Emissions of methane from the oil and gas industry vastly exceed federal government estimates, according to a definitive study published yesterday. The study finds that daily leaks of the potent greenhouse gas from oil and gas wells in Texas’ Barnett Shale matched the annual emissions of 8,000 cars.
Meanwhile, in California’s Aliso Canyon, a natural gas storage site has leaked at least 800,000 metric tons carbon dioxide equivalents of methane since Oct. 23, equal to the annual emissions from 168,421 cars. The size of this leak has been compared to the 2010 Deepwater Horizon oil well accident in the Gulf of Mexico. Sempra Energy and Southern California Gas Co., which operate the site, have said that it could take up to four months to drill an intercepting well and plug the leak.
The leaks of methane, the primary component of natural gas, are bad news for the climate. Methane is 86 times as warming as carbon dioxide on a 20-year time scale, according to the Intergovernmental Panel on Climate Change. The leak in the Barnett means that a Texan who uses natural gas would have a 50 percent greater climate impact over the next 20 years than a consumer elsewhere, said Steven Hamburg, chief scientist at the Environmental Defense Fund (EDF) and a co-author of the study.
"That is a big deal," he said.
The leaks from the oil and gas industry, which is the second-largest industrial emitter, have prompted calls for greater regulation. In August, U.S. EPA proposed rules that, together with existing regulations, would curb emissions by 20 to 30 percent below 2012 levels by 2025 (ClimateWire, Aug. 19). The rules would apply only to new sources of emissions, but the agency will consider whether to regulate existing sources, as well.
This has emerged as the flashpoint in the tussle between industry and green groups, with EPA in the middle. The American Petroleum Institute, the largest industry group, has said that all regulations of methane are duplicative and would cost $1 billion by 2025.
"Onerous and unnecessary new regulations could have a chilling effect on the American energy renaissance, our economy and our incredible progress reducing greenhouse gas emissions," said Howard Feldman, senior director of regulatory and scientific affairs at API.
Surprises for everyone, including shareholders
According to the EDF analysis, methane leaks from oil and gas operations on federal and tribal lands cost companies $360 million in 2013. The stock price of Sempra Energy fell by 2.78 percent yesterday after the company said that it cannot yet compute the costs of the ongoing gas leak in California.
Scientific studies have repeatedly found that the sector is not as clean as industry groups, and even EPA, assume. But these studies have a drawback.
A handful of top-down studies, using airplanes and satellites, have found extremely high leak rates of methane from oil and gas fields. For instance, oil fields in North Dakota were found to leak 10 percent of their production in one study (ClimateWire, Oct. 22, 2014).
Bottom-up studies, done at the ground level, have found lower leak rates (ClimateWire, Feb. 19).
Reconciling the top-down and bottom-up measurements has proven difficult. Into that fray comes the new study, published in Proceedings of the National Academy of Sciences and funded mostly by the Alfred P. Sloan Foundation. The study cost about $1 million.
The study, done over a two-week period in 2013, included simultaneous top-down and bottom-up measurements made at the Barnett Shale. It is the first to reconcile the two sets of measurements.
About 1.5 percent of the 103,312 metric tons of gas produced per day in 2013 leaked, the study finds. This equals a loss of $100 million per year in revenue.
It also finds that EPA is underestimating the industry’s emissions by a factor of 2.
Accidents caused by human error — a person leaving a hatch open or a broken valve — at 10 percent of facilities were responsible for almost 90 percent of the emissions. And only 2 percent of facilities were responsible for almost half the emissions.
Hamburg of EDF said that the study justifies the need for regulations on existing sources.
"The data show that existing sources are a significant part of the problem," he said.
A call for government incentives to plug the leaks
EPA closed its comment period on its draft rule last week, after meeting with companies and industry groups over the past 30 days. It will now decide whether the rule will be altered and a final rule will be issued in June 2016.
The Our Nation’s Energy Future Coalition, an industry group comprising Apache Corp., Southwestern Energy Co., BHP Billiton Ltd. and Hess Corp. that collaborates closely with EPA on methane issues, wrote in a comment that low-emitting oil wells should not be subject to regulation. EPA should provide assurances that existing sources would not be regulated if companies implement voluntary emissions curbs, the coalition wrote.
SWEPI LP, Royal Dutch Shell PLC’s American subsidiary, also called on EPA to incentivize voluntary emissions reductions.
The Louisiana Mid-Continent Oil and Gas Association wrote that EPA had not considered in its calculations the costs of traveling to "remote" facilities located in wetlands or offshore to curb emissions.
Concho Resources Inc., a Texas-based production company, wrote that the wellhead price of natural gas is lower than the $4 per thousand cubic feet assumed by EPA. It suggested the costs associated with the rule should be recalculated.
EPA’s proposal currently requires optical gas imaging cameras to be used in a leak detection and repair program. Concho pointed out that cameras manufactured by FLIR Systems Inc. would be favored, since that company allows latitude and longitude to be embedded in the photograph, per EPA requirement. Concho suggested that the operator be allowed to photograph a well identification sign instead of using GPS markers.
The strongest protests came from API, which called EPA’s proposed rule "unlawful" and challenged the regulation of methane under the Clean Air Act. API questioned EPA’s social cost of methane (SCM) calculation, used to monetize the benefits of the rule.
Sen. Jim Inhofe (R-Okla.), chairman of the Senate Environment and Public Works Committee, also questioned the social cost of methane calculation used by EPA in a letter to Administrator Gina McCarthy.
"The timing of the SCM’s application is seemingly driven by the international climate negotiations so the Obama Administration can cite regulatory actions for methane and tout outlandish benefit estimates for reducing methane conjured by the SCM," he wrote.