Cutting oil and gas methane emissions 75 per cent by 2030 will leverage Canadian success and expertise.
Introduction
Reducing methane emissions is essential for keeping global temperature rise well below 2 degrees Celsius and Canada has a strong role to play. The country has already made significant strides in reducing these emissions, and now the federal government is one step away from requiring even deeper cuts.
That remaining step is to finalize stronger federal regulations on methane emissions from the upstream oil and gas sector. The sector is the largest source of these emissions in Canada, accounting for 45 per cent of the total. Existing federal and provincial regulations have already successfully cut these emissions, playing a major role in reducing national emissions. As well as the core benefit of additional near-term emission reductions, finalizing the new regulations will further spur Canada’s growing methane mitigation industry especially as jurisdictions such as the European Union and Colorado strengthen their regulations. California is promoting their new methane detection satellite as an opportunity to work with other jurisdictions on reductions.
This Insight describes how oil and gas companies can mitigate methane, including using Canadian technologies and services, and the co-operative advantages of the federal regulations as a backstop for province-specific revisions.
Oil and gas producers have the solutions to stop methane releases
The oil and gas sector emits methane in three main ways: intentionally through venting, unintentionally through leaks (also called fugitive emissions), and by burning natural gas inefficiently (Figure 1). Fortunately, industry can stop each of these types of releases. Options include capturing the gas or using non-emitting equipment rather than venting, detecting and fixing leaks to avoid fugitive emissions, and ensuring that when combustion is necessary, it is highly efficient.
Figure 1
Venting is by far the largest source of methane emissions from the oil and gas sector. Producers may seek to vent methane, which is a saleable product, for three reasons. First, oil facilities may lack the equipment to capture, use, or transport their co-produced gas. Second, facilities may use equipment that is designed to vent. Third, facilities may need to vent for safety reasons, if flaring or alternatives cannot be used.
Venting for the first two reasons can be eliminated and the releases for safety reasons can be significantly reduced. For example, oil producers can install vapour recovery units (VRU) to collect gas for on-site generators or to compress and transport by pipeline for off-site sales. Canada has a sizable domestic industry in this space with at least 15 manufacturers of VRUs. Pneumatic devices, which include a range of mechanical technologies that run on pressurized gas, are a widespread example where venting is the result of equipment design. A ready solution is to replace fossil gas-powered pneumatic devices with non-emitting equipment, such as electricity systems or those driven by air or an inert gas. Kaitharos is a leading company in Canada, using nitrogen gas to eliminate methane venting.
The second largest source of oil and gas methane releases is known as fugitive emissions. These are mainly gas leaks caused by deterioration or improper installation of equipment. In addition, oilsands operations emit fugitive methane during surface mining activities and from tailing ponds.
Oil and gas producers currently inspect for leaks for safety, to avoid product losses, and in compliance with the current methane regulations. The main option for producers to further reduce these emissions is to find and address leaks earlier through more frequent leak detection inspections and comprehensive management. While historically expensive, innovations and growing expertise in methane monitoring and detection have brought costs down significantly. Canadian company GHGSat is a world leader in methane detection technologies and services using satellites and aircraft.
The other main sources of methane emissions—the inefficient combustion of fossil gas as a fuel and during flaring—can also be addressed through existing technology. Combustors are available that achieve carbon conversion efficiency of 98 per cent or higher and mitigate some of the air quality issues from open flaring.
Stronger federal regulations still allow the provinces to lead
The new methane regulations are more stringent than current regulations and they are also flexible, featuring two pathways to compliance. The first pathway is a regulatory approach that would prohibit venting (with exemptions), specify equipment standards and inspection frequency for detecting and repairing leaks, and require a minimum carbon conversion efficiency for combustion. The second is a performance-based approach that would require the installation of continuous monitoring systems and a leak management plan.
As with all regulations under the Canadian Environmental Protection Act, the amended regulations can be considered a backstop. Provinces can propose their own regulations to replace the federal version as long as they meet equivalency requirements.
The three provinces that produce nearly all of Canada’s oil and gas methane emissions—British Columbia, Alberta and Saskatchewan—all have equivalency agreements with the federal government for their methane regulations. That means that while the federal regulation sets reduction and reporting standards for the provincial regulations, emitters in those provinces need to comply with the provincial regulation. The equivalency agreements allow provinces to tailor the regulatory requirements. Due to the heterogeneity of the oil and gas industry, provincially tailored requirements can be more cost-effective. British Columbia has already amended their oil and gas methane regulations, designed to reduce emissions by 75 per cent below 2014 levels by 2030. Equivalency with the federal amendments is expected to readily follow.
The time is now for deeper methane cuts
The need for stronger regulations on oil and gas methane is indisputable.These emissions have a potent near-term impact on the climate and there are readily available solutions to reduce them. And the same arguments hold for advancing the proposed regulations for methane from the waste sector–which are estimated to yield more than 18 times the benefits as their costs.
Putting in place the final federal regulations would accelerate needed reductions with commercially available technologies that are often developed by Canadian companies. It would support the federal government’s mandate to fight climate change while building a strong economy precisely at the moment they’re needed the most. The time is now.
Alison Bailie is a Senior Research Associate at the Canadian Climate Institute.