Cost-Effective Methane Mitigation Policy in an Era of Low Natural Gas Prices Arvind P. Ravikumar, Adam Brandt Energy Resources Engineering, Stanford University Email: arvindr@stanford.edu Twitter: @arvindpawan1 Stanford University

Introduction Globally, natural gas is expected to grow in both OECD and non-OECD countries Natural gas one of the biggest disruptors in the energy sector in U.S. in 21st century – 60% of total gas from unconventional production Total Production Shale Production BP Statistical Review of Energy (2017)

Short-Term Benefits of Natural Gas Abundant resources  cheap natural gas  rapid coal to gas switch U.S. power sector CO2 emissions down by 24% - gas + renewables Use of LPG (cooking) and CNG (public transportation) in developing world Significant reduction in PM 2.5 pollution IEA World Energy Outlook 2017

But, Methane Emissions… Methane – 2nd most abundant GHG in atmosphere Significantly higher Global Warming Potential compared to CO2 O&G emissions contribute approx. 1/3rd U.S. methane emissions NOAA Global Air Sampling Network https://www.esrl.noaa.gov/gmd/aggi/aggi.html Inventory of U.S. GHG Emissions and Sinks: 1990-2015 (EPA 2017)

Emissions from Oil and Gas Sector Skewed leak-size distribution – ‘super-emitters’ shown in all sectors ‘5 – 50’ rule: Top 5% of emitters contribute to 50% of emissions Combination of factors: malfunction, operator error, wear and tear ‘Super-emitters’ seen in every component category A. P. Ravikumar et al., Environ. Sci. Technol. (2017) 51 718. A. R. Brandt et al., Environ. Sci. Technol. (2016) 50 12512.

Emissions Mitigation Direction emissions regulations EPA (NSPS, OOOOa), ECCC, sub-national (CO, AB) Prescriptive approach – specify emission reduction pathways Pros: Policy uniformity, some guaranteed emissions reduction Cons: Technology lock-in, uncertainty in effectiveness Market-based emissions regulation: Carbon Tax Alberta, U.K, new proposals in the U.S. Economically ‘efficient’ way to reduce carbon emissions Pros: Technology agnostic, flexible, match goals with needs Cons: Monitoring, complex credit-system, mitigation uncertainty

Modeling Natural Gas System: FEAST FEAST – Fugitive Emissions Abatement Simulation Tool-kit Models leaks as a Markov process, with each component in a ‘leaking’ or ‘non-leaking’ state C.E. Kemp et al., Environ. Sci. Technol. (2016) 50 4546. A. P. Ravikumar et al., Environ. Res. Lett. (2017) 12 044023.

Modeling Technology: Optical Gas Imaging Infrared light absorption by methane Performance affected by many parameters Weather – Temperature, Winds, Humidity Imaging distance Gas composition – presence of non-methane hydrocarbons A.P. Ravikumar et al. (2017) Environ. Sci. Technol. 51 718

Modeling Policy: OOOOa Regulations EPA (2016) – finalized rules for methane emissions from New and Modified Sources (OOOOa) Leak Detection and Repair Programs Use of Optical Gas Imaging technology instead of Method-21 Semi-annual (well-sites) or Quarterly (compressors) survey ‘Fix’ all leaks seen by camera Periodic equipment/component replacement for wear and tear Modify high-emitting operators to low-emitting alternatives Route emissions to Vapor Recovery Unit (VRU) Understand role of uncertainty in both emissions mitigation and cost

Mitigation Uncertainty: Technology OGI-based leak detection introduces significant uncertainty into emissions mitigation (operator controlled and environmental) Lesson 1: Prescriptive policies require understanding of tech limits

Defining Technology Equivalence Stochastic nature of leak detection limits maximum mitigation efficiency Marginal emission improvement at high detection sensitivities A.P. Ravikumar et al. Environ. Sci. Technol. In review (2017)

Marginal Mitigation Reduces With Survey Frequency – 1 OGI-based LDAR simulation under hypothetical policy scenarios Marginal increase in mitigation reduces with increasing survey frequency EPA target: 60% after semi-annual frequency might not be achieved

Marginal Mitigation Reduces With Survey Frequency – 2 Similar observation at compressor stations – quarterly surveys Significant improvement from 1 to 2x survey, but reduces thereafter Lesson 2: Mitigation benefits NOT proportional to survey frequency

Marginal Mitigation Cost Mitigation cost varies from < $4/mcf (annual) to > $30/mcf (monthly) Additional mitigation reduces, while cost increases 2/3rd of potential mitigation achieved in semi-annual surveys Baseline Emissions

Emissions Distribution Across Basins Large variation among basins – varying baseline emissions Estimates have high uncertainty – including single point estimates M. Omara (2016), X. Ren (2017), J. Peischl (2015), D. Caulton (2014), G. Roest (2016), O. Schneising (2014), A. Robertson (2017), S. Schwietzke (2017), J. Peischl (2016), X. Lan (2015), D. Lyon (2015), D. Zavala-Araiza (2015), A. Karion (2015), H. Brantley (2014), M. Smith (2017), EPA (2016) A. P. Ravikumar et al., In review

Baseline Emissions Differences in baseline emissions  different mitigation levels Emissions mitigation target achieved only under specific conditions Varies between 35% and 70% for semi-annual surveys A. P. Ravikumar et al., Environ. Res. Lett. (2017) 12 044023.

Mitigation Uncertainty: Natural Gas Supply Chain Characteristics of facility strongly affects mitigation potential (e.g., prior maintenance, oil to gas ratio, etc.) Lesson 3: Effective mitigation requires region-specific policies

Uncertainty Reflected in Costs and Benefits Implementation costs constant (although lower than EPA estimate) Mitigation benefits variables (net-positive to net-negative)

Carbon Tax Scenario Carbon prices applied on CO2e basis for methane using GWPs EPA regulations more expensive only when carbon tax < $20/tonne CO2e Cost (EPA compliance) < Cost (mitigation) + Cost (residual C-tax) Lesson 4: C-tax might not be cost-effective for methane emissions

What Does Good Policy Look Like? EPA approach largely cost-effective, but has mitigation uncertainty 3 major issues need to be incorporated to improve effectiveness Technology limits & flexibility Develop technology-equivalence metrics Stanford/EDF Mobile Monitoring Challenge, DOE Monitor study, etc. Mitigation focus instead of methodology focus Marginal benefits to increasing survey frequency (esp. after 2x) Incorporate new science and multi-tiered approaches Account for distributional issues Regional approach to mitigation, with region-specific policies Improve inventory estimates Requires co-operation from oil and gas operators If your operations are really better, show the data

Empirical Estimates of Detection Effectiveness 50% and 90% detection probability as a function of distance follows approx. power-law A.P. Ravikumar et al. Environ. Sci. Technol. In review (2017)