Cover Me - With Methane Emissions, Solutions Can Be As Tricky to Pin Down As the Problem Itself

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Thursday, 04/13/2023Published by: Jason Lindquist

By now, just about everyone is aware of and has been impacted by efforts to reduce greenhouse gas (GHG) emissions — and methane especially — as a way of meeting global climate goals, but that doesn’t mean everyone is on the same page. The energy industry is a leading source of methane emissions in the U.S., but with nearly 1 million active wells across the country and not much common ground on the actual scope of methane emissions and how best to reduce them, finding a path forward without overburdening the sector and its customers is more than a little tricky. In today’s RBN blog, we preview our latest Drill Down Report on efforts to reduce methane emissions.

Discussions around the ongoing energy transition often focus on the need to control and then reduce the volume of GHGs emitted into the atmosphere. And while carbon dioxide (CO₂), the most prevalent GHG, often gets the most attention, methane is especially problematic. It is the primary constituent in pipeline natural gas and also a particularly potent GHG, with a Global Warming Potential (GWP) that is 25-36 times that of CO₂ if normalized to a 100-year timeline. But methane emissions are neutralized in the atmosphere at a much quicker pace, meaning that their initial GWP is much higher, more like 86 times that of CO₂ if normalized to a 20-year timeline. That means that making even modest reductions in unburned methane emissions is an important step in plans to blunt the long-term effects of man-made climate change.

The U.S. oil and gas sector accounted for the equivalent of 211 million metric tons of CO₂ (based on the 100-year timeframe noted above; MMtCO₂e) in 2020, according to the most recent industry-specific data from the Environmental Protection Agency (EPA). Those emissions are tied to several sources, with natural gas production (41%, 87 MMtCO₂e) and oil production (19%, 41 MMtCO₂e) responsible for the majority. Going one step further to look at emissions from production, most are tied to either pneumatic devices (35%) — which control gas flows, levels, temperature and pressure in the equipment — or gathering and boosting stations (29%). With 60% of the energy sector’s emissions tied directly to oil and gas production, it makes sense to target the emissions from the types of wells presumed to leak at the highest rates — the low-performing wells that can operate for decades after their high-performing years are done.

There were 916,934 producing wells in the U.S. in 2021, according to a November 2022 report from the Energy Information Administration (EIA), the most recent data available. About three-quarters of U.S. production, which stood at 11.2 MMb/d of oil and 104.7 Bcf/d of natural gas in 2021, came from the highest-performing sites, those producing more than 100 barrels of oil equivalent per day (boe/d) even though they account for less than 7% of active wells (gray layers in Figure 1 below). It’s important to note that a shale well’s production typically declines sharply after its first several months of operation, so the low-performing wells, shown in the blue layers in Figure 1, are generally older.

A low-performing well — also called a stripper well, or a marginal well — is an oil or natural gas well that may be nearing the end of its economically useful life, although such wells can continue to produce small volumes for long periods, up to several decades. The Internal Revenue Service (IRS) defines this type of well as one that produces 15 boe/d or less over a calendar year, which is also the threshold used in the EIA report. The percentage of low-production wells has held steady at about 80% since 2000, according to EIA data. In 2021, there were 714,603 wells categorized as low-performing — 78% of the total — but they were responsible for only about 6.7% of U.S. oil (blue layers in Figure 2 below) and natural gas production. In contrast, the 59,077 wells that produced more than 100 boe/d were responsible for about three-quarters of oil (gray and green layers in Figure 2 below) and gas production.

As we’ve noted, output starts declining not long after a well comes online and low-performing sites make up a significant majority of wells in operation. And since wells have the potential to operate for decades, older sites are widely considered to have a greater risk of significant methane leaks over time, mostly tied to equipment integrity, where the age of the well and the frequency and quality of maintenance are important factors in a well’s performance. A study published in April 2022 by Nature Communications links an increased prevalence of methane emissions to several maintenance-related issues common to low-performing wells, including leaks at fittings and joints, and performance issues with on-site gathering infrastructure.

The report said that low-performing well sites had a leakage rate that was 6-12 times higher than the average methane loss rate of 1.5% for all well sites, with the highest rates at sites that produced the least amount of oil and gas. Those wells are also closely linked with super-emitting events, where methane emissions spike to unusually high levels. Low-performing wells are generally clustered together in several top producing regions, including 1) Appalachia; 2) Oklahoma, Kansas and Arkansas; (3) Colorado, Utah and Wyoming; 4) the Permian Basin; and (5) the Barnett Shale. The report’s focus is on leakage rates from oil and natural gas production, especially from low-performing wells, but it’s important to put those findings into some context and consider some key information about well behavior, which tends to get overlooked in any debate over emissions:

• All wells are not the same. This is especially true of low-performing wells, which could be just a few years old or in production for decades, with wildly different technologies in place.
• Not all emissions controls will work on every well, and it’s not possible to control emissions from all types of wells.
• These wells may produce very low amounts of oil, but there are thousands in operation. A change in the cost associated with operating such wells could impact their economics and force a large number of them to shut in.
• Reducing emissions is not as simple as turning off a well, especially if there’s a downstream problem, which can cause intermittent emissions to spike. For example, since most drillers don’t operate natural gas plants, if there’s a midstream problem, leaving no way to move that gas from one place to another, it can cause upstream problems that are difficult to solve.
• If a well is forced to shut-in, it may never produce again.

Also, we should note that the prevalence of methane emissions can be hard to get a handle on and estimates can vary greatly, in large part because of the way they’re measured and calculated, one of several topics covered in our new Drill Down report on the topic. The EPA’s Greenhouse Gas Inventory (GHGI), which is published annually, utilizes what is called a “bottom-up” approach to estimate those emissions. It uses estimated emissions factors for certain activities, assuming normal performance — such as well completions or the performance of valves or seals — then multiplies that by the assumed amount of activity in each category to create an overall emissions estimate. This approach is important in identifying the most significant contributors of emissions but can also miss those that are temporary or episodic — and overlook or underestimate others. A “top-down” analysis can lead to different conclusions. In that approach, emissions are assessed based in part on a variety of observations, such as by aircraft, satellites, weather stations and other tools for direct measurement — each of which can be hampered by false detections, low-resolution measurements and limited capabilities.

In addition to the focus on low-performing wells, our new Drill Down report also takes a close look at ways that regulations are evolving to tackle methane emissions. Since common ground can be hard to find when it comes to methane emissions, a nuanced approach is required and we spend a whole section of the report examining the wide variety of approaches the U.S. and other countries are taking to regulate them. The report also has a section dedicated to the Methane Emissions Reduction Program (MERP), which was introduced with the Inflation Reduction Act (IRA) and features the federal government’s first-ever fee on any GHG emissions. The Environmental Protection Agency (EPA) then followed that up with a supplemental proposal in November 2022 that significantly broadens the initial MERP plan and calls for all well sites, regardless of size, to be routinely monitored for leaks until they are properly closed. Our new report also assesses the EPA’s proposal, its targeting of super-emitters, and why third-party groups will play a bigger role in mitigating methane emissions in the years ahead.

Many believe that reducing methane emissions is critical to hitting long-term climate and decarbonization targets. As we discussed in our It Don’t Come Easy series, the North American oil and gas industry faces a long list of choices about how best to approach emissions reductions, which technologies to use, which programs to join, and how to interpret new emissions data — all of which will be necessary to identify, mitigate and eliminate the problems caused by super-emitting events that are more likely to occur at low-performing wells.