March 2020, Vol. 247, No. 3
Features
Methane Emissions: Fugitives on the Loose
By Richard Nemec, Contributing Editor
Steeped in New Mexico politics and public service from an old line Democratic Party family, New Mexico Gov. Michelle Lujan Grisham did not hesitate to jump on the climate change bandwagon and commit to address the issue aggressively when she ran for the governor’s job in 2018 while still serving in the U.S. House of Representatives.
A year into her leadership of the state where her family has served in public office for decades, Lujan Grisham’s administration, in the last four months of 2019, created a blueprint for cutting methane emissions from the state’s abundantly productive oil and natural gas industry.
While the emissions from the oil and gas value chain were a hot issue for her campaign, she intends to keep a fire under state officials to follow through with adopting limits on the emissions moving forward. In December, a centerpiece for Lujan Grisham’s efforts was unveiled as a 300-page report from an advisory panel to the state environment department and its cabinet-level Energy, Minerals and Natural Resources Department.
Earlier last year, a group of Democratic U.S. senators, including several presidential nomination aspirants, introduced legislation in Congress to mandate the use of best available technology (BAT) and leak detection practices to prevent methane leaks from gas pipelines and related facilities.
Sen. Tom Udall (D-N.M.) led the group in making a pitch for the measure to be included in the latest pipeline safety law, but they were blocked by the Republican majority from doing so. In the meantime, Udall was lobbying for more use of 21st century technology, and responsible federal agencies were considering changing their requirements for pipelines.
The focus of today’s state and federal proposals dates back to the end of the Obama administration when the U.S. Environmental Protection Agency (EPA) issued three final rules governing emissions from new oil and gas wells and began regulating emissions from existing oil and gas sources. As updates to the New Source Performance Standards (NSPS), the rules were designed to reduce methane, volatile organic compounds (VOC) and toxic air pollutants, underpinning the Obama administration’s goal of slashing methane emissions from the oil and gas sector by 40-45% from 2012 levels by 2025.
President Trump’s administration quickly moved to undo all of this, though federal appeals courts have ruled in favor of enforcing the Obama rules. After a formal review of the new source rules and a two-year delay in implementing them, Trump’s EPA proposed loosening parts of the rules in the summer of 2019, despite the fact that some majors such as BP plc and ExxonMobil have come out in support of stronger methane emissions limits.
In its primary proposal, the EPA would remove compressor stations, pneumatic controllers, underground storage vessels and other sources in the transmission and storage segment of the oil and natural gas industry from regulation.
Strong advocates for reducing emissions aim their message squarely at the oil patch operators who own and operate the sources of the methane, saying they need to take more responsibility for monitoring, reducing, and reporting the emissions. “Whether we see that happening in the years to come will tell us a lot about the future of natural gas in the United States,” one advocate told P&GJ, echoing many other environmental spokespeople.
In 2019, New Mexico brought together 27 experts from across the st ate – oil and gas industry representatives, environmental lawyers, scientists from the Los Alamos National Laboratory, Colorado State University, and New Mexico’s Institute of Mining and Technology – to make up the bulk of the statewide Methane Advisory Panel (MAP). They took a hard look at the state’s efforts to mitigate against greenhouse gas (GHG) emissions. Eventually, MAP produced a technical report that has been boiled down to support Lujan Grisham’s expected efforts to get new rules and regulations in place in New Mexico.
From a national perspective, New Mexico’s Permian will bear watching in 2020 for its methane emissions statistics given the U.S. Energy Information Administration’s (EIA) short-term outlook released early in the year, predicting that “most of the forecasted crude oil production growth occurs in the Permian region of Texas and New Mexico.” EIA forecasts overall U.S. production climbing from 12.2 MMbpd in 2019 to 13.3 MMbpd in 2020 and 13.7 MMbpd in 2021.
During the first seven weeks in 2020, New Mexico officials scheduled public comment sessions, gauging consumer and voter reactions. Once a somewhat esoteric topic restricted to scientists and energy industry engineers, environmental and public policy wonks have expanded the conversation to a much broader audience today.
State officials championed New Mexico’s report as “unparalleled” and created a technical foundation on which the state can build its methane rules and regulatory requirements. XTO President Staale Gjervik praised the report for supporting the fact that methane emissions can be “mitigated in a cost-effective manner.”
About the same time near the end of 2019, the Edison Electric Institute (EEI) held a meeting in Florida with Wall Street analysts who follow the power sector to unveil what EEI dubbed its joint venture Natural Gas Sustainability Initiative (NGSI), previewing the power utilities’ intent in 2020 to propose a system of protocols to have their natural gas suppliers “measure and disclose methane emissions.”
At the time it was announced in Orlando, Fla., EEI officials described the effort regarding gas as “partly aimed at tamping down keep-it-in-the-ground sentiment in some areas of the nation,” as well as addressing the movement in a growing number of cities to prohibit new construction that includes natural gas as an energy source.
The American Gas Association (AGA) worked with EEI for more than a year to develop the initiative, according to EEI’s Phil Moeller, executive vice president and a former Federal Energy Regulatory Commission (FERC) commissioner.
“The venture is seen by the industry as critical to ensuring acceptance of using natural gas as a long-term bridge to a future with much lower greenhouse gas emissions,” Moeller noted at the time. As more power generation is derived from natural gas, electric utilities become the largest U.S. gas user, and many electric utilities also own local gas distribution companies.
EEI’s NGSI would encourage companies across all parts of the natural gas supply chain to voluntarily measure and disclose their methane emissions. That includes companies involved in gas production, gathering, processing, transportation, storage and distribution.
Separately, in the current time frame, the Environmental Defense Fund (EDF), as an extension of its ongoing methane emissions work, was in the Permian Basin in both New Mexico and Texas for what its officials are calling a year-long measurement effort.
Outlined in the fall of 2019, EDF is using advanced emissions monitoring technologies to determine how much methane is escaping in the Permian as a world leader for oil and gas production, where currently half of the U.S. oil drilling rigs are located. EDF hopes to extract “scientifically robust emissions data” to better map and measure the scale of the problems and accelerate the use of better, faster ways to mitigate the emissions.
“Recent data suggest that the New Mexico Permian methane emissions are five times higher than EPA emissions estimates,” said Stacy MacDiarmid, an EDF spokesperson. “We are closely watching the progress in New Mexico since the governor [Lujan Grisham] announced ambitious plans for new methane regulations.”
EDF officials contend that the technology to identify and measure methane emissions is “absolutely getting better.” They cite mobile drone and truck-mounted technologies, the digitizing of the oilfield operations, and the possibility of real-time detection systems. “Data is more transparent and accessible than ever, which means all interested stakeholders – governments, companies and customers – have incentives to reduce methane,” MacDiarmid said.
Extensive research led by EDF over a six-year period, from 2012 to 2018, shows U.S. methane leaks are a far greater threat than the government’s estimate suggests. The EPA said the oil and gas industry emits an estimated 8.8 million tons (8 mmta) of methane annually. EDF officials claim the organization’s first-of-its kind, five-year research series uncovered at least 14 million tons (13 mmta).
“That number – 60% higher than EPA’s – is massive,” an EDF spokesperson emphasized, equating the wasted gas with the total energy needed to fuel 10 million homes for a year, or gas that’s worth an estimated $2 billion.
Industry sources such as the American Petroleum Institute (API) and Interstate Natural Gas Association of America (INGAA) strongly disagree, noting the volumes are going down amid heightened U.S. oil and gas production. “In the Permian Basin, production surged nearly 170% from 2011 to 2018, but methane emissions relative to production fell nearly 45%,” said API Washington, DC-based Spokesperson Reid Porter, adding that the industry is leveraging new technologies and innovative practices to reduce emissions.
“The natural gas and oil industry supports smart regulation to ensure public safety, protect the environment and promote responsible development of domestic energy,” Porter said. Industry-led initiatives like the Environmental Partnership are reducing emission rates and empowering companies big and small to reduce their environmental footprint. Under federal and state oversight, our companies are constantly developing and advancing technologies to capture as much gas as possible to deliver to customers while lowering emissions.”
Industry progress can be documented in recent federal government statistics, though EDF officials question those, too. EIA’s latest projections on gas-fueled power generation predict that gas will produce 38% of the nation’s electricity in 2020 while coal will continue declining to 21%. Methane emissions from the gas-generated power fell 14% since 1990, even as production grew by 50%.
At INGAA, 25 major transmission pipeline and midstream operators have voluntarily committed to reducing methane emissions in pipelines, pneumatic controllers, storage and compressor stations. The INGAA companies collaborate regularly on research and development and best practices. Even as U.S. gas consumption has risen 43% over the past quarter century, the nation’s largest pipeline and storage operators have reduced their methane emissions by 44%, according to an INGAA spokesperson.
Two trends in the national statistics bolster the oil and gas industry’s continuing contention that methane emissions are improving steadily. They are found in the fact that coal continues to produce less and less electricity while renewables produce more each year at both the centralized utility-scale and distributed levels. The gas- and renewable-sourced megawatts displacing coal equate to less methane in the atmosphere.
For example, EIA’s early 2020 Short-Term Outlook notes that it expects total utility-scale electricity generation from natural gas-fired power plants will remain relatively steady (37%-38%), while renewables rise from 17% in 2019 to 19% in 2020 and 22% in 2021. Coal’s forecast share of electricity generation falls from 24% in 2019 to 21% in both 2020 and 2021. EIA’s latest forecast also estimates that renewables will account for a bigger portion of added power supplies in 2020 than new gas-fired megawatts.
After decreasing by 2.1% in 2019, EIA at the beginning of 2020 forecasts that energy-related carbon dioxide (CO2) emissions will decrease by 2% in 2020 and by 1.5% in 2021. Declining emissions reflect forecast declines in total U.S. energy consumption combined with assumptions of relatively normal weather. “Energy-related CO2 emissions are sensitive to changes in weather, economic growth, energy prices, and fuel mix,” according to EIA.
In and around the prolific Permian subbasins covering eastern New Mexico and western Texas the issue of methane emissions has percolated for some time. Leaders in the Permian Basin Petroleum Association (PBPA) praised Lujan Grisham and her administration for including the industry group’s representatives in various policy efforts, such as the MAP.
“We will continue to be involved in these discussions and negotiations through the coming months,” said Ben Shepperd, PBPA’s president. “This administration has made it clear they understand the importance and value of our industry. We will continue to make sure we have a seat at the table to represent the most vibrant industry in the state that produces prosperity across the Permian Basin.”
The apparent industry-state government cooperation in New Mexico and other states is offset by continuing debate and disagreement among parts of the oil and gas industry, climate change activists and the Trump administration agencies at the Department of Interior and the U.S. EPA. Increasingly during last year some of the majors and others in the oil and gas sector have publicly supported the need to do more to curb methane.
In early 2020, researchers at the University of Texas (UT) released a report speculating that the oil and gas and petrochemical build-out on the state’s Gulf Coast and broader Southwest U.S. region could generate more than half a billion tons of additional GHG emissions annually by 2030. That figure is equivalent to 8% of total current annual U.S. emissions. “The added emissions are driven by the region’s oil and gas boom, and a substantial fraction comes from large industrial facilities such as new petrochemical plants, LNG export terminals and refineries,” the UT researchers noted.
Added Emissions
The paper detailing the study, “Emissions in the Stream: Estimating the Greenhouse Gas Impacts of an Oil and Gas Boom,” was published in mid-January in Environmental Research Letters.
The UT authors cited another new report from the Environmental Integrity Project (EIP), which finds that industry build-out and increased drilling could release up to 250 million tons (227 million metric tons) of GHG emissions by 2025. The EIP report’s findings are based on permitted emissions, while UT researchers noted that they accounted for both future permitted and nonpermitted emissions through 2030.
“We wanted to understand if the industrial build-out we were reading about was a greenhouse gas mountain or a molehill,” said co-author Andrew Waxman, assistant professor of economics and public policy at the LBJ School of Public Affairs. “Emissions from oil and gas production are well known, but our analysis finds more than two-thirds of future emissions will come from midstream and downstream sources, including petrochemicals, LNG gas export facilities and refineries. These sources are a pretty big mountain that policymakers and climate modelers don’t seem to be currently accounting for.”
Also published in Environmental Research Letters late in 2019, researchers at Massachusetts Institute of Technology (MIT) concluded that current methods of controlling methane emissions need to “improve 30 to 90% in this new decade for gas to be an effective part of the U.S. efforts to reduce GHG emissions.” The authors concluded that methane leaks vary among operations and geographical locations, and fugitive emissions often are impossible to identify and estimate accurately.
At the same time, AGA Foundation released two reports examining strategies for the direct use of gas products to lower GHG emissions through either advanced technologies or renewable natural gas (RNG) (biogas). “Highly efficient gas appliances and use of RNG will reduce emissions along the [gas] systems,” said AGA CEO Karen Harbert. The first study on direct-use technologies was done by Enovation Partners, and the second on power-to-gas technology was completed by ICF.
In the first weeks of the New Year, EDF indicated it had a new report, “Hitting the Mark,” outlining the advances in technology for identifying, monitoring and reporting leaks. It was eyeing early February for the release. EDF’s Ben Ratner, who leads the organization’s business, energy and innovation programs, said the new report specifically “encourages and urges” oil and gas operators to adopt new approaches and methods for determining and reporting emissions. “To do this right, the industry will have to shift from using desktop estimates and calculations that often have been proven incorrect to increasing integrated direct measurements from the new technologies now available,” Ratner said.
According to Ratner, 2020 is a time for significant policy shifts, not only in the United States (North America), but globally, particularly in Europe where the European Union (EU) is poised to take some dramatic action on emissions reductions through its role as the world’s fast-increasing importer of LNG.
Progressive Approach
“The EU imports amount to nearly half [47%] of the natural gas that is internationally traded, and so when you combine that with the EU’s very progressive approach to climate change, they have a unique opportunity to exert the leverage of their strong gas market position as a major global buyer and user,” Ratner said. “They need to put in place policies that reduce emissions, not just in the EU, but in gas exported to them from places like the United States, not to mention Russia, Qatar and Algeria.”
As a vanguard for the oil and gas industry, API sees methane as another issue that government and the private sector are resolving: “The powerful combination of continually improving industry practices, advancing state programs and federal environmental statutes ̶ all work together to provide an effective structure that allows for the essential development of the nation’s oil and natural gas resources while protecting the environment,” the organization’s website states.
API officials like Reid Porter rely on EIA, the National Oceanic & Atmospheric Administration (NOAA) and other third-party sources to bolster their case, though EDF and Ratner remain skeptical. Porter will note that while gas-fired power generation grows and coal continues to decline, methane emissions from the gas industry fell 14% since 1990, even as production surged by 50%. And, API also more recently cites the NOAA study.
In the first months of the Trump administration, NOAA released a study alleging that the estimates on methane emissions in the Obama administration were inflated to help support the case for national standards on mandated reductions.
NOAA countered that assertion with findings noting that the earlier research relied on air measurements likely collected during episodic maintenance events, which skewed emissions higher than they typically would be. As a result, NOAA concluded that these “peak” emissions data were inappropriately used to calculate a normal emissions profile.
NOAA’s study (2006-2015) concluded there was no significant increase in total U.S. methane emissions during a 10-year period when U.S. gas production increased 46%. During this same period, NOAA said there was only a modest increase in emissions from natural gas and oil activity. “Given dramatic production increases, the emissions intensity, or emissions per unit of production, has declined significantly,” Porter said.
Case closed? Unfortunately, it is not that simple. Increasingly, state and local government officials are questioning our nation’s reliance on fossil fuels, of which methane emissions are a part of the mix.
No matter what the accurate statistics turn out to be, all sides would agree there is still time for U.S. technology and ingenuity to help resolve the dilemma for future generations. The global majors such as BP plc (“we see endless possibilities”) and ExxonMobil (“playing an essential role in protecting the environment and addressing climate change”) may have a head start on the pathway to a transformation no one can fully envision yet.
Richard Nemec is P&GJ’s Los Angeles-based correspondent and a frequent contributor. He can be reached at rnemec@ca.rr.com.
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