IMPLICATIONS OF US SENATE ACTION ON FUGITIVE METHANE CONTROL

May 23, 2017 § Leave a comment

In a surprising decision, the US Senate voted to let stand the Obama era regulation curtailing methane related emissions from the oil and gas value chain.  Much of the reaction has related to the political implications of the failure of a Trump supported reversal of an Obama administration action.  My take is that, for once, the Senate acted in bipartisan fashion.  Several senators on either side of the aisle were on the fence.  In the end, Senator McCain’s statement probably best explains the action of the fence sitters.  He released a statement:

“While I am concerned that the BLM rule may be onerous, passage of the resolution would have prevented the federal government, under any administration, from issuing a rule that is ‘similar’”

The key point he was making was that allowing the rule to stand still allowed it to be amended, whereas removing it would prevent any ‘similar’ rule from being attempted in the future.  The current Secretary of the Interior was already on record as willing to encourage voluntary methane reduction by operators.  So, the senator’s direction will very likely be followed.  Besides, as discussed below, much of the mitigation of fugitive methane simply makes economic sense to the operators.

The rule was largely modeled on an existing rule in Colorado, and widely supported by the residents and the oil and gas operators there, who are credited with participating in the details.  The federal action was, at least in part, premised on the fact that other states had not followed suit.  Interestingly, the senator from Colorado ended up voting to remove the rule.  Hmmm.

Two Democrats, Heidi Heitkamp of North Dakota and Joe Manchin III of West Virginia, had considered voting for repeal for similar reasons as Senator McCain, that it was not comfortable as written.  Apparently, they were persuaded that changes would be forthcoming.  The rule applies only to Bureau of Land Management (BLM) lands.  But as a practical matter, if operators are going to act to limit emissions on BLM leases, transferring the technology to other leases would be simple, unless economically onerous.

The Environmental Defense Fund (EDF) is leading an effort on quantifying the nature of the problem and the means to solve it.  The Department of Energy’s ARPA E unit launched the MONITOR program to create better means for detecting fugitive methane economically.  Both these efforts are described in some measure in chapter 2 of my book: Sustainable Shale Oil and Gas: Analytical Chemistry, Geochemistry and Biochemistry Methods.  The chapter also describes the principal findings of an EDF funded effort to quantify the distribution of fugitive emissions along the entire value chain from the well to the city gate and somewhat beyond.  The data are a bit old now, but the takeaways are illustrative, nevertheless.  Over 82% of the losses occur at under 20% of installations.  Mitigation measures are advantaged by this concentration.  They also conclude that 45% of the emissions can be captured with then current technologies in economic fashion.  This could be accomplished by a net additional expenditure of USD 0.01 per thousand cubic feet (mcf) of gas produced.  Even at the currently low natural gas prices in the vicinity of USD 3 per mcf, this is certainly economical.  Of particular note is that they do take into account a credit for the sale of the natural gas captured.  While reasonable, this is not realistic for leaks in the midstream pipeline infrastructure.  Detection is also more problematic in the midstream.  But some of the MONITOR projects do address that area as well.

There is a tendency to confuse methane releases with emissions from the flaring of natural gas. Both represent economic loss, but the first is more harmful to the environment because methane is about 25 times worse than carbon dioxide in the global warming impact.  Many states have regulations covering the various sources of fugitive methane, including coal mining and agriculture. Colorado has a comprehensive one directed to oil and gas production.  North Dakota has regulations requiring flaring to be curtailed.  The vast bulk of flaring is of gas associated with oil production, whereas the majority of methane releases are in the natural gas production and distribution infrastructure.  In the US, gas production is more economically challenged than oil because the market price is lower (gas has regional pricing, unlike oil).  This makes investment in mitigation more challenging.  But, as the numbers quoted above show, much of this is still economical.  Several technologies are in development, some currently available, to attack the problem of flared associated gas.  Some of these are also described in the book referenced above.

Fugitive emissions of methane from various industrial sources, including coal mining and oil and gas production, must be targeted for economic and environmental reasons.  But the regulations must be guided by the economic availability of detection and amelioration schemes.

Vikram Rao

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