Methane emission reductions: Some say costs are offset by benefits
FARMINGTON — The environmental group that backed a multi-year study on the impacts of methane releases from natural gas collection tanks at drill sites and other sources says fixing the problem will make money and create jobs.
Oil industry groups say increased regulation patterned after Colorado's Regulation 7 would kill jobs by raising the cost of extraction and hurt states like New Mexico, where wells in the San Juan Basin sit mostly idle while the Permian Basin booms.
The Environmental Defense Fund’s report, released in June in the journal Science, says the U.S. oil and gas industry emits 13 million metric tons of methane from its operations each year — nearly 60 percent more than current Environmental Protection Agency estimates.
It calls for a 45 percent reduction in the amount of methane released.
While federal rule makers are moving away from strict methane release standards, there is plenty of action on that front in the public and private sector.
A policy group representing companies already at work in the methane waste reduction industry says the costs of detecting and fixing leaks is low. It cites a study on Colorado’s methane reduction policy as proof that mandatory methane inspection schedules won’t kill the oil and gas industry.
A firm based in Las Cruces performs laser-assisted aerial detection pipeline surveys in various parts of the country, but hasn’t found much work here in New Mexico.
At Colorado State University, an experimental program with a high-powered industry advisory group at its side is tasked with developing and testing low-cost and effective methane detection and capture solutions.
Would more jobs be created?
So-called low-cost fixes to enhance the capture of methane would require an expansion of an inspection industry that’s already growing in New Mexico.
Methane is a marketable product, the biggest ingredient in natural gas and is also a greenhouse gas linked by scientists to a warming climate.
No one — not in industry or within the ranks of environmentalists — believes that accidental methane releases are good, and most acknowledge that a waste of product is a waste of money.
Environmental Defense Fund senior policy manager Jon Goldstein sees added inspections and retrofitting of equipment as adding to economic growth and prosperity in San Juan County and other oil and gas regions through the creation of local jobs.
He says some of those jobs are already here, and the potential for jobs paying between $30,000 and $113,000 is real.
Companies like BP and XTO have pledged to keep high standards for methane reduction as part of business plans to capture more methane, Goldstein said.
He points to successes in Colorado and progress on clean air made in Wyoming as examples of changes in the release of methane and resulting economic success.
“The industry likes to say, 'You’ll kill our industry if we do this.' … It doesn’t really hold water,” Goldstein said.
In cases in which a well owner really can’t turn a profit after remediation measures, Goldstein said existing BLM procedures include a path toward an exemption from methane release rules.
Goldstein told Energy magazine the process of fixing old equipment would only add “1 cent per mcf of natural gas — an additional penny of cost on a $3 product.”
Oil industry pushes back
Some oil and gas industry associations say EDF’s peer-reviewed study is a rehash of old studies and is an outlier, conflicting with Environmental Protection Agency measurements that the industry relies upon.
“This paper is consistent with the fact that methane emissions were low in 2015 and reaffirms the benefits of increased use of natural gas as a fuel source, which is driving US carbon dioxide emissions downward,” American Petroleum Institute upstream group director Erik Milito stated on the association’s website in June.
“The industry has achieved continued emissions reductions thanks in large part to technology advancements and this innovation has been fundamentally important to our shared goal to reduce emissions," he said.
He said methane emissions have dropped 14 percent since 1990 “during the same period that natural gas production has increased more than 50 percent.”
Milito also questioned the methodology used in the report.
The New Mexico Oil and Gas Association is likewise critical of the findings, and of any assertions that Colorado’s rules demanding increased and scheduled methane inspections would do anything good for New Mexico.
NMOGA spokesman Robert McEntyre said the rules would make this state less competitive “and be a nail in the coffin of the San Juan Basin.”
McEntyre also challenged the narrative he said is put forth as revisionist history by some that Colorado oil and gas producers willingly went to the table to talk about adopting stricter rules.
“You brought a cow into a slaughterhouse and asked it if it wanted to be a steak or a rawhide,” he said of the negotiations to create Colorado’s methane rules.
As for the figure cited by Goldstein based on a $3 price for gas, McEntyre noted “we’re not there yet” and gas prices are depressed.
Methane rules in flux
After a contentious couple of years spanning two presidential administrations, the federal government is moving away from strict methane release controls, even as the industry bands together to reduce emissions.
Both the Bureau of Land Management and the EPA are in the process of replacing the tougher Obama administration rule with more relaxed standards
“The latest wrinkle there is they put out a repeal rule,” EDF’s Goldstein said. There were “400,000 comments against repealing it. Something like 98 percent were against repealing the rule.”
He said there also were no public hearings. He said on July 13 that EDF expects the tougher rules would not make it past the end of July.
Active in that fight was a group representing firms that are in the business of developing and implementing the technology that detects leaks at oil and gas sites.
They have their own voice in Washington, D.C., and elsewhere, through a consulting firm called 38 North Solutions that works for the Center for Methane Emissions Solutions, a policy group NMOGA considers as closely tied to EDF.
Director Isaac Brown said large and small companies realized bureaucrats and legislators in Washington and in state legislatures across the country were making regulations that affect their businesses.
Brown also disputes NMOGA's characterization as "inaccurate and misleading. While we do have some policy positions that are similar to EDF, we are not tied to them and our members are some of the largest methane mitigation companies in the United States, including several that do business in New Mexico," Brown said. "In fact, often we take very different positions than the environmental community because our membership, which is entirely methane mitigation companies, might have a different view on a policy issue."
Brown’s organization has the goal of making sure new legislation or rules are “developed with considerable input from industry.”
“The biggest success story for methane policy would be regulations in Colorado. We were very supportive of that entire process,” he said.
Brown called Colorado’s Regulation 7, which requires quarterly checks for methane leaks, “a wonderful case study of how industry can work together with regulators.”
While he said companies like Exxon understand the benefits of systematically capturing methane, “unfortunately we’re not seeing on an industry wide (scale) the same level of focus put on this.”
Impact of Colorado’s rules
Brown shared a study conducted for his group by Keating Research of Colorado that sought to gauge how Colorado firms were coping with the new methane regulations.
The study’s author contacted 35 firms in 2015 and 2016, and 10 of those chose to sit for an interview. Of those interviewed, the firms reported that they had conducted more than 1,100 site inspections on average at their oil and gas operations in Colorado over the span of a year.
“The inspections are working to help find methane leaks,” the study found. “When we ask representatives to tell us how many methane leaks they are finding during a typical site inspection, they report finding 2 to 3 methane gas leaks on average, and they find at least one methane gas leak in 9-out-of-10 typical site inspections.”
Those companies said, on average, “that their company found more than 800 methane leaks in Colorado,” the study said.
Most leaks were small, the companies said.
“The vast majority (88%) of methane leaks that were found during site inspections over the past year are described as a small leaks, while about 1-in-10 are described as large, significant leaks,” the study said. “In 9-of-10 cases the representatives agree that the cause of the leak is typically something simple such as an open valve or a loose connection or seal, while only 1-in-10 of the leaks are considered more problematic than that.”
Most of the small methane leaks were found in regulators or controllers, separators, valves and tank hatches. The most common cause was debris, a loose connection or wear and tear on the equipment, the study said.
As for economics and air quality, the study found some positive feedback from the firms they interviewed.
“What is most encouraging is that oil and gas company representatives are taking notice that finding and fixing the thousands of methane leaks under Regulation 7 is reducing methane emissions in Colorado,” the study said. “Six-of-ten representatives agree with the statement — Regulation 7 significantly reduces methane emissions in Colorado, compared to 3-of-10 who disagree.”
Study author and longtime Colorado pollster Chris Keating concluded that seven out of 10 businesses surveyed “believe the benefits of Regulation 7 outweigh all of its costs.”
“Oil and gas company representatives understand that when they balance out the money they are spending to find and fix the methane leaks against the additional revenues they are receiving from the gas they are recapturing, 8-of-10 say that they are profiting, coming out even or paying out a little more money than they are collecting in new revenue,” the study said.
However, one of the 10 said they’re paying far more money to find a fix the leaks than they are collecting in new revenue.
NMOGA’s McEntyre isn’t surprised the study found that leaks were detected and fixed, stating that leak detection is already part of the procedure for oil and gas producers.
“Once you find a leak and you fix it, it’s generally going to stay repaired,” McEntyre said.
Onerous laws mandating inspection schedules benefit companies that do the inspections if only certain ways of detecting methane plumes are built into the law, he said.
Overly prescriptive rules, he said, “only serve to limit the innovation that has got us where we are.”
Surveying from the air
So, if industry is working toward capping methane emissions, who’s doing that work? One such company is Las Cruces-based LaSen Inc.
A lot of LaSen’s customers who, in the past, have only done annual inspections are inspecting pipelines more frequently, said LaSen’s director of operations, Tim Goolsby.
“The two big reasons are safety and savings,” Goolsby said.
Among LaSen’s customers is the Pacific Gas & Electric Co., which on Sept. 9, 2010, was responsible for a deadly gas explosion in San Bruno, California. A leaking 30-inch diameter natural gas pipeline exploded and leveled part of that city’s Crestmoor neighborhood.
Not every leak that is detected has that potential for disaster, but leaks mean safety hazards, as well as pollution and wasted product.
“Even though they’re small, they cost the companies thousands into millions,” Goolsby said.
Lead scientist Ralph Motto told Energy magazine that deploying LaSen’s laser-assisted aerial survey technology is cheaper and faster than sending crews on the ground to survey for escaping gas plumes.
The service on average costs $135 to $140 per mile surveyed, depending on the number of crew members. The helicopter can survey 300 miles of pipeline per day.
Half the companies that hire LaSen send their own pipeline personnel with LaSen’s crew. If they don’t, the company looks not only for leaks, but for “abnormal operations” they flag for clients, managers said.
LaSen has a small percentage of work presently in New Mexico, with four specially-equipped helicopters stationed in various parts of the country to service oil and gas companies on call.
The company recently surveyed about 1,000 miles of BP and Red Cedar lines in southern Colorado and the Farmington area.
Oil companies save money with this technology, “so consumers also benefit,” Motto said.
Their surveys have found critical leaks in populated areas.
“I know this technology has saved lives,” Motto said.
Testing goes to college
Colorado State University’s Energy Institute runs the MONITOR Program, which is an acronym for a lengthy name: Methane Observation Networks with Innovative Technology to Obtain Reductions.
The program seeks to develop “innovative technologies to cost-effectively and accurately locate and measure methane emissions associated with natural gas production,” according to its website.
“Such low-cost sensing systems are needed to reduce methane leaks anywhere from the wellpad to local distribution networks, reduce safety hazards, promote more efficient use of our domestic natural gas resources, and reduce the overall greenhouse gas (GHG) impact from natural gas development,” the website states.
The Methane Emissions Technology Evaluation Center will test developing emissions detection technology under realistic conditions.
Assisting the program are members of the METEC Industry Advisory Board, a collection of experienced oil and gas industry leaders.
“Data generated during the field tests will demonstrate the performance capabilities of the technologies and could be used by the MONITOR performers to accelerate the commercialization and/or regulatory approval of their technologies,” the website states.
Note: This article was modified to include the fact that 38 North Solutions works for the Center for Methane Emissions Solutions.