Exxon Mobil calls for tighter methane regulations

March 3, 2020  reuters.com

March 3 (Reuters) - Exxon Mobil on Tuesday called for tighter regulation of the greenhouse gas methane and offered up its own in-house rules as a model for companies and lawmakers worldwide.

The largest U.S. oil company laid out the guidelines it follows - some of which have been rolled back by the Trump administration - at a time when the industry faces growing pressure from investors to reduce its environmental footprint.

The world’s top oil and gas companies are under heavy pressure from investors and climate activists to meet the 2015 Paris climate goal of limiting global warming to below 2 degrees Celsius from pre-industrial levels.

Exxon and U.S. rival Chevron Corp have been far less ambitious with their greenhouse gas reduction targets than their European rivals.

BP Plc in February set one of the oil sector’s most ambitious targets for curbing carbon emissions, including getting emissions from its operations and barrels produced to net zero.

Exxon will hold its annual investor meeting on Thursday and is expected to detail its climate goals.

Exxon started its methane reduction program in 2017 in its shale fields and has been able to reduce emissions by 20%. It has since started rolling out the methane guidelines to the rest of the company, which “demonstrate what’s practicable and achievable,” said Chief Executive Darren Woods.

The program includes leak detection and repair, having companies report their total methane emissions and minimizing venting, the release of unburned methane, which is far more environmentally harmful than flaring it.

Exxon’s announcement came early Tuesday during the annual investor day presentation for its chief U.S. rival, Chevron Corp, which has tied compensation to the reduction of methane emissions.

Last year, the rivals rolled out ambitious production plans for the Permian Basin on the same day, setting up a showdown in the top U.S. shale field. (Reporting by Jennifer Hiller; Editing by Bernadette Baum)

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good for them, and for all of us.

Agree.  However I am concerned that much of the fugitive emissions are coming from mid-major and smaller operators.  I am unaware of any LA Haynesville/Bossier operating companies that have emission reduction programs.  Same for most of the TX HA/BO operators.  Although the Permian Basin wells get a lot of attention in regarding to flaring/emissions, the volume per well is quite small compared with HA/BO wells.  The Permian Basin total volume of associated gas is a problem owing to the large number of wells and pace of drilling.

Good for XOM.  But only 20% reduction in emissions?  Not good enough.

A step in the right direction from an industry leader.  Absolutely it is not good enough but is a commitment to a process that should become more strict and wider spread over time.  This is an attempt to forestall more stringent government regulation but it will only be successful in that sense for a short period of time, IMO.  More common sense regulations are coming. The public will demand it.

ExxonMobil Shares Blueprint for Stricter Regulations of Methane Emissions

04 March 2020  spe.org

The largest oil and gas major in the US announced a new plan this week to reduce and regulate methane emissions across “all phases of production.”

ExxonMobil is sharing its internally adopted plan in the hopes that industry regulators and other oil and gas companies will broadly implement tighter emission mitigation practices that it says are cost-effective. The call for stricter policies comes as the industry faces increased pressure from public stakeholders, investors, and governments to address climate change by reducing greenhouse gas emissions.

“ExxonMobil has been applying the principles of this framework to our oil and natural gas operations for several years, resulting in improvements that demonstrate what’s practicable and achievable,” said Darren Woods, chairman and chief executive officer of ExxonMobil.

“We offer this blueprint to companies across our industry as they consider how to make improvements to reduce the sector’s methane emissions. Our industry has developed high-tech advances to curb emissions, and we also hope this framework will be helpful for governments as they develop new regulations,” added Woods.

ExxonMobil’s initiative is based largely on a voluntary emissions reduction program that was launched in 2017 through its US-shale subsidiary, XTO. The now expanded program prioritizes monitoring technologies, the mitigation of wellhead venting, and the replacement of production equipment components that have “a high-leak potential” which includes commonly used pneumatic devices that rely on venting methane to function.

“More comprehensive than current federal rules, the proposed regulations would apply to new and existing sources,” the company said in a press release. ExxonMobil also reported that following these standards has led to a 20% reduction in XTO’s methane emissions since 2016 and has put the company as a whole on track for a 15% reduction.

ExxonMobil offered details on the four pillars of its regulatory proposal.

Leak Detection and Repair

A major source of the industry’s unintentional emissions, or leaks, involve production and process equipment across the oil and gas infrastructure landscape. Typical equipment components where fugitive emissions can occur are valves, screwed connections, flanges, open-ended lines, and pump seals.

  • Establish a “leak detection and repair” (LDAR) program.
  • Leaks detected should be repaired when possible, or entered into a system for correction as soon as practicable (e.g., within 30 days).
  • LDAR coverage should be repeated periodically (e.g., at least once per year).
  • A regulating authority should also consider whether to: 
    • Provide exemptions for low producing or “marginal” wells (e.g., less than 15 BOE/D)
    • Develop a specific listing of equipment and components to be covered

Minimization of Wellhead Venting

All unconventional wells that are hydraulically fractured are brought on line through the flowback process. As excess water and sand is removed from the stimulated reservoir, flowback fluids are mixed with natural gas that can vent to the atmosphere if not controlled.

  • New hydraulically fractured wells should follow reduced emissions completion (REC) procedures.
  • REC separators should be used so the gas can be routed for separate collection and into sales lines or other production uses, once conditions allow.
  • Collected gas can be combusted if other uses are infeasible, or for safety reasons.

Operational Equipment Controls

Pneumatic controllers are valves that are used throughout industrial operations to control pressure, fluid levels, temperature, flow rate, and other processes automatically. Natural gas-powered pneumatic controllers directly release or “bleed” methane as part of their intended function. ExxonMobil’s proposed regulatory framework calls for the elimination of continuous high-bleed pneumatic (HBP) control devices, except in cases where they are required for process or safety conditions.  

  • Replace HBPs on existing facilities.
  • A regulating authority should consider an appropriate phaseout period given its operational context (e.g., within 3 years).
  • Do not use HBPs on new facilities.
  • Use no or low-bleed devices where technically feasible.
  • Use mechanical or electric control where possible when electricity is available.
  • Conduct periodic pneumatic-controller maintenance, for example when conducing LDAR program.

Record Keeping and Reporting

Quantifying methane regulations has been a challenge in the past but technology and dedicated research has solved many of the tallest hurdles. Documenting the volume of methane that is released at any given site is also critical to establishing baselines and enforcing regulatory policies. ExxonMobil has created a comprehensive list of what oil and gas operators need to keep track of to support those goals.

  • Total methane emissions: Each operator should report annually the total methane emissions from its operated assets.
  • LDAR program: Document and annually report results of inspections.
  • Completions and  flowback: Report to agency the anticipated dates of upcoming completions, within 2 days of each process, to allow opportunity for direct inspection.
  • Manual liquid unloading: Document and report annually dates, times, durations, and estimated volumes of any venting that occurred.
  • Pneumatic controllers: Document and annually report the type and bleed rates of pneumatic controllers the company has in operation.
  • Pneumatic pumps: Monitor, document, and annually report on pumps, vapor recovery units (VRUs), and combustion devices as part of LDAR program.
  • Compressors: Monitor, document and annually report on compressors, seals, VRUs, and combustion devices as part of LDAR program.
  • Storage tanks: Document installation and proper operation of gas capture systems as required by regulations (e.g., a VRU or combustion device) for storage vessels, for a beneficial use to achieve at least a 95% reduction in methane emissions.
  • Pipeline blowdowns: Document and report annually on the number of blowdown events (i.e., planned and unplanned releases), as well as the estimated volume of gas emitted from such events.  

 

I'm neither agreeing nor disagreeing with the statements made by the two of you, but what is your basis for saying 20% is not enough?  The industry can, and likely has, placed a $$ value for every step it can take.  As you get past the easier ones, the next steps become either more technically complicated or less predictable results.  One reaches a point where the benefits don't justify the costs, yes, even for climate change.

It isn't nearly as simple as just saying "not good enough" unless we know the full story.

I'll let you take this one, Henry!  :-)

Still waiting on Henry, Steve.  He is not prompt, so I will start with the problem with pneumatic devises which Exxon wants to document and report, but seemingly not replace.

The natural gas industry commonly uses pneumatic devices powered by pressurized natural gas as valve controllers and pressure regulators. However, these devices are one of the main sources of vented methane emissions in the industry, with 51 billion¹ cubic feet released per year in the production sector alone.

These levels can be reduced or even completely eliminated by replacing high bleed and low bleed devices by retrofitting existing natural gas pressure regulators. Reducing the number of components in a system and improving maintenance practices can also be profitable.

Data from the United States Environmental Protection Agency shows approximately 400,000 pneumatic devices are used in the production sector to control and monitor gas and liquid flows in dehydrators and separators, temperature in dehydrator regenerators and pressure in flash tanks. Approximately 13,000 gas pneumatic devices are used in the processing sector for compressor and glycol dehydration control in gas gathering/booster stations and isolation valves in processing plants. In the transmission sector an estimated 85,000 devices actuate isolation valves and regulate gas flow and pressure at compressor stations, pipelines and other storage facilities.

Electric actuators and motorized regulators offer a number of benefits to reduce methane emissions, even enabling the design of zero emissions systems.

It is normal for pneumatic devices to bleed some natural gas into the atmosphere and so they are a major source of methane emissions from the natural gas industry. The actual bleed rate or emissions level mostly depends on the device’s design. According to the Natural Gas STAR Program (an emissions reduction framework for partner companies with oil and gas operations in the US), a high bleed pneumatic device is any which bleeds more than 6 standard cubic feet per hour which equates to over 50 thousand cubic feet each year.

Isn’t this included in Pillar # 3 above?  I’ll admit, I know little about the technology here, so maybe it isn’t.   But it looks like Exxon/Mobil is saying that these should be eliminated where feasible.

Feel free to correct me.  I won’t take it personal.

IMO, "calling for it" and "doing it" are two different things.  As you can see these pneumatic devises are ubiquitous across the infrastructure.  All the companies that realized that the cost is off set by the gas saved should have been doing this ten years ago.

Sorry for not jumping in earlier.  I've been obsessing over coronavirus and the stock market....

I am no expert on the gas industry, but I do know the oil drillers leak a ton of natural gas.  I also know that my area of the country, which is much further north than Louisiana, never had winter this year.  We had only a handful of days when the daily high was below freezing, and we usually have a few week-long periods where the temperature never gets above freezing.  We never had snow, and we probably average a few feet each year.  This is not going to get better.  

Over the years, we, as a nation, decided that factories could not dump pollutants into rivers.  We decided that factories should not pollute the atmosphere.  We need to agree that oil drillers should not be leaking methane into the atmosphere.  I am not against oil drillers.  In fact, I just wrote my congressman that while we should not bail out cruise lines, we should make sure oil drillers survive this economic mess.  But the drillers must be more responsible about methane leaks.

The dollar value the industry places on preventing leaks is likely very different from the dollar value I place on the climate change resulting from that leak.  My local area had a similar issue (in principle) last weekend, in which a major landowner polluted the whole region on Saturday by conducting a controlled burn of 3000 acres.  What right did this landowner have to ruin the air for 24 hours?  People with health issues were told to stay indoors.  I just see it differently - this one owner had no right to do such a thing, and ruin the air for a million of us.

I view methane leakage as the same.  What right do the oil drillers have to leak all this methane into OUR atmosphere?  Obviously it is legal, but it shouldn't be.

Henry, one way to reduce fugitive methane emissions is to not bail out oil companies.  Far too many are stuck on a producing tread mill they can not escape - drill to cover debt service regardless of the price.  Of course the price may very will stay low enough long enough that they slow or stop and go to bankruptcy court.  The super majors and mid-majors can afford to take the actions needed to lower emissions and slow the pace of drilling.  We need to have a shake out that gets rid of the marginal companies (the ones not committing to emission reduction programs), concentrates production in a smaller number of more responsible companies and then continue to press those companies to do more to limit fugitive emissions and flaring.  It helps that those larger cap companies are also more attuned to and concerned with public perceptions.

The only thing I can say regarding your stock portfolio is to take comfort in Sec. Mnuchin's statement that when this is all over there will be a large pent up demand to sky rocket stocks right back up where they were pre-COVID-19, maybe higher!  Of course by then some of those non-O&G companies may be on the same bankruptcy court dockets.

Oh yes, like I believe every Mr. Mnuchin tells me.

I don't believe anything that I hear from the current administration.  Remember when Kudlow told us the virus was contained, "air tight?"  So we should all go buy stocks!  Then after 9 more percent down from that date, he, again, told us the stock market was a great buy?  And now we are another 10 percent down from there.  

And weren't we told that a "miracle" would make the virus go away?  And weren't we were told "warm weather" would end it by Spring?  And just a few days ago we were told it was going to zero.  (Well, I guess if you have a really, really long time horizon, that might actually be true.)  Today, Trump told us we would be hunkered down until August (not that I believe that either).  

And Skip, my portfolio is fine.  If you build a balanced portfolio, you don't lose sleep in times like these.  It's the waking up that's bad - all the horrors.

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