New Carbon Initiatives, Tax and the Implications

Transcription

1 New Carbon Initiatives, Tax and the Implications Industry Night Presentation and Panel Discussion June 20, 2016 Presenters: Standards Certification Education & Training Publishing Conferences & Exhibits Danny Lam, PhD/MBA Research Associate Waterloo Institute for Sustainable Energy (WISE) Robert Craig, Principal Amberg Environmental and Regulatory Consulting Ian Kuwahara, Technical Director Cap Op Energy Inc. Audrey Mascarenhas, President and CEO Questor Technology Inc.

2 Measuring GHG Reductions Standards Certification Education & Training Publishing Conferences & Exhibits Danny Lam, PhD/MBA Research Associate Waterloo Institute for Sustainable Energy (WISE) University of Waterloo

3 Climate Change: GHG Emissions Relationship between GHGs & Climate Change Established, But. Do we know where GHGs come from? Natural vs. Human Activity? Baseline? Pathways to mitigation? What is the most economic means to mitigate? Cost per tonne GHG mitigated Excision of high GHG sources best way? Renewable vs. Fossil How do we get best bang for buck? How do we measure? How do we tie GHGs to activities dynamically?

4 How Do We Measure Now? Good Unspoken GHGs Renewable Solar, Wind, Biomass, Hydro Holy Grail Grid Parity Evil High GHGs Non-Renewable Oil, Gas, Coal Best Outcome Phase Out Leave in Ground Economic Value Added? Lifecycle? Economic Benefits Net of Costs? Static vs. Dynamic Measures?

5 Externalities: Value Added Formula Filet Mignon

6 National Renewable Energy Lab Lifecycle Assessments Oil & Gas Nothing is 100% Clean or Renewable 7/18/2016

7 Economic Value Added? Variability Feed inherently variable / intermittent power into electric grid that require stable, always on & available power. Solar PV Variability Wind Elec. Power Variability Utilities pay fixed price / kwh Market price / kwh varies

8 Measuring Fuel Economy (GHGs) Private Cars / Light Vehicles Technical Measures MPGs (L/100km) Tonne/Mile (Gross)Tonne/Mile (Gross)Tonne/Mile/Average Speed Net Tonne/Mile/Average Speed OBDII Data Cost / GHGs per Desired Effect Transport A person from A to B in comfort & privacy Transport person A to B w/o privacy Enable person to interact between A & B to generate economic value

9 Instrumentation & Metrics Are Key Steps: 1) Dynamic Measures 2) Disaggregation / Micro Markets 3) Tight Relationship Cost & Emissions to Desired Effect 4) Communicating Benefits to Customer & Closing Deal

10 Alberta Carbon Perspective Standards Certification Robert Craig, Principal Amberg Environmental and Regulatory Consulting Education & Training Publishing Conferences & Exhibits

11 Amberg Corporate Overview Amberg s mission is to assist medium sized companies to navigate through the changing Canadian regulatory environment. Shifting policy and more stringent carbon regulation are factors that will result in growing carbon cost and financial exposure for our clients. The Company specializes in air quality assessment, emissions reporting and regulatory compliance providing baseline GHG emissions and proactive technological, regulatory and commercial solutions to reduce these emissions. Amberg has attained ISO accreditation (greenhouse gas validation and verification) which complements our range of environmental and regulatory services in B.C., AB., Sask.,ON. and QC.

12 Carbon Leadership Plan The Alberta Carbon Leadership Plan seeks to: Target large volume GHG emission sources like energy Target upstream energy sources including energy and thermal power Target fugitive emissions, a large volume GHG reduction sources 70% of fugitive methane occurs in oil and gas Targeted 45% reduction from fugitive emission sources Assign carbon compliance costs to the end use market, thereby broadening the carbon compliance burden to 90% of the economy Fundamentally shift a portion of energy production to renewables from conventional energy

13 Alberta Carbon Regulations Alberta Regulations are Shifting from SGER to CCR Carbon Cost ($) $ SGER 50% 50 % 15% 20% 20% $30 $30 $ SGER Carbon Levy Economy wide 90% 90% 2018-CCR (SGER expires) Reduction Target per Emitter (%) Carbon Cost ($) Reduction Target per Emitter (%) GHG Emissions (Economy Wide) Regulated % GHG Emissions (Economy Wide) Regulated % * = Reduction Target per Emitter not yet determined for CCR. 20% is an estimate

14 Compliance Alternatives 1. Undertake efficiency improvements at facilities to reduce emissions 2. Invest in available technologies like engine fuel management, vent gas capture, solar pumps and other technology choices Develop offset protocols and secure offsets 3. Purchase Alberta based carbon offset credits 4. Payment in to a Climate Fund (like CCEMC) Proactive approaches by companies today can result in an avoidance of future carbon cost and uncertainty

15 Carbon Leadership Carbon Levy Will apply to transportation and fuels including heating fuels such as diesel, gasoline, natural gas and propane It will include upstream oil and gas combustion in 2023 For example, carbon levy rates for typical fuels include: Gasoline 4.4 cents per litre Natural gas $1.01 per GJ The overall costs of the Carbon Leadership Plan are projected to be $9.6 B over 5 years Of this, $5.6B will be allocated to renewables and green infrastructure

16 Perspectives on MACC CAPP Data 2015 Data can be hard to accumulate, both for cost and volume Ring fence issues MACC efforts do not include a timeline for various technologies

17 Converting Challenges into Opportunities Standards Certification Education & Training Publishing Conferences & Exhibits Ian Kuwahara, M.Sc., P.Eng. Technical Director Cap-Op Energy Inc

18 About Cap-Op Energy Mission: To simplify sustainability in the energy sector with intelligent tools and strategic thinking. Sustainability Made Profitable Cap Op Energy has developed the premier energy efficiency platform for the oil & gas industry to automate and standardize the quantification of greenhouse gas credits (carbon offsets) from data acquisition through to verification and reporting. It offers significant savings and risk reduction to customers by coupling the power of cloud computing and project aggregation with years of industry expertise and best practices. Copyright 2016 Cap Op Energy Inc.

19 The Challenge Mandate: 45% reduction in methane emissions from O&G by 2025 (National and sub-national) 45% of what? Small emission sources not well documented, but contribute significant proportion of methane venting Compliance (abatement) costs will range from $2/t CO 2 e to $160/t CO 2 e (10 year) Distributed methane abatement solutions available to address massive hi bleed fleet Costs and information are the barriers finding and scoping small projects is challenging Copyright 2016 Cap Op Energy Inc. 21

20 Scope of Opportunity GHG Emitting Equipment Total Alberta Equipment Count Estimated Eligible Alberta Equipment Count GHG Efficient Alternatives Average Emissions Reduction (annual) Average Capital Cost (Installed) High-bleed instruments 369, ,000 Low-bleed instruments 40 tco 2 e $1,000-2,500 Pneumatic Pumps 172, ,000 Low/No-bleed pumps 75 tco 2 e $10,000-25,000 Solution Gas Venting 19,000 8,000 Well site vent gas capture 500 tco 2 e $20,000 - $60,000 Vent gas (Engines) 31,968 10,000 Vent gas capture 1000 tco 2 e $50,000 - $250,000 Natural gas combustion engines 31,968 6,000 Air-fuel ratio controllers 600 tco 2 e $150,000 - $300,000 Lowest Hanging Fruit (Current Opportunity) Next Best (Opportunity for Future Expansion) Sourced from Alberta s Upstream Oil & Gas Assets Inventory Project Opportunities to Reduce GHG Emissions Copyright 2016 Cap Op Energy Inc.

21 The Opportunity Our data confirm pneumatic device conversions are the $2/t to $10/t projects and there are hundreds of thousands to do Cap Op is working to help companies abate distributed methane emissions Planning tool for low cost execution Robust emissions quantification Carbon backed project financing Regulatory framework can drive work Carbon pricing drives economics Upstream > across jurisdictions End use in CA, benefits to CA Copyright 2016 Cap Op Energy Inc.

22 Carbon-Backed Project Financing Accelerate projects based on carbon price, not energy price Leverage 3 rd party funds for project capital Cap-Op Tools Support Low-Carbon Natural Gas Inventory Measure Scope Execute MAP Improve accuracy of methane emission reporting / carbon intensity estimates through enhanced granularity Decision support tool for identifying, evaluating and prioritizing methane abatement programs Verify / Report DEEPP Robust quantification of distributed emissions Aggregated verification of emission reductions Project management and performance tracking Industry benchmarking

23 Why is everyone talking about Methane? Standards Certification Audrey Mascarenhas President and CEO Questor Technology Inc. Education & Training Publishing Conferences & Exhibits

24 Questor is a leading provider of safe, reliable, clean, efficient value creating waste solutions. We specialize in waste gas combustion equipment addressing air quality and emissions. We recover the waste heat from clean combustion and other sources to generate power and treat waste water. Questor s solutions reduce costs, improve energy efficiency, achieve compliance, reduce GHG emissions while gaining public support.

25 Canada, U.S. agree to cut methane. emissions to fight climate change Joint steps to cut emissions from existing oil and gas sources by 40 45% by 2025 U.S., EPA will develop the regulations for methane emissions for oil and gas immediately Environment Canada will regulate the emissions and move as expeditiously as possible to implement national regulations. Regulations to be published by early 2017 CBC News top headline March 10 th 2016

26 GHG Reduction The Global Warming Potential (GWP) of methane is 25 times higher than that of CO 2 and therefore inefficient combustion increases the greenhouse gases emitted For example: 19,000 sft 3 /d (mscfd) of waste methane gas generates the following CO 2 emissions: Combustion Efficiency t/d. t/yr. 0% (Vented) 9.1 3,328 65% 3.8 1,402 80% >99.99% (Questor)

27 Alberta Flaring & Venting MMscf/d Flared Vented Total

28 Combustion Efficiency Drilling and Completions Gas processing Oil and Gas Production 8

29 COMBUSTION Basics CH O 2 = heat + CO H 2 O Methane + Oxygen = heat + Carbon Dioxide + Water 99.99% Combustion efficiency requires the right mixture of fuel and air Poor combustion results in the creation of: CH 4, CO, black carbon soot particulates Over 250 compounds Volatile organic hydrocarbons or VOC s benzene Sulfur compounds H 2 S, carbon disulfides, mercaptans + over 250 other compounds identified in research

30 Implications - Carbon Credits Vented methane contributes 8.6 Mt of CO 2 e/yr 7.4 Mt of CO 2 e/yr comes from flared gas (65% efficiency) 99.99% efficient combustion would reduce GHG emissions by 13.1 Mt/yr The approximate cost is $150MM or $1.25 per tonne of CO 2 e assuming a 10yr project life This investment would generate an offset credit of $245MM at a carbon tax of $20 per tonne of CO 2 e Ancillary benefits of improvement in air quality and measurable and auditable performance

31 Oil and Gas Solutions 99.99% Combustion Efficiency Clean Emissions CO 2 and Water Pad and Well Site Operations Water Vaporization Waste Gases Drilling and Completions Operations Clean Combustion Device Gas and Oil Processing Upstream, Midstream and Downstream CHP 65kW ORC

32 Questions? 5min break before panel discussion