Copyright of the Daily Oil Bulletin 2018
Balance Achieved In Draft Methane Regs, Says AER Official
Draft methane reduction regulations released Tuesday achieve a balance in terms of providing flexibility for companies in determining how they go about achieving the required reductions, says a senior regulator.
“If you look at the spectrum from being very prescriptive … to one that says do whatever you want — just achieve the target — we think we’ve found a pretty good balance point in the middle of that spectrum, Mark Taylor, executive vice-president, operations of the Alberta Energy Regulator, said this morning in an interview.
The final regulations are expected to be released this fall with requirements for fugitive emissions screenings and surveys to be effective Jan. 1, 2020.
The regulations are designed to meet the Alberta Climate Leadership’s plan to reduce 2014 methane emissions from the upstream oil and gas industry by 45 per cent by 2025.
In late 2018 and into 2019, the AER will be asking companies to develop their retrofit compliance plan and submit it to the AER. “It’s really to get all the companies we regulate to really start thinking about how they are going to achieve compliance with these regulations over the next six years,” he said.
Also in 2019, the AER will have its measuring and reporting platform in place, with an easy user interface.
“All of our stakeholders agree that the earlier we start to get better information on what methane emissions are and where they are coming from, the better it is for everybody,” said Taylor. “Industry is eager to start providing us with reporting on methane volumes, even though there won’t be any regulations in place on reducing the volumes until 2020 when the leak detection and repair piece goes into effect.”
The AER’s technical team has been working closely with the technical team from Environment and Climate Change Canada, with each running models that will predict what their regulations will achieve.
The AER took the time to develop a model so “you could test with science and fact” all the different approaches that could be put into regulation to achieve the 45 per cent reduction, he said. “The model gave you that consistent tool.”
The Alberta government will be seeking to demonstrate to the federal government that its regulations are equivalent to those that will applied nationally and the AER believes its regulations will do that.
One of the reasons for the lengthy process (2 ½ years) is that Alberta is the first jurisdiction in the world to propose regulations for both new and existing facilities.
The process involved a multi-stakeholder committee that included industry, government, environmental non-government groups and think tanks such as Alberta Innovates. “Really it was about trying to build the best made-in-Alberta solution,” said Taylor.
And what made it worth taking the time was that the AER wanted the process to be as efficient and effective as possible, delivering that 45-per-cent reduction at the lowest possible cost to industry. “That meant it took a lot of iterations to find that sweet spot.”
The estimated $780 million cost to industry to meet the province’s methane reduction targets by 2025 is based on today’s technology but the expectation is that as technology advances those costs will come down. “We built the regulations to make sure they don’t get in the way of new technology, they actually encourage new technology,” he said.
Taylor noted that a lot of the larger oil and gas companies have been focused on reducing methane for two or three years and have taken advantage of Alberta government programs offering incentives for changing out equipment such as pneumatic devices. The companies also have been working with Emissions Reductions Alberta in trying to move technology forward.
He does not believe the draft directives are too onerous. Those dealing with fugitive emissions, for example, are risk informed which means that areas industry will be required to inspect more often will be the ones that have inherent risk of higher emissions.
“Allowing industry to focus on the sites where they’ve got the greatest bang for the buck that they are going to find something that is worth reducing.”
A fugitives emissions manual currently is under development and will be released with the final regulations which are expected this fall.
The Alberta government’s target in the Climate Leadership Plan is based on Environment and Climate Change Canada’s 2014 estimate of methane emissions and “Canada is the recognized leader for transparency at the United Nations when it comes to reporting on climate change,” said Taylor.
As Alberta industry numbers become available, that information will be shared with ECCC so that by 2025 the federal government’s inventory number will be the benchmark to see if Alberta has met its target. “We are going to make sure we have a transparent and reporting system so that any stakeholder would be comfortable with the numbers.”