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A new methane emission study released this week details sources and potential costs associated with reducing emissions of the potent greenhouse gas from US energy infrastructure. The study, commissioned by the Environmental Defense Fund and completed by ICF International, found the US oil and gas industry could significantly reduce methane emissions using existing technology for a cost of less than one cent per thousand cubic feet of produced natural gas, based on a $4.00 per thousand cubic foot prevailing natural gas price.

Twenty-two of the over 100 emission source categories account for over 80% of estimated 2018 methane emissions, with most originating from existing sources. “By volume, the largest opportunities target leak detection and repair of fugitive emissions (“leaks”) at facilities and gas compressors, reduced venting of associated gas, and replacement of high‐emitting pneumatic devices” according to the study.

Leak detection and repair – dubbed LDAR by the researchers – constitutes a significant business opportunity for companies developing innovative detection technology.

EDF Methane study 3-14

Source: Economic Analysis of Methane Emission Reduction Opportunities in the U.S. Onshore Oil and Natural Gas
Industries, ICF March 2014

“Part of the effort deals with working with companies to find better leak detection methods. Soon we’ll be trying to develop a detector that looks and acts like a smoke detector that would prompt personnel to go look for an emissions source,” EDF Vice President Mark Brownstein told Breaking Energy on a media call.

He added, “This report is based on technology we have today and today’s costs. We will be able to innovate and do things faster and cheaper, so we expect costs will come down.”

The oil and gas industry is largely behind efforts to curtail methane emissions from their activities, not least because it offers companies long-term cost savings opportunities.

“We participated in this study because knowing the facts is essential,” said Southwestern Energy Company (SWN) CEO Steve Mueller in a statement. “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.”

Of course emissions reduction costs of $0.01/Mcf of produced gas cited in the report would increase if US natural gas prices increased as well. The study’s findings are based on a $4/Mcf gas price, but “we also looked at $3 or $5 prices,” ICF Senior Vice President Joel Bluestein said on the media call. Costs will fluctuate based on prevailing natural gas prices, he said.

In the EIA’s Reference case forecast (AEO2014), the Henry Hub spot natural gas price reaches $4.80 per million Btu (MMBtu) (2012 dollars) in 2018 and increases to $7.65 per million Btu in 2040.

Access the report here:

Methane Cost Curve Report

 

 

 

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