Oil and Gas Systems Methane Emissions A Greenhouse Gas Reduction and Revenue Generating Opportunity

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1 Oil and Gas Systems Methane Emissions A Greenhouse Gas Reduction and Revenue Generating Opportunity Roger Fernandez, Team Leader U.S. Environmental Protection Agency March 2009

2 Methane to Markets Partnership The Methane to Markets Partnership (M2M) is an international initiative that advances cost-effective, near-term methane recovery and use as a clean energy source in four sectors: Oil and Gas Systems Coal Mines Landfills Agricultural Waste The goals of the Partnership are to reduce global methane emissions to Enhance economic growth Strengthen energy security Improve air quality, industrial safety and public health Reduce emissions of greenhouse gases 2 2

3 Methane as a Greenhouse Gas The 2nd most important GHG, accounting for ~18% of total radiative (climate) forcing, or about one-third of that of CO 2. (IPCC) A potent greenhouse gas (GHG) with 100-year global warming potential (GWP) of 23 and atmospheric lifetime of ~12 years Primary component of natural gas and valuable clean energy source Carbon Dioxide (other) 3% Global Anthropogenic GHG Emissions by Gas (2004) Methane 14% Carbon Dioxide (deforestation, decay of biomass, etc) 17% Nitrous Oxide 8% F-gases (CFCs, HFCs, PFCs, SF6) 1% Carbon Dioxide (fossil fuel use) 57% Estimated Global Anthropogenic Methane Emissions by Source (2005) Other Agriculture 7% Oil and Gas 18% Rice Cultivation 10% Landfills 12% Coal Mining 6% Source: IPCC Assessment Report 4 (2007) Source: U.S. EPA Report (2006) Enteric Fermentation Biomass 30% Combustion 3% Fuel (stationary and mobile) Wastew ater 1% Manure 9% Management 4% 3

4 Projected Methane Increase to 2020 Global anthropogenic methane emissions are projected to increase by 23 percent to 7,904MMTCO 2 E by

5 Integrated Radiative Forcing for Year 2000 Global Emissions year Time Horizon IPCC 5

6 Integrated Radiative Forcing for Year 2000 Global Emissions 20 year Time Horizon IPCC Methane has a much larger impact, compared to CO2, when considered in this time frame 6

7 Oil and Gas Sector Fugitive and Vented Methane An estimated 100 billion cubic meters of natural gas is vented or lost through fugitive emissions from the oil and gas sector world wide each year As methane is 21 times as potent a greenhouse gas as CO 2, these emissions add more than 1000 MM tons of CO 2 Equivalent to the atmosphere annually Global flaring in the oil and gas sector results in 400 MM tons of CO 2 to the atmosphere annually It is estimated that over 30% of these emissions could be captured at a profit and therefore billions of dollars are lost annually While in some cases, market and infrastructure barriers exist, technologies do exist today to detect, measure, capture and use vented or fugitive methane emissions. 7

8 Methane Emissions from Oil and Gas Operations Oil Production Venting of casinghead gas Flash emissions from crude oil and condensate storage tanks Natural Gas Production & Processing Well completions, blowdowns and workovers Reciprocating compressor rod packing Venting from glycol reboilers on dehydrators Processing plant leaks Pneumatic devices Gas-driven pneumatic devices Gas Transmission Venting of gas for maintenance or repair of pipelines or compressors Gas Distribution Leaks from pipelines, compressor stations (valves, flanges, etc.) Compressor blowdown venting Centrifugal compressor seal oil de-gassing Leaks from unprotected steel mains and service lines Leaks at metering and regulating stations Pipeline blowdowns Picture courtesy of American Gas Association 8

9 Cost-Effective Methane Mitigation Opportunities Natural Gas Production & Processing Oil Production Route casinghead gas to VRU or compressor for Recovery & Use or Sale Install VRUs on crude oil and condensate storage tanks Gas Transmission Use pipeline pumpdown Composite Wrap for Non- Leaking Pipeline Defects Install low bleed pneumatics or instrument air Reduced emission well completions and well automation to reduce venting Economic replacement of reciprocating compressor rod packing Install flash tank separators on dehydrators Identify, measure & fix leaks in processing plants Identify, measure & fix leaks in compressor stations & pipelines Re-route gas to fuel system or sales line or flare Replace wet seals with dry in centrifugal compressors Gas Distribution Identify, measure & fix leaks in pipelines & metering and regulating stations Inject blowdown gas into low pressure mains Picture courtesy of American Gas Association 9

10 Case Study: Pemex Mexico Centrifugal Compressors EPA helped PEMEX assess benefits of shifting from wet seals to dry seals on centrifugal compressors at a compressor station in Southern Mexico Pre-feasibility study included: Preliminary estimates of benefits Measurements of methane emissions from wet seals Adjustment of preliminary estimations Basic project economic assessment Final measurements to assess performance and benefits Shaft Seal 10

11 Case Study: Pemex Benefits Confirmed reduction in gas savings 33.5 SCFM (57 m 3 /h) per seal 35 MMCF (1 million m 3 ) per compressor per year Environmental and economic benefits per compressor: Reduction of 7,310 ton of CO 2 equivalent per year US $126,690 /year in natural gas commercial value Additional revenue of US $58,480 /year possible if presented for carbon credit There are at least 60 similar compressors in the PEMEX natural gas system, with a combined methane emissions reduction of 438,000 ton of CO 2 e /year Economic benefits for operational costs (power, oil and cooling water) and maintenance are not included. 11

12 Air Quality Benefits Reducing methane emissions reduces mortalities associated with ozone pollution! Methane contributes to background ground-level ozone levels by: serving as an ozone precursor increasing summer afternoon temperatures through climate change Avoided global mortalities based on a 65 Mt/yr reduction in methane emissions starting in 2010 (West et al, 2006) 12

13 Methane to Markets Resources: Industry Wide Resources to advance cost-effective oil & gas sector methane emission reductions: General technology transfer, training, and capacity building: Technical documents in four languages and research outlining over 80 mitigation options, including analyses of economic, environmental and operational benefits, and Workshops, conferences, and study tours All recommended technologies and practices are proven based on actual field implementation by partner companies. 13

14 Methane to Markets Resources Company Specific Individual technical assistance to help companies identify and assess cost-effective methane emission reduction opportunities Analysis of estimated methane emission sources and corresponding project opportunities Pre-feasibility and feasibility studies Leak detection and measurement studies Project Opportunities Study for Partner XX Natural Gas STAR Partner Challenge 14

15 Institute Methane Emissions Reduction Best Practices Methane emissions reductions Substantially reduce greenhouse gas emissions Better local air quality through reduced ozone Generate revenue through gas sales Increase worker safety Technologies exist today! Suggest that financiers include use of methane emissions reduction technologies in loan terms Remember, methane is natural gas. These emissions reductions generate revenue 15

16 Contact Information Roger Fernandez Methane to Markets Team Leader U.S. Environmental Protection Agency