LEADING THE WAY FOR NATURAL GAS TO FIT IN A LOW-CARBON ENERGY WORLD CHALLENGE: REDUCING METHANE EMISSIONS

NATURAL GAS SUPPLY CHAIN Source: Adapted from American Gas Association and EPA Natural Gas STAR Program

METHANE EMISSIONS PROFILE Millions of Potential “Affected Sources” 1.3 million oil and gas wells 5,000+ gathering/boosting facilities 668 processing facilities Over 1,800 transmission facilities Over 400 storage 111 LNG facilities Regional Variations Significant regional variations among emission sources Differences likely attributable to: Type of natural gas production (i.e. wet gas-vs-dry gas) Age, number, and type of infrastructure Fat-Tail (“Super-Emitter”) Phenomenon Small number of emission sources are responsible for a disproportionately large number of emissions

EMISSION REDUCTION OPPORTUNITIES By Emission Source

EMISSION REDUCTION OPPORTUNITIES By Industry Segment

POLICY OPTIONS FOR ADDRESSING METHANE EMISSIONS TECHNOLOGY-BASED DESIGN Command-and-Control Approach Pre-defined emission control technologies are applied to all “affected sources” Application of control technology is required regardless of the actual emission profile of the source Technology-based design is more appropriate for a smaller population of homogenous emission sources Monitoring, recordkeeping and reporting requirements are burdensome due to large number of emission sources PERFORMANCE-BASED DESIGN ONE Future Approach Performance-based design allows companies to focus on “super emitter/fat-tail” emission sources Each company optimizes emission reductions by focusing capital deployment on its highest emitting sources Technology-neutral approach encourages development of new technologies to achieve emission reduction goals Intensity-based metrics enable bench-marking between companies, regardless of size

KEY POLICY DESIGN QUESTIONS How do you design a policy that matches the science? Super-emitters and marginal wells are misunderstood Chronic super-emitter Episodic super-emitter Malfunctioning super-emitter Marginal wells Incorporate existing operating practices Does the policy optimize emission reductions by deploying capital on the highest emitting sources? Does the policy encourage development of new emission reduction technologies?

ONE FUTURE POLICY DESIGN Performance-based approach Methane intensity goal of 1% leak/loss rate across value chain Methane intensity “sub-goals” developed for each segment of value chain Recognizes variations among emission sources and the “super- emitter” phenomenon, thereby optimizing capital deployment Emissions inventory protocols approved by EPA   Methane Emissions Intensity Methane Emission Intensity Goals (percent of Gross Production) Industry Segment 2012 2020 2025 Gas Production and Gathering 0.55% 0.46% 0.36% Gas Processing 0.18% 0.15% 0.11% Gas Transmission and Storage 0.44% 0.37% 0.30% Gas Distribution 0.26% 0.24% 0.22% Total 1.44% 1.22% 1.00%

MONITORING TECHNOLOGIES EDF Detector Challenge Piccaro Surveyor Rebellion Photonics Gas Cloud Imaging ARPAE MONITOR

RAPID SURVEY, LEAK DETECTION AND DIRECTED INSPECTION & REPAIR SINGLE DAY SURVEY CAPACITY Airplane 50 Square Miles Drone 4 Square Miles Ground Crew 0.5 Square Miles

RESEARCH ON NEW DETECTION TECHNOLOGIES