How oil and gas can keep up with environmental policy

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There’s no denying that Australian energy policy is in a fragile state. With the crumbling of the National Energy Guarantee in August 2018, the decade-plus of uncertainty faced by power companies is set to continue, with no definite end in sight. Amongst all the political and economic grey areas however, there is one sphere that the energy industry can look to for an indication of where policy is heading: emission reductions.

How oil and gas can keep up with environmental policy

There is a clear scientific consensus (and related social pressure) about the need to curtail greenhouse gas emissions — of which the energy industry is the largest producer — and recent research points to specific ways that these emission reductions can be achieved.

Momentum towards CCS

Following 2015’s Paris Agreement, the UN’s Intergovernmental Panel on Climate Change (IPCC) outlined what it will take to reach the agreed-upon global temperature targets, specifying the “substantial emissions reductions” required over the next few decades and “near zero emissions of CO₂” by 2100.

Australian politicians have continuously reaffirmed their commitment to fulfilling the Paris Agreement’s targets, and recent statements from the Australian Academy of Technology and Engineering (ATSE) make strong recommendations about a specific type of emissions-reduction technology: carbon capture and storage (CCS).

CCS covers a number of innovations which capture and safely store CO₂ from industrial processes before it can be released into the atmosphere. It’s also currently the only technology capable of making the deep emission reductions necessary to meet climate goals. When CCS is combined with bioenergy to yield the emerging field of BECCS, negative emissions could even be achieved through the capture of ambient CO₂.

While there is still disagreement about the specific type of CCS that will be most effective, ATSE’s policy demands about emissions are clear:

“To encourage the required large investments from industry in commercial-scale demonstration and first-of-a-kind commercial plants, CCS requires bipartisan government support, including stable and lasting policies for all emissions reduction technologies.”

Some Australian organisations have already begun to get on board, with the Gorgon LNG project in Western Australia set to capture and geologically store 3-4 million tonnes of reservoir CO₂ per year in a bid to become the world’s largest CCS project.

What exactly does this mean for the energy industry? As the scientific weight accumulates behind the need for the expedited deployment of emissions-reducing technologies, it becomes more and more likely that Australian policymakers will step in and mandate their adoption. It thus appears wise for energy companies to strongly consider incorporating a portfolio of CCS investments in long-term strategy.

The problem with methane

In addition to CCS, another body of research has produced concerned murmurs in the oil and gas industry. Just as it overtook coal as a more competitive choice for energy generation, natural gas’ promise of lower emission intensity was cast into doubt by the major complicating factor of methane leaks.

A US study measuring the methane leak rate across the oil and gas supply chain arrived at a figure of 2.3 per cent — more than 60 per cent higher than the 1.4 per cent estimated by an earlier government study. In addition to significant lost profits, this amount of leakage poses a serious environmental quandary.

Uncombusted natural gas is mostly methane, which is roughly 30 times more effective at trapping heat than CO₂. As an earlier study calculated that a leak rate of 3 per cent or more would nullify the short-term climate benefits of natural gas over coal, the current average leak rate cuts worryingly into gas’s environmental edge. With policymakers poised to cut emissions wherever they can, it’s not hard to imagine regulations being imposed to penalise corporations for avoidable methane discharges.

Fortunately, an 80:20 analysis of emission-producing infrastructure areas can help. International studies have found that a small number of “super-emitter” points along the supply chain can produce up to 90 per cent of a corporation’s methane emissions.

Oil and gas producers can take advantage of new technologies such as data-based leak quantification methods and increasingly affordable infrared camera options to detect the leakiest segments of their infrastructure. In some areas this leaked gas can be collected and used. Such measures both increase profits from previously lost product, and provide a layer of assurance against potential methane regulations in the future.

Another source of usable raw methane being discharged into the atmosphere is due to Pneumatic instrument systems which are powered by high-pressure natural gas. Such systems were often used at compressor stations for process control. Typical process control applications include temperature, liquid level, flow rate and pressure regulation. In various places around the world the constant discharge of methane from these controllers is one of the largest sources of methane emissions in the natural gas industry.

In recent years, many energy companies have started to realise that if they collect waste gas they can use it for power generation. Gentherm Global Power Technologies is the world’s leading manufacturer of Thermoelectric gensets. These gensets, which have no moving parts and therefore require almost no maintenance, are able to convert this methane into power. The power can be used to operate existing pneumatic equipment with instrument air or operate replacement electric controls. The result is that less harmful emissions are being sent into the atmosphere. There are thousands of Gentherm’s thermoelectric genset units in operation around the world. Luckily for local energy producers, Gentherm’s units are also becoming commonplace and readily available in Australia.

How oil and gas can keep up with environmental policy

Heed the writing on the wall

Wade Elofson, founder of Powered, a resource-focused business development company, has been immersed in the oil and gas sector long enough to know when change is inevitable. In studying climate research trends around the world, he’s gained insight into what Australian energy producers can expect when it comes to environmental regulation.

“There are strong indications that oil and gas companies should take emissions-reducing technologies seriously as they form their long-term strategies,” Mr Elofson said.

“Maintaining a diverse portfolio of CCS investments and prioritising methane leak capping are both becoming necessities for staying ahead of policy risk.”

For more information, please contact or call Wade Elofson on +61 474 128 517.

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