New Methane Regs Built On Extensive National, International Collaboration


Slashing methane emissions from oil and gas operations represents both challenge and opportunity. Today, the DOB starts a five-part series, written by our technology editor Maurice Smith, that examines the multipronged efforts underway to uncover the quickest and most cost-effective solutions to get there.

When a delegation from the Alberta Energy Regulator (AER) descended on Washington, D.C., for talks with the U.S. Environmental Protection Agency (EPA) about emergent methane regulations three years ago, the initial reception was about as warm as a Canadian winter.

Alberta had announced it would regulate a 45 per cent reduction in oil and gas sector methane emissions from 2014 levels by 2025 as a cornerstone of its Climate Leadership Plan, and the U.S. had already established reduction targets for new facilities under federal jurisdiction. Some U.S. states were even more advanced along the methane regulations path. Comparing notes seemed like the sensible place to start.

“One of the first things we did was we reached out to other jurisdictions in North America that were already moving in the space of regulating methane, like the states of Colorado, California [and] Pennsylvania,” said Mark Taylor, executive vice-president, Operations Division, AER.

“Thanks to our help from our embassy in Washington and some folks at the AER, we managed to get a meeting with a number of very senior folks from the EPA. They were already moving in that space and the last thing we needed to do was to reinvent the wheel.”

The initial meeting took place in an old post office building, built around the turn of the previous century, in an initially “very cold room,” recalls Taylor. “It didn’t get any warmer when the folks from the EPA walked in. They were extremely aloof, didn’t really seem to want to be talking to me. So I just opened with the reason I am here, is ‘you guys are leading with methane reduction. I have got a new mandate. I have got to figure out how to get a 45 per cent reduction, and ideally I would like to reach out to your technical teams and borrow any good practices or avoid bad practices if at all possible because I don’t have a lot of time.’”

That broke the ice, he said, and “the temperature in the room went up by about 15 degrees. It was extremely comfortable now, and the conversation has continued for the last three years, even with the change of president.” Notwithstanding the election of Donald Trump in 2016, and his administration’s efforts to roll back methane regulations in the U.S., “extremely good relations” have continued, Taylor said.

“And what they have also figured out is, all the work they had done was getting to regulate new facilities — they hadn’t gotten to the space of actually regulating existing facilities. One of the things I told them very early was, as part of our 45 per cent reduction mandate, we are going to have to regulate existing facilities as well. We have 80 years of development on the landscape; I can’t get a 45 per cent reduction simply by focusing on new facilities, I have got to go after existing facilities.

“So suddenly they saw that there was a win-win situation — they are going to be able to learn, and they are currently learning, from what we are doing, and once we actually implement it they can learn more from what we are doing, and we are learning from them. So that collaboration has definitely played a huge role for us.”

Under the radar

Given the sometimes fractious debate around methane regulations set to come into force Jan. 1, 2020 — with disagreements over what they will cost an industry already facing economic headwinds and whether equivalency deals provinces hope to adopt in place of the federal rules are stringent enough to meet the mandated target — the level of collaboration going on under the radar has been easy to miss.

But according to speakers at a recent Petroleum Technology Alliance Canada (PTAC) Methane Emissions Reduction Forum, Canadian provinces and U.S. states, oil and gas companies and associations, environmental groups and academia — while they don’t always agree — have all been working closely for years to come up with the most effective and lowest-cost regulatory regimes to get the industry over the finish line in 2025.

“I would say that collaboration between the western provinces is probably happening at a higher rate in almost every file of importance to all of us on a daily basis; it is the highest degree of interaction that I have seen in my career as a regulator, which started back in 1999. I think it is something that regulators should be proud of,” said Ken Paulson, chief operating officer, BC Oil and Gas Commission (OGC).

He also dispelled the notion that provinces seeking their own rules haven’t been working closely with Ottawa. “We didn’t start in the best space, necessarily, between the federal government and the provinces on this file, but I am happy to say that I think we have landed in a very good space, actually, between the federal government and all of the western provinces.”

While every jurisdiction will tailor its own set of regulations, learnings have come from far and wide to inform the B.C. model, he added. “We have been borrowing liberally from other jurisdictions across North America to find the best fit of practices and minimize financial burden that we can put in place for the industry to have an effective framework in B.C.”

An emerging natural gas giant, B.C. produces about a third of Canada’s gas, mostly from unconventional production as output from the prolific Montney and to a lesser extent Duvernay plays dominate activity. Recent approval of the first of what could grow to several major LNG plants on its West Coast promises to lead to increased activity over the next several decades.

Environmental groups have focused on the need for stringent emissions control in the province as it ramps up production if the province is going to have any chance of meeting its climate action plan to reduce greenhouse gas emissions by 40 per cent by 2030 based on 2007 levels. They have called B.C.’s draft regulations inadequate to that task.

Paulson concedes frequency of inspection of oil and gas facilities, or leak detection and repair (LDAR), remains “one of the most contentious pieces that seems to come up all the time” as the province puts in place different frequency requirements for different types of installations that it believes will be adequate. “Some are annual, some are more frequent.”

Further innovation will help, according to the Oil and Gas Commission, which is involved in the BC Methane Research Collaborative, created to focus research efforts toward managing and reducing release of methane from oil and gas operations. “They are evaluating and developing technologies so when regulations come into force we are ready.”

While the province is on “a very tight timeline” to meet the Jan. 1 implementation date set for federal regulations to come into force, he said B.C. has “really stepped up our development efforts over the last three months” and is looking to be “on track for equivalency by the time they come into force. We are benefitting a lot from the groundwork that has already been laid for us [because of federal and Alberta work].”

Saskatchewan tackles testing

Saskatchewan became the third province to release its own methane mitigation plan last week with a goal to cut emissions by 4.5 million tonnes per year by 2025. It includes royalty credits to incentivize technology development and encourages increased use of methane in the province.

Getting methane emissions reductions right could hardly be more vital as the Canadian oil and gas sector fights for its life in a carbon-constrained future, according to Mike Crabtree, vice-president, Energy Division, Saskatchewan Research Council (SRC). While the main drivers in oil and gas production up to now have been reserves, productivity and cost per bbl, another driver is now emerging, he said.

“I firmly believe that in the future there will be the fourth, which will be the carbon intensity of the fuels that we produce. And I think that our focus on methane, on methane technology, in Canada, although it is painful and a cost at the moment, will stand us in good stead.”

In western Saskatchewan, cold heavy oil production with sand (CHOPS) has been found to be particularly methane emissions intensive, making it vulnerable in a carbon-constrained future. A 2017 peer reviewed study found methane emissions from CHOPS were more than three times higher than the best available federal estimates due largely to venting and casing gas emissions.

“Preference is going to be given to [lower] carbon intensity and there are going to be trapped reserves where the carbon intensity does not meet the thresholds that the market demands,” said Crabtree. “And if you are unsure that that is going to happen, look at what is happening in California at the moment. They have a low carbon fuel standard. If you are [too high], you cannot import oil into California. So it is coming.”

The SRC took the position this represents a Canadian opportunity as much as a provincial one, and an avenue for which it could lead in technology development and field application, he said. Working in association with other research organizations such as PTAC and Canada’s Oil Sands Innovation Alliance (COSIA), the SRC saw a gap early on in the field-testing of new technologies. It sought input from industry and learned that decentralized small-scale facilities would be more useful than a large-scale central facility.

“The answer came back [from industry] that they actually want to test these new technologies in their fields, on their operations, under their specific conditions. So we invested. We built a system called CeDER (Centre for the Demonstration of Emissions Reductions), which is a mobile system. We currently have three trailers we are operating with a number of the operators,” Crabtree said.

“We need to take those technologies that have been developed and have been sort of sitting on the shelf for the last two or three years and accelerate them into the field. Companies need to determine what they need in terms of where the low hanging fruit is, where to make investments first, where to get quick wins, and that is often determined in the field. I think as we move through this process, from regulation into reality, we have to embrace the new reality, and we have to look for the opportunities to add value to the fuels that we produce utilizing these sorts of technologies.”

Unlikely partnerships

Industry and regulatory agencies have also collaborated to a surprising degree with environmental organizations, some of which have moved beyond censuring industry for its environmental practices to take an active role in drawing up regulations and developing new technologies to monitor and mitigate emissions.

For example, the Environmental Defense Fund in the U.S. worked closely with regulators in states like Colorado and California to draft what are considered some of the most advanced regulatory regimes while working to develop, promote, and even operate new technologies to better mitigate emissions. EDF has formed unlikely partnerships with oil and gas companies, universities and technology developers in technology challenges to find solutions to challenges like mobile methane monitoring and is set to launch its own methane detecting satellite in 2021.

In Alberta, the AER struck a multi stakeholder group, the Climate Policy Assurance Team, early on that included environmental groups like EDF and the Pembina Institute, as well as Alberta Innovates and PTAC, industry through both individual companies and the Canadian Association of Petroleum Producers (CAPP), said Taylor. “A cross section was at the table as we spent the better part of two and a half years drafting the methane reduction regulation. We could have done the old-school prescriptive [model] and probably be done in a month, but we would not have achieved that lowest possible cost. And that’s a key.”

The roadmap has also included extensive collaboration with the federal government, Taylor said, sharing models, talking about regulatory approaches and setting the groundwork so that provincial regulations could work to supersede federal regulations. That means the federal government has a good understanding on where the Alberta regulations came from, which should ease the process to gain equivalency.

“That groundwork technically is very sound. Without that kind of collaboration I think this whole process, and hoping to get it done in a matter of two or three years, would not have a hope of happening, so it’s really about making sure you get all the right players at the table and collaborating along that journey,” he said.

The momentum for international collaboration has continued with the western provinces as associate members of the Interstate Oil and Gas Compact Commission, which counts the U.S. states that have oil and gas development as members, said Taylor. “That gives us a pathway into seeing what all 31 U.S. states are or aren’t doing when it comes to methane reduction. It’s a forum where we are collaborating as regulators.

“I liken it to being at an Alcoholics Anonymous meeting. We get in a room and we close the doors and there is no press, there is just a bunch of regulators and we all have problems, and they tend to be the same problems. We don’t just talk about how good our regulations are, we can actually talk about how crappy they are or how we are challenged coming up with new ones, and that really leads to much better outcomes,” he said.

Whether or not Alberta ends up with the world’s “best” methane regulations is not really the goal, he concluded. “If we are collaborating and paying attention to what other jurisdictions are doing, we are going to get the best made-in-Alberta solution, or best B.C. solution or best Saskatchewan solution. They are all going to be different — we are different provinces with different policy directions — but the regulation is going to be the best for your jurisdiction.”

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