, Senior Director for Strategic Planning, Environmental Defense Fund, said reducing SLCPs will buy us the time we need to come up with cleaner solutions.
• The Bureau of Land Management is tasked with avoiding waste and unnecessary pollution in public lands. Therefore, BLM must address methane leakage because:
  • Leakage is pollution, as it accelerates climate change impacts.
  • The public loses out on royalties.
• Existing equipment is already a significant source of methane emissions even without taking into account the huge increase in shale gas production.
• In many cases, investing in the equipment and practices necessary to reduce leakage can actually lead to cost savings.
• All in all, technology equipment upgrades and field practices can knock off 40 percent of methane emissions at a cost of only 1 cent per thousand cubic feet (natural gas is currently being sold for about $4-$5 per thousand cubic feet).
• Companies throughout the United States already make equipment, such as seals and compressors, which reduce methane leakages.
• The knowledge and knowhow needed to reduce methane leakages is well known and available, and in many cases doing so has financial benefits. Several oil and gas industry leaders are beginning to take action to reduce their leakages. But many in the industry prefer to invest first and foremost in capacity. This is why government action is needed: to level the playing field and ensure all industry players take the necessary action.
• David Doniger, Policy Director and Senior Attorney, Natural Resources Defense Council, said reducing methane leakage from the oil and gas sectors represents an important and necessary piece in the portfolio strategy to reduce greenhouse gas emissions.
• Doniger repeated that methane is 36 times more potent than CO2 over a 100-year timeframe when it comes to warming the climate, and 87 times more potent than CO2 over a 20-year timeframe.
• Enhanced standards to cost-effectively address the issue could cut methane leakage in half, to the tune of 150 million metric tons of CO2 equivalent in five years.
• There are five cost-effective approaches: addressing equipment leaks, pneumatic equipment, compressors, oil well venting, and liquids unloading.
• Regulating emissions indirectly via volatile organic compounds (VOCs) would lead to substantially fewer emissions reductions all around (even of VOCs). The direct approach of regulating methane emissions is 8 to 10 times more effective and should, therefore, be adopted by EPA.
• Michael Obeiter, Senior Associate, Energy & Climate, World Resources Institute, reiterated that there are many cost-effective technologies currently available—we know how to address the issue of methane leakages.
• From a climate perspective, flaring is preferable to venting (98 percent of the methane is converted into CO2, which has less of a global warming impact), but flaring natural gas is often incomplete, resulting in emissions of methane, carbon monoxide, and other hazardous air pollutants and VOCs. But flaring should be seen as a stop-gap measure at best.
  • Congress and states can help incentivize pipeline infrastructure at oil wells currently flaring gas in order to put flared gas to more constructive use by putting it into a pipline.
• Most studies have concluded that EPA is underestimating—perhaps significantly—the scale and scope of fugitive methane emissions.
• Obeiter focused on three areas that hold the most promise for reducing methane leakages: better pneumatic devices (which currently represent about one third of all oil & gas sector emissions at the production level), better compressors, and better pipeline venting for maintenance and emergency repairs.
• There are three main actions Congress can take to address methane leakage:
  • Increase appropriations for R&D at the Department of Energy to bring down the costs of emissions measurement and control technologies
  • Address emissions sources not covered by potential future EPA standards with legislation instead
  • Provide tax incentives for the purchase and use of emissions control technologies
• Brent Lammert, Vice President Sales, Test Equipment, FLIR Systems, Inc., noted that action at just 10-20 percent of sites with emissions would lead to a 60 percent reduction in emissions.
• Reducing leakages leads to safer operations and better public safety, and is often profitable with a rapid payback.
• Colorado’s methane regulations are being closely watched domestically and internationally as they can serve as a model to other states, and to other governments. They specify three things:
  • What you can use to do the leakage inspections
  • How frequently the inspections must be carried out
  • How much time companies have to repair reported leakages.
• In other words, leaks can be reported without worrying about incurring a fine, so long as the leak is adequately repaired in the specified timeframe.
• Lammert concluded by demonstrating the detection of a leak using his company’s optical gas-detecting, portable video camera. The camera uses state-of-the-art compact infrared technology to detect leaks so that they can be immediately visualized by the camera operator (see the video above).

Earlier this year, the Obama administration released its “Climate Action Plan: Strategy to Reduce Methane Emissions,” which called for improved methane measurement and reduced emissions across several sectors, including oil and gas operations. The EPA subsequently released a series of white papers on methane leakage reduction options for the oil and gas sector in order to solicit input from independent experts, and is now evaluating options for achieving further reductions from this sector. The agency’s current standards for this sector apply only to certain equipment installed after 2012, do not apply to transmission or storage facilities, and do not apply to emissions from the thousands of oil wells being completed each year. The Bureau of Land Management is also expected to propose updated standards to cut wasted natural gas by reducing venting, flaring, and other emissions from oil and gas production on public lands. A recent poll conducted by Benenson Strategy Group found that among likely 2014 general election voters in Colorado, New Mexico, North Dakota, and Utah, 69 percent would support a rule that would “require oil companies to significantly reduce the amount of natural gas they release or burn off into the air when they extract oil from public lands.”