Exploration

This is the ‘Achilles heel’ of the booming US natural gas industry that could derail its future

CNBC—The Trump administration and the U.S. Environmental Protection Agency may be weakening methane emissions rules for natural gas producers affecting private and public lands, but the private sector is taking unique countermeasures.

In a first for the industry, BP announced in September a new technological plan to constantly monitor methane emissions at drilling sites around the world, using drones and gas cloud imaging.

Methane, a potent greenhouse gas, is released into the air as a byproduct of oil and natural gas drilling. It’s colorless and odorless, and scientists have recently reported more leaks through energy production than previously known.

That is a big problem for the big oil and gas industry as pressures mount from regulators, climate activists and the companies’ own shareholders to address concerns about climate change.

The industry’s methane problem has come into focus with the rise in use of natural gas produced through hydraulic fracturing “fracking” — it is now the top fuel used to produce electricity in the U.S., according to the U.S. Energy Information Administration. Companies have marketed natural gas as a cleaner source of energy because it emits only half the carbon dioxide of coal, but that reputation is being hampered by the growing concern about methane leaks.

According to the Environmental Protection Agency, about 10% of U.S greenhouse gas emissions in 2017 were methane. Eighty-two percent were carbon dioxide. Though methane doesn’t last as long as CO2 (it stays in the environment for about a decade but can have centuries-long impacts on expanding oceans), it has more than 80 times the heat-trapping potential of carbon dioxide 20 years after it escapes into the atmosphere. Overall, methane is considered to have 28 to 36 times the “global warming potential” of carbon dioxide.

“There’s a growing concern among investors that the oil and gas industry is making very big bets on natural gas as sort of the foundation for its long-term growth,″ said Andrew Logan, senior director of oil and gas at Ceres, a shareholder advocacy organization focused on sustainability issues. Logan said methane leakage had gone under the radar, but now investors are cognizant of the problem. “If methane is not properly addressed, it really undercuts any claim natural gas has to being lower-carbon.”

Many oil companies, including Chevron, have faced shareholders critical of their handling of methane. From 2015 to 2018, some 40 methane shareholder resolutions have been called on energy firms to increase their methane management.

When you look at the future, the Achilles heel of the gas industry is the methane emissions.

– Fatih Birol | Iea Executive Director

To address the issue, BP is deploying aerial drones and high-tech cameras that can detect invisible gas clouds. The technology uses a hyperspectral camera that can “see” leaks of methane and other gases as they occur. The gas cloud-imaging cameras pick up what the human eye can’t, thanks to optic computer technology. BP intends to deploy drones equipped with lasers and “methane sniffing” technology that sniffs a sample of gas from the surface toward a sensor.

The drones, hardware and software are supplied by Providence Photonics, Flylogix, PrecisionHawk, SeekOps, Rebellion Gas Cloud Imager and Fieldbit.

The drone-mounted leak-detection technologies for continuous measurement of methane will range from the North Sea to the West Texas Permian Basin to the company’s giant natural gas Khazzan field in Oman. BP is already using the technology in Khazzan and will soon retrofit facilities in Trinidad and Sangachal and on all future projects.

“The enablement of these digital trends is what has actually brought this to reality,” said Morag Watson, BP’s chief digital innovation officer. By “digital trends,” Watson was referring to technologies that have come to fruition in the past decade or so from the fields of space, defense and medicine that BP is now combining with oilfield technology.

BP indicated it is willing to share the practices it has developed to use in conjunction with the drone and imaging technology with other oil and gas companies. “We would love for others to also adopt the same technology,” Watson said, though the technology itself would need to be licenses from BP’s individual tech vendors. BP does provide information on its best practices to industry groups, such as the Oil and Gas Climate Initiative and Oil and Gas Technology Centre.

Measuring methane leaks

Previously, because methane leaks are vented at different points in the process — from wells to pipelines to storage facilities — BP and other companies in the industry all relied on estimates using engineering-based modeling or calculations to understand the scope of the problem.

Minimizing methane leaks from drilling is of such concern to the energy industry that the International Energy Agency in July launched a new online “methane tracker” to provide a global picture of emissions covering eight industry areas across more than 70 countries.

“When you look at the future, the Achilles heel of the gas industry is the methane emissions,″ IEA Executive Director Fatih Birol told a Washington event hosted by the American Petroleum Institute on Sept. 16. “And the good news is for the industry, this can be fixed by existing technology, only using the best practices. And I can tell you that many companies are taking this seriously.”

The group also suggests methane emissions from the oil and gas sectors could be reduced by nearly half at no net cost. Christophe McGlade, an energy analyst with the IEA, said the estimates used by the methane tracker are based on detailed questionnaires sent to energy companies. The methane tracker does not currently track methane in real time, he said.

Starting in December 2017, an investor initiative called Climate Action 100+, backed by more than 360 investors with more than $34 trillion in assets, launched an initiative to convince the world’s largest corporate greenhouse gas emitters to curb emissions and make more climate-related financial disclosures. It followed shareholder actions in the U.S. against the natural gas sector that pushed some companies to better manage methane emissions.

Some of the steps companies can take using existing technologies include replacing production hardware like pneumatic controllers and glycol pumps that can leak. BP has already replaced all its “high bleed” pneumatics.

Several oil companies, including Exxon Mobil and Chevron have taken efforts to reduce their methane intensity. Chevron set a goal of cutting its methane emissions by 25% to 30% by 2023. Chevron has linked pay incentives for its 45,000 employees to hitting those targets.

 

Fracking’s ‘massive’ increase in methane

Though methane leaks have been a fixture of drilling for some time (about 31% of methane emissions come from natural gas and petroleum systems, according to the EPA), over the past decade, fracking has prompted a “massive” increase in methane in the atmosphere, according to the European Geosciences Union.

Methane is emitted during the production and transport of natural gas, coal and oil. It is also a by-product of livestock and agriculture — political proposals like the Green New Deal drew attention to burping cows.

The issue got a lot more attention after the Trump administration in late August proposed rescinding drilling methane limits on oil and gas companies. Those limits were set by the Obama administration. That move prompted a backlash among environmentalists and even some oil companies.

“If you looked at the response from the Trump EPA to eliminate the methane regulation, it prompted a business backlash,” said Ben Ratner, senior director of the Environmental Defense Fund, who noted that BP, Royal Dutch Shell, Exxon Mobil plus 10 electric and gas utilities spoke out against the rollback. The American Petroleum Institute, an industry trade group, supported the rollback, which it argued harmed smaller companies because of the cost of compliance.

Ratner said the sensor “revolution” is transforming the field of methane monitoring as cheap infrared monitoring devices have been introduced. “We’re seeing waves of ongoing continuous improvement that make it less costly and more rapid to detect methane emissions,” he said.

Watson, who recalls discussing the application of technology to the methane situation about three years ago, said she’s glad to see the issue is getting more attention. Until recently, little was known about where the leaks were occurring or the best way to fix them. “I think it’s really the last couple of years when people have understood much more about methane,” she said.

Nicole Ghio, senior fossil fuel campaigner for Friends of the Earth, an environmental group, said she’d rather see the federal government policing corporate pollution.

“What BP is doing is no substitute for federal regulation,” said Ghio. “What it shows is that industry is capable of taking action, but thanks to shareholder pressure, activist pressure and the bottom line is forcing companies to do what’s right.”

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