IEA (2020), "Methane Tracker 2020", IEA, Paris https://www.iea.org/reports/methane-tracker-2020
Detecting and measuring methane emissions in a comprehensive and cost-effective manner remains a fundamental challenge because of the high cost of detection systems.
Technologies that can prevent vented and fugitive emissions, by contrast, are reasonably well-known. The challenge is to incentivise the deployment of these abatement technologies via voluntary or regulatory means. In many cases, investment in abatement technologies is economic, as the gas saved quickly pays for the installation of better equipment or the implementation of new operating procedures. Where reduced emissions do not pay for themselves—or where barriers prevent companies from taking action that would otherwise be cost-effective—policy and regulatory interventions may serve to incentivise companies to take steps to reduce their emissions.
A wide variety of technologies and measures are available to reduce methane emissions from oil and gas operations. The different abatement options covered by our analysis are described in further detail below.
If all options were to be deployed across the oil and gas value chains, we estimate that around 75% of these emissions could be avoided. Importantly, since methane is a valuable product and, in many cases, can be sold if it is captured, we also estimate that around one-third of these emissions could be avoided with measures that would have no net cost (at 2019 natural gas prices).
There is a large degree of variation between countries given different gas prices and capital and labour costs, but the global averages for the key options in the marginal abatement cost curve are shown.
Many pieces of equipment in the oil and natural gas value chains emit natural gas in the regular course of operation, including valves, and gas-driven pneumatic controllers and pumps. As described in below sections, retrofitting these devices or replacing them with lower-emitting versions can reduce emissions. Policy and regulatory instruments can play an important role in incentivising companies to replace high-emitting devices.
Replace with instrument air systems: Pumps and controllers are used at well sites and across the oil and natural gas supply chains for a variety of purposes. Commonly, they are pneumatic, using pressurized natural gas as a power source. These pumps vent natural gas in the ordinary course of business. They can be replaced by instrument air systems, which pressurize ambient air to perform the same functions without emitting methane.
Replace pumps: Pumps are used at well sites and across the oil and natural gas supply chains for a variety of purposes. Commonly, they are pneumatic pumps that use pressurized natural gas as a power source. These pumps vent natural gas in the ordinary course of business. Emissions can be eliminated through replacement with electrical pumps powered by solar or other generators, or tied to the grid.
The “replace pumps” grouping in the IEA methane abatement cost curve include replacing Kimray/pneumatic or chemical injection pumps with electric pumps or solar electric pumps. Pneumatic pumps can also be replaced by instrument air systems, as described above.
Replace with electric motor: Gas-driven pneumatic devices continuously release small amounts of gas, even when specified as "low-bleed." These devices can be replaced with "zero-bleed" technologies that use electrical power to operate, instead of pressurized natural gas. An electric motor can also replace a diesel or gas engine used onsite during drilling and well completion.
The “replace with electric motor” grouping in the IEA methane abatement cost curve covers replacement of gas-powered devices with servo motors. Replacement of chemical injection pumps is a separate category, described above.
Replace compressor seal or rod: Two kinds of compressors are used across the oil and natural gas supply chains to move product through the system: reciprocating and centrifugal. The IEA methane abatement cost curve include several activities related to both types of compressors:
Reciprocating compressors use piston rods to compress gas. Rod packing is the seal that prevents gas from leaking around the rod. Compressor pressure and wear and tear on packing parts and the rod can increase emissions. The older seals are, the more likely they are to emit. One technology, then, involves replacing rod packing systems to reduce emissions.
Centrifugal compressors use a spinning turbine to pressurize gas. Centrifugal compressors require seals on either end to prevent gases from escaping. Wet seals absorb oil and natural gas under pressure and can be a source of methane emissions. They must either be degassed, with the captured stream of gas recycled into the compressor or used as fuel gas, or replaced with dry seals.
Early device replacement: Pneumatic devices are used throughout production sites and compression facilities to control and operate valves and pumps with changes in pressure. Gas-driven automatic pneumatics release a small amount of natural gas as part of their control functions. Devices can be categorized as low-, intermittent- or high-bleed, based on the rate of gas that escapes. Intermittent-bleed devices release gas only when actuating. Replacing higher-bleed devices with lower-bleed devices reduces emissions. The earlier devices are swapped out, the more emissions will be avoided.
Command-and-control policies may require phase-out of high-bleed and pneumatic devices in existing operations, more frequent replacement of compressor parts, or instalment of only low-emitting devices and dry seals in new operations. Similar policies could require that each emitting device be tied into a capture system routed to flares, which transform most of the methane into its less potent greenhouse gas, CO2. Alternatively, a performance-based emissions limit could be set for an entire facility; as part of meeting that target, an operator may choose to replace some but not all of its high-bleed and pneumatic devices.
An information-based regulation could require a facility operator to send emissions from emitting devices to a metered vent. This would quantify the emissions coming from these devices. Such a rule could be paired with an emissions limit at each vent, requiring the operator to look upstream of the vent to determine the most cost-effective emissions reductions.
Tying these devices into metered vents could also support the use of a carbon price or greenhouse gas tax. The government could charge the operator based on the volume of carbon dioxide equivalent emitted through those vents. In a variant on this, a government could impose a mandatory carbon price on other sectors of the economy, and then enable oil and gas industry to generate credits by replacing high-bleed pneumatics with low- or non-emitting components. Such a scheme would create incentives for companies to reduce their methane emissions, either to avoid paying the tax or to generate marketable credits. Economic incentives and market-based approaches might also prompt the construction of additional pipeline capacity, to deliver captured gas to market (and even to develop non-combustion end uses for methane gas, for instance fuel cells or the manufacture of graphene for batteries).
There are a number of opportunities across the supply chain to install new devices that can reduce or avoid large sources of vented emissions. For example, devices such as vapour recovery units and plungers can be installed to capture gas and pair it to an end use that is less harmful than direct release to the atmosphere. Just as with replacement of devices, policy and regulatory instruments can play a role in encouraging companies to install entirely new devices in new locations to reduce venting.
Vapour Recovery Units (VRUs): VRUs are small compressors designed to capture emissions that build up in pieces of equipment across the oil and natural gas supply chains. For instance, VRUs can pull off gases that accumulate in oil storage tanks and that are otherwise periodically vented to the atmosphere to prevent explosion.
Blowdown Capture: Gas blowdowns are conducted at wellheads or elsewhere along the supply chain when equipment (e.g. vessels, compressors) must be depressurized. Blowdowns can be triggered by emergency signals or routine start up or shut down procedures. When this happens, operators open up the well to remove the liquids and gas. Emissions are mitigated when excess gas is recovered and used onsite or sent to the sales line, instead of being vented or flared.
Install Flares: While still a source of CO2 and methane emissions, flaring is preferable to direct release of the methane gas to the atmosphere. Flares can be installed at oil and gas production sites where gas production exceeds onsite demand or nearby pipeline capacity, to combust methane emissions. Portable flares can expand a facility’s flare capacity and provide an outlet for gas captured during well workovers or completions.
The “install flares” grouping in the methane abatement cost curve includes installing portable flares; installing permanent flares of different sizes; and routing methane that would otherwise be vented from dehydrators and storage tanks to existing flares.
Install plunger: Periodically over the life of a producing well, downhole liquids need to be removed to facilitate continued flow of product (often called ‘liquid unloading’). Traditionally, a well operator opens the well and vents methane, relieving pressure and drawing liquids up through the wellbore. Plunger lifts may be installed to extract liquids more efficiently, while limiting the escape of methane. As pressure from accumulating fluids builds up, it pushes on the plunger. The plunger draws up gas and liquids in its wake. If a certain threshold of reservoir pressure is achieved through withdrawal of the plunger, gas can go directly to the sales line with no venting.
Command-and-control regulations could require that methane emissions from specific pieces of emitting equipment or activities be captured and either paired to a productive use or routed to flares. Design specifications for flares could include elements such as automatic ignition systems, or requirements to achieve a consistent, elevated rate of methane destruction. Command-and-control style regulations may also require operators to install VRUs or plungers. Moreover, they may specify procedural requirements to ensure equipment are being properly used and maintained. For example, regulations could require smart well automation, which can sense when to deploy a plunger for optimal results.
Alternatively, a performance standard could set a facility-wide venting limit, or a GHG emissions limit that accounts for the lower global warming potential of CO2. In determining how to meet this type of limit, operators may opt to install devices to capture any gas that might have been vented and then either send that gas to market or route it to a flare.
Governments could also select a market-based approach and, for example, charge royalties for flared and/or vented gas to encourage operators to capture the gas for re-injection, use onsite, or sale in the market. A GHG tax could create an incentive as well: if the tax programme covers methane, the operator would be charged for each tonne it directly emits; if not, the operator might be eligible to generate emissions credits by flaring methane gas. In some contexts, grants, tax credits, or deductions from a royalty payment could incentivise investment in a gas capture system or flares (including newer, more efficient flares.
Leak detection and repair (LDAR) refers to the process of locating and repairing fugitive leaks. LDAR encompasses several techniques and equipment types. One common approach is the use of infrared cameras, which make methane leaks visible. LDAR can be applied across the supply chain—to upstream activities (including well development, gathering, processing) and/or downstream activities (such as transmission or distribution lines). LDAR is often required at particular intervals.
In the cost curve, we include varying frequencies of these programmes, from monthly to yearly—the more frequent LDAR programmes are, the less the amount of gas that tends to be saved as a result of each programme, while the costs remain stable. This is what one would expect from effective programmes.
The cost of inspection differs depending on the value chain segment in question—LDAR programmes tend to be more cost effective for upstream operations since it takes longer to inspect compressors on transmission pipelines, relative to those concentrated in a production facility.
The most common policy approach currently deployed to address fugitive emissions is to require inspection at a facility at regular intervals, to scan equipment for leaks. While many companies already undertake LDAR, the practices and rigor of programmes vary widely. Therefore, regulation can standardise practices by dictating options for detection methods, a timetable for repairing leaks based on their severity, and detailed recordkeeping and reporting of leaking components. Maintaining detailed records of leaking equipment is important, as analysis of records can reveal opportunities to implement early maintenance practices for leak prevention in problem areas.
The difficulty in accurately measuring methane emissions from leaks poses a challenge to other potential policy approaches, such as market based or performance standard, which rely on strong emissions quantification.
However, as innovative detection methods such as continuous monitoring systems, and aerial surveillance and satellite instruments, continue to progress and be deployed, new or revised policy approaches will be required. There is an opportunity for regulatory frameworks to accommodate available and emerging technologies that can identify big emitters more reliably.
The IEA’s analysis includes technologies and techniques in addition to the categories above. In the marginal abatement curve, these technologies appear under the label “Other,” which includes the following:
Install new methane-reducing catalysts: Exhaust from gas-burning engines and turbines contains methane from incomplete fuel combustion. Oxidation catalysts are used to reduce unburned emissions for other hydrocarbons; new catalysts are being developed to do the same for methane.
Deploy microturbines, mini-CNG, mini-GTL (gas to liquids), or mini-LNG facilities: Micro-technologies can offer capacity for compression or liquefaction of associated gas in remote locations. These technologies avoid venting and flaring by capturing gas for use at the facility, in the surrounding community, or for transport by truck or rail.
Conduct a pipeline pump-down before maintenance: A pipeline pump-down involves using compressors to lower pressure in gas lines before performing maintenance or repair. This technique avoids emissions that would otherwise occur as venting.
Conduct reduced emission or “green” completions: Reduced emission completions (RECs) are alternative practices that capture gas that would otherwise be released while completing or re-working existing wells. Delivering captured gas into the sales pipeline reduces the need for flaring.
While a number of technologies already exist to detect, measure, and abate methane emissions, this is a dynamic area with new technologies emerging. As such, it is important that policy and regulatory approaches can adapt to advances in technology so that regulatory requirements do not themselves become a barrier to methane abatement. If, for example, a regulation requires a highly prescriptive method for measuring emissions from various sources on a site, it could make it legally difficult for a company to employ alternative (or additional) methods for measuring emissions, such as aerial surveillance or satellite sensing technology, that could otherwise serve to complement and improve traditional measurement techniques.
A well-designed regulatory scheme can allow for improvements in technology, or even provide incentives for companies to seek innovative solutions. For example, policies that set a facility-wide or company target and then enable operators to choose their preferred path to compliance can stimulate the uptake of new solutions, as can a price on methane pollution. Any policy approach can build in adaptive mechanisms, for instance, by allowing the regulator to consider alternative technical approaches to measuring, monitoring, or abating methane, without having to undergo new rulemaking. Finally, complementary policies like government investment in research and development, or expedited permitting or waived application fees for companies willing to pilot new technologies can also be effective at bringing new ideas to commercial scale.
As alluded to above and described in further detail on the next page, there are multiple efforts underway to adopt policy and regulatory measures aimed at reducing methane emissions or the emissions intensity of oil and gas production. There are also a number of voluntary, industry-led efforts to reduce methane emissions from oil and gas operations:
- The Methane Guiding Principles (MGP) established in 2017 is a multi-stakeholder collaborative platform incorporating over 20 institutions from industry, intergovernmental organisations (including the IEA), academia, and civil society. The principles aim to advance understanding and best practices for methane emissions reduction and to develop and implement methane policy and regulation.
- The Oil and Gas Climate Initiative (OGCI) aims to improve methane data collection and develop and deploy cost-effective methane management technologies; it consists of thirteen major international oil and gas companies. In 2018, OGCI members announced a target to reduce the collective average methane intensity of its aggregated upstream gas and oil operations to below 0.25% by 2025 (from 0.32% today), with an ambition to ultimately achieve a level of 0.2%.
- The Oil & Gas Methane Partnership (an initiative of the Climate and Clean Air Coalition) provides protocols for companies to survey and address emissions and a platform for them to demonstrate results. It consists of group of ten oil and gas companies, governments, UN Environment, World Bank, and the Environmental Defence Fund.
Voluntary initiatives can play a vital role in developing new approaches to abatement and in demonstrating what is possible and practicable. However, there are limits to what can be achieved by voluntary action because the pool of those willing to take such action is limited, and because the actions themselves may fall short of what is desirable from a public policy perspective. Effective targets, policies and regulations established by governments are also therefore essential to bring emissions into line with the trajectory in the Sustainable Development Scenario. The methane tracker provides essential information to help governments and other stakeholders design effective strategies.