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ICAC MEETS WITH TOM MICHELS, EXECUTIVE DIRECTOR OF ONE FUTURE
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On August 17th ICAC President Stan Mack and Executive Director Betsy Natz met with Tom Michels, Executive Director of One Future, which is a national trade association which represents O&G producers, transmission companies, gas processors, and local distribution companies (LDC’s).  One Future is working with the EPA to develop a framework for voluntarily controlling methane emissions using technologies and practices already in use in the industry.

 

Regulations

 

For existing wells, One Future prefers not to have a prescriptive regulation but one that allows producers to pick the acceptable target.  Mr. Michels offered the example of the pneumatic valves as a control measure, which he says is awful for the industry.  If the leak is sufficient, most often companies have already installed or plan to install new pneumatic valves.  So they don’t want the government picking the control mechanism, but want the companies to decide where they have the biggest issues and let them apply technologies to abate those sources.

What One Future would like the EPA to do is allow the industry to propose a wide range of activities for controlling emissions, and if they do this they would be exempt from any 111(d) rulings.  Michels said that the industry leaks about 1.3% of the gas through the value chain, and their goal is to get to 1%.  This reduction would represent about 360 billion scf of gas.  In general, the upstream processes contribute about 36% of the sector’s methane emissions, transmission another 37%, and the LDC about 27%.  What One Future is proposing is to apply methane reductions on an intensity basis depending upon the production.  For instance, although a small company has fewer emissions, they actually could be of a higher intensity than a company like ExxonMobil who has more emissions but less intensity when weighted against their production.  One Future believes this will allow trading along the value chain.  LDC’s have little opportunity to reduce emissions without completely replacing pipelines at very high cost.  So if they could obtain credits from up the process stream this would prove to be more economical.

The Quad O rules for the NSPS apply only to primary gas wells and not to those from which associated gas is emitted.  Michels believes the standards will be current work practices and the use of well-known control technologies.  He did say though that the Bakken and Eagle Ford fields will have to do something.  They are not sure what the EPA will do: ratchet current standards down further, require more detection, or perhaps something else.

The biggest burden is demonstration of compliance.  The enviros are telling the EPA you can trust the oil companies but you must verify.  Currently the documentary burden is extraordinary with daily pictures and documents that have to be sent in (that Tom is sure no one reads).  There are opportunities for companies to help find ways to “verify” compliance using technology that will reduce the burden on the industry.

 

Monitoring and Detection

 

Michels discussed this at some length and this appears to be an area of concern for the industry.  This is especially true with the EPA regarding 111(b) NSPS for methane, and for the Bureau of Land Management with their venting and flaring rules.  As with most emission sources, in the O&G industry 80% of the emissions come from about 20% of the sources.  So they don’t want to have imposed on them regulations requiring extensive inspections on all parts of the equipment; this would be extensive, expensive, and onerous.  What they would like is a way to detect when known equipment may be failing so they can react to that source as fast as possible.  This is very hard with so many remote locations.

Michels offered an area of big concern for the transmission industry: The Pipeline Hazard Mitigation and Safety Administration of the DOT (PHMSA) which requires hydraulic testing of the lines.  This is a result of the San Bruno explosion in the San Francisco area a few years ago.  This entails isolating a relative short section of pipe (maybe 12 miles), evacuating the gas, and then filling up that pipe with water and hydraulic testing for leaks.  There is a lot of methane emissions in evacuating the pipe, and this is a very expensive process.  They need a procedure to limit the methane emissions, and preferably to find another method other than hydraulics to detect for leaks.

Another monitoring requirement regarded flares.  How do they know they have gone out?  How do they know they are working at peak efficiency?  These seem to be areas needing more technology.

 

Quantifying Emissions

 

There is very little direct measurement of emissions from this industry.  Most of how they quantify their emissions is based on a study done by the Gas Research Institute in 1996 in which they developed emission factors for pieces of equipment.  One Future is sure they are probably incorrect, but Michels did suggest that overall EPA probably has it right.  Some factors underestimate and others overestimate, and on balance it is probably close to correct.  They would like to see direct measurement made of major sources of emissions to establish new factors.  If they show the factors are lower, they would like to be able to claim this in their emission reduction strategy with the EPA.  This is being considered by the EPA.

 

ICAC suggested that it might be of value for both parties to have a joint meeting.  Michels was reluctant as he thought that such a meeting might turn into a product fair where we would pitch products.  ICAC assured him that there would be no such promotional activity and that what ICAC provides are technology seminars to relate the state-of-the-art for technologies with no favoritism for any product or technology.  We will need to keep working on this.

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