An independent analysis conducted by ICF International (ICF) has determined that the onshore segment of the U.S. oil and gas sector can significantly reduce emissions of methane – a highly potent greenhouse gas and the primary ingredient in natural gas – using currently available technologies and at a low annualized cost.
Released on March 3, 2014, the new report reveals that by adopting proven emissions-control technologies, industry could cut methane emissions by 40 per cent below projected 2018 levels at a cost of less than one cent per thousand cubic feet of produced natural gas. Some of these measures pay for themselves over time through the sale of captured natural gas, according to the report, which was commissioned by Environmental Defense Fund (EDF).
“We participated in this study because knowing the facts is essential," said Southwestern Energy Company (SWN) CEO Steve Mueller in a statement about the report. “And one of the key takeaways is that there clearly are ways to reduce methane emissions at low cost and sometimes even positive financial payback to companies. At Southwestern Energy, for example, we have already demonstrated that capturing emissions through reduced emission completions can be accomplished for the same cost as venting the gas into the atmosphere.”
ICF’s analysis uses data and commentary from numerous organizations, including oil and gas producers, pipeline operators, equipment vendors, service providers and a trade association. Achieving the 40 percent in reductions would require industry to adopt fewer than a dozen viable emissions control strategies across 19 different sources within a five-year timespan, including such measures as shifting to lower-emitting valves, or pneumatics, that control routine operations, and improving leak detection and repair to reduce unintended methane leaks from equipment, also known as “fugitives.” The most economical of these measures would save industry a combined $164 million per year.
“ICF’s in-depth analysis points out the vast potential this nation has to address one of the key environmental issues confronting U.S. oil and gas development,” said Fred Krupp, President of Environmental Defense Fund. “We now have a clear path to protecting American communities and the global climate from methane pollution – and it turns out to be an extremely low-cost path. This report is a call to action for commonsense policymaking and accelerated industry leadership starting now.”
Key findings of ICF’s report:
- Total methane emissions from U.S. oil and gas are projected to increase 4.5% by 2018 as emissions from industry growth – particularly in oil production – outpace reductions from regulations already on the books.
- Industry could cut methane emissions by 40 percent below projected 2018 levels at an average annual cost of less than one cent per thousand cubic feet of produced natural gas by adopting available emissions-control technologies and operating practices. This would require a capital investment of $2.2 billion, which Oil & Gas Journal data shows to be less than 1% of annual industry capital expenditure.
- If the full economic value of recovered natural gas is taken into account, the 40% reduction is achievable while saving the U.S. economy and consumers over $100M per year.
- The most cost-effective methane reduction opportunities would create over $164M net savings for operators.
- Almost 90% of projected 2018 emissions will come from oil production and existing natural gas infrastructure.
- A number of solutions, particularly in the upstream of the oil and gas value chain, will have environmental co-benefits at no extra cost, by reducing emissions that can harm human health, like volatile organic compounds and hazardous air pollutants.