New Federal Regulations on Methane Leakage from the Oil & Gas Sector: An Opportunity in Disguise?

New Federal Regulations on Methane Leakage from the Oil & Gas Sector: An Opportunity in Disguise?

The new federal regulations aiming to reduce methane emissions from new wells and facilities in the oil & gas sector by 40% by 2025 seem to be quite do-able with current technologies. Trying to do it with legacy wells and facilities will be more complicated, more burdensome to smaller companies, and probably have less overall impact on quantity of leakage. While it is true that larger leaks can help pay for their mitigation by selling the gas that was leaking, the costs to low margin legacy producers could be more traumatic. Leak detection and repair (LDAR) technologies are getting better, especially with drones, automation, and remote monitoring systems. 

The first stage of the process will be assessment of leakage rates and identifying locations of leakage. Infrared cameras from above can help in some areas to identify (but not quantify) leaks. Fixing the biggest leaks is the most important matter since doing so would lower leakage rates more significantly and allow more gas to be sold. Leakage rates in some of the newer dry gas areas of the Marcellus as well as in the NGL areas have been assessed at very low rates. Marcellus Shale Coalition notes leakage rates as low as 0.18 % which is close to 20 times lower than the 3% rate suggested that would nullify the climate benefits of natural gas relative to coal. Studies that have suggested rates as high as 9% in Utah (NOAA?) seem to be unrealistic or at least a fantastic economical repair opportunity. The EPA estimates of 1.4% seem more plausible although many in the oil and gas industry think 1% is about right. Most in the anti-oil & gas contingent tend to only mention the studies that most support their position. Reductions and eventual elimination of flaring gas from oil wells and flareless completions will also likely become the norm. Capturing compressor leak-off and better management of valves and seals will also be a part of reducing leakage rates. 

  

Oil and gas operators have three incentives for detecting and repairing leaks: 1) attaining compliance with regulations; 2) capturing and selling more product; and 3) improving their reputations and the reputation of the industry as a whole and gaining more public acceptance for an industry that has been struggling with public acceptance. Since methane leakage has been the “go-to” argument for anti-fracking activists, properly detailed and widespread assessment of leakage rates and mitigation of leaks has the real potential to eliminate methane leakage as an issue for condemning the industry. Thus, it is an opportunity for the industry to put that argument to rest. As long as the leakage rates are not largely assessed and repaired the opponents of oil & gas have leverage to complain about leakage rates no matter the reality of the rates. They have and they will in long editorials in prominent journalistic sources and will continue until proven wrong. Widespread detection and repair, assessment and mitigation, can remove that leverage. When Hillary Clinton was asked about fracking in a recent debate she mentioned four things: water contamination, methane leakage, fracking chemical disclosure, and community opposition. Fracking chemical disclosure is coming about and should become a non-issue soon. Properly addressing the first two, both significantly overblown, should reduce community opposition.

   

The oil and gas industry has long been innovative and a great developer of technology. LDAR, proactive safety and environmental planning, and over-compliance to regs when feasible should be seen as desirable goals. Although industry advocacy groups like API, IPAA, and EID will as a matter of protocol complain about regs, particularly federal regs as duplicative and burdensome, we should not linger too long with fighting the regs but step up and put this matter to the test and hopefully put it to rest. I am referring here to the mandates on new wells. There may be financial grounds to oppose the proposed regs on legacy sources. Perhaps as new sources are assessed and mitigated the costs of assessment and mitigation will go down so that legacy sources can then be addressed. Thus calling for at least a delay for legacy sources seems reasonable on that basis.

If we suspect the EPA assessment of reported leakage is correct that overall leakage rates have come down 13% while gas production has increased 25% due to the shale revolution we should suspect that with a greater industry effort and application of new technologies across the board that the proposed federal reductions may be achievable much faster than mandated. 

~ 62% Direct Subsidization for Some Solar and Other Renewable Energy Projects for Businesses is Unfair to Taxpayers

~ 62% Total Direct Subsidization for Some Solar and other Renewable Energy Projects for Businesses is Unfair to Taxpayers

While subsidization of renewable energy offers a great means of making renewable energy affordable for both residents and businesses, there is a limit to what is fair. Currently, there is a 30% federal tax credit and state renewable energy credits that avg. between 5 and 10% of total cost that payback slowly over time. For some very lucky recipients there is also the Rural Energy for America Program (REAP) administered by the USDA that provides loan guarantees up to 75% and grants up to 25% of a project for businesses in rural areas – which can be defined as being in a city of population less than 50,000 in one of the designated areas. I know of two businesses in Athens, Ohio that successfully got the grant. The article referenced below is for a renovated hotel getting outfitted with solar panels and a couple of EV charging stations. Some businesses also get the 25% grant for installing geothermal systems. The federal credit for geothermal systems, however, is only at 10%, so the total there would be 35% plus any state credits – so likely at 40-45%. Geothermal is generally a better investment than solar, thus the lower federal incentive.

Basically, in the economics for the WV hotel, one might roughly estimate that about $185,000 of the total system costs of about $300,000, or about 62%, were paid (or in the case of state incentives, will be paid through time) by tax credits and grants – with taxpayer-funded money. While this is a great deal for the business owners and frankly a shrewd business decision, it is also unfair, generally speaking. With the numbers stated in the article – even with 62% subsidization it will take nearly 12 years for the part funded by the owners to break even. After that they should profit nicely, as long as the inverter holds out, the panel efficiencies don’t come down too much, or break. Other benefits of solar and geothermal systems include linger roof life and higher re-sale value of the home or business. There is also the business perk of being green – basically it is free advertising as well – as if to say – buy from us, we support renewable energy, we walk the walk. Meanwhile the taxpayers who funded most of the system are left in the dark. 

REAP vs. HEAP

In contrast, there are subsidies for people who have trouble paying for traditional forms of energy. The Home Energy Assistance Program (HEAP) is one where people under a certain income level can get assistance with their heating costs. The difference is that these programs benefit the poor while the solar subsidies benefit the wealthy, or those lucky enough to have a business in a place that can get the extra USDA REAP grant. Thus, we HEAP pennies for the poor to survive while some shrewd and hip green businesses REAP tens of thousands of dollars in grants to get further rewarded for their green awesomeness. I am pretty sure HEAP won’t pay 62% of one of these poor families’ heating and/or electric costs. One might call these excessive renewable subsidies – green entitlement programs. Now, I like renewable energy and I have a residential solar system that I like as well. I think the standard fed and state incentives are fair but even with them it is not a great investment. Incidentally, when people talk about fossil fuel subsidies they actually typically include things like the HEAP program which is actually a subsidy for the poor to keep warm and not a subsidy for fossil fuels. Roof space, roof orientation, and shading matter for solar. They can improve or damage the investment numbers. Basically, I think the USDA REAP program is a bit excessive and such money would be better put to help poor people who really need it rather than wealthy people who want to get wealthier and also improve their green reputations – have their cake and eat it. On the whole, rooftop solar, shallow geothermal, purchasing renewable energy from the grid to increase RPSs, buying EVs, and more – offer small but significant advantages to those that can afford them while they do nothing for those who cannot. When these purchases actually do achieve parity with traditional energy purchases (which may in reality be far into the future without subsidies) then things may be different but poor people usually don’t buy new things and used Prius’s go for higher than used gasoline cars. Those who get HEAP have to re-apply every year and many just don’t do it out of laziness and the stigma against being needy.

         

References:

Rural Energy for America Program Renewable Energy Systems & Energy Efficiency Improvement Loans & Grants, at USDA website – rd.usda.gov

Renovated Hotel Opens, Touting Largest Solar Array in WV – article by Maria Pisciotta, West Virginia State Journal, March 22, 2016, posted at statejournal.com

Nitrous Oxide Emissions: Sources, Global Warming Effects, and Mitigation Strategies

Nitrous Oxide Emissions: Sources, Global Warming Effects, and Mitigation Strategies 

Nitrous oxide (N2O) made up about 5% of U.S. anthropogenic greenhouse gas emissions in 2013. This makes it the third most abundant greenhouse gas after CO2 and methane. The source of 74% of those emissions was “agriculture and soil management” according to the EPA. 5% of the emissions were sourced by “manure management.” That makes nearly 80% sourced from the agriculture sector. Industry, transportation, chemical production, and stationary combustion make up about 16%. The EPA also notes that N2O has an avg. staying time in the atmosphere of 114 years (compared to about 10 years for methane). This gives it 300 times the warming power in weight equivalence to CO2. About 40% of global N2O emissions are thought to derive from human activities. Since the Industrial Revolution nitrous oxide concentrations in the atmosphere have risen by about 15%. Variations in naturally emitted N2O were not addressed in the EPA report.

N2O is the same gas used as a dental anesthetic (so-called laughing gas), an oxidation agent, and a food additive. Nitrous oxide is distinct from nitric oxide (NO) and nitrogen dioxide (NO2), but all three are produced during reactions from combustion. NO, NO2, and N2O react to form smog, acid rain, and tropospheric ozone, or ground level ozone, none of which are desirable.

  

One issue I found annoying in the EPA report was the section on – Emissions and Trends – where they stated that there was an 8% increase in emissions since 1990 (from the graph it looked like it increased about 8% from 1990 to 1991). Technically this true but emissions since 1991 have been close to flat overall. Presentation of data and statistics should avoid being misleading, if possible. Emissions of N2O are projected to rise 5% by 2020.

The transportation sector makes up about two-thirds of non-agricultural N2O emissions. Stationary combustion from coal and gas power plants makes up a much smaller amount of N2O emissions as does biomass burning. An even smaller amount is released in nitrogen fertilizer manufacture. Domestic waste water treatment is another minor source.

Mitigation Strategies

Under-utilized nitrogen-based synthetic fertilizer is the biggest source of atmospheric N2O. Mitigation strategies such as organic farming could theoretically help but crop yields would be reduced and the use of manure-based fertilizer would increase, also increasing N2O emissions from manure management. More land use would also be required to make up for the decrease in crop yields resulting in reduced carbon sink potential. Better management and more efficient use of synthetic nitrogen-based fertilizer is perhaps a better mitigation strategy. This could also decrease fertilizer runoff which is a serious problem around the world as nitrogen and particularly phosphorous runoff into bodies of water is the main source of dangerous algae blooms, red tides, and de-oxygenated dead zones where rivers meet seas.

In Crop Farming

Nitrogen (N) from fertilizer, whether synthetic or organic (typically manure) is often mobile. Synthetic fertilizer often has N in inorganic form which is more readily available to plants. Organic fertilizer contains organic N that converts to inorganic N over time. N can be lost as nitrate to groundwater or in gaseous form as nitrous oxide (N2O), dinitrogen (N2), or ammonia (NH4). It is typical that about half of applied fertilizer is taken up by the crops for which it is destined. Soil microbes produce the N2O from the N during both aerobic nitrification and anaerobic de-nitrification. The anaerobic process is thought to make the most N2O. Thus one important mitigation strategy is simply to try to reduce the amount of waterlogged soils where anaerobic microbial functions can occur. Strategies to reduce N2O formation involve avoiding the formation of inorganic N by basically using the N by increasing the NUE, or N use efficiency. By tweaking the application rate, fertilizer formulation, timing of application, and placement, the N2O produced can be reduced. Rate of application depends on the crop as different crops take up fertilizer at different rates. Formulation can also depend on crops – whether to use anhydrous ammonia or urea ammonium nitrate. Additives can also reduce some N2O emissions by inhibiting nitrification.  Timing of application can be tweaked to when it is most readily taken up by the plants. Adding fertilizer in the fall or spreading manure on frozen fields can lead to big nitrate and N2O losses. Placement may involve concentrating the fertilizer nearest the plant roots where it is needed rather than spreading it across the fields. Carbon reduction credits as incentives are also a potential reward of targeting fertilizer to reduce N2O emissions.

In Automobiles

In automobiles N2O emissions can be reduced by lowering the operating temperature of the engine through exhaust heat recirculation which employs the exhaust gas recirculation (EGR) valve to recirculate part of the hot exhaust gases to perform other functions, several of which can help power the hybrid batteries, keep the engine and fuel warm, help warm the interior, and improve gas mileage, all while reducing N2O emissions. This technology is used extensively in hybrid vehicles to help charge the Lithium batteries. 

Simply increasing MPG in vehicles to reduce overall fuel consumption will decrease N2O emissions. Catalytic converters and other pollution control technologies can also reduce N2O emissions.

In Dairy Farming

Cows fed on grass release more urea in urine than in dung so mitigation strategies can involve helping cows to have more efficient digestion. Applying nitrification inhibitors as a spray to fields where cows pee can reduce nitrous oxide emissions from urine patches by 60-90%. The sprays also tend to increase nitrogen availability and thus fertility of the soils. Avoiding of grazing on wet soils can trigger less anaerobic N2O production. Better soil drainage, improved irrigation management, and effluent management (applying effluent dry rather than wet) are other strategies that can reduce N2O emissions. 

In Industry

In the power generation industry one simple way to reduce N2O emissions is to switch fuels from coal to natural gas since natural gas produces far less when burned than coal. Natural gas power plants emit 7% of the nitrogen oxides (NO, NO2, N2O) emitted by coal plants so that is a pretty dramatic difference. In manufacture of nitrogen fertilizer some fiber materials such as nylon, N2O is emitted in the production of nitric acid for fertilizers and adipic acid for making materials. EPA lists “technological upgrades” as a means to decrease emissions in these industries, which may involve capturing and reusing the gas.    

References: 

Overview of Greenhouse Gases: Nitrous Oxide Emissions – U.S. EPA (www3.epa.gov)

Global Mitigation of Non-CO2 Greenhouse Gases, 2010-2030 – U.S. EPA, EPA-430-R-13-011, September 2013

Mitigation of Non-CO2 Greenhouse Gases in the United States: 2010 to 2030 – U.S. EPA, EPA-430-S1-4-002, April 2014

Management of Nitrogen Fertilizer to Reduce Nitrous Oxide (N2O) Emissions From Field Crops -  by Neville Millar, Julie E. Doll, and G. Phillip Robertson, Michigan State University Extension Bulletin E3152, November 2014 

How Exhaust Heat Recovery and Recirculation Works – by Christopher Lampton – Auto/Hybrid Technology, at howstuffworks.com

Reducing Nitrous Oxide: Options for Reducing Nitrous Oxide Emissions from Dairy Farms, at dairyaustralia.com.au

Emissions of Greenhouse Gases in the U.S. – U.S. Energy Information Administration (EIA), March 31, 2011

What Are the Main Sources of Nitrous Oxide Emissions? -  from whatsyourimpact.org

Switch to Gas Slashed Power-Plant Emissions, Study Finds – article by Douglas Fischer, in the Daily Climate, Jan. 10, 2014