Reaching Methane Reduction targets in CanadaAre we really?

April 5, 2018

Methane Emission Reductions in Canada

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• Some history on the proposed Regulation.

• How Canada has committed to reducing methane emissions over the next several years.

• Methane emissions quantification and reporting.

• Status of the proposed Regulation.

Global Commitments

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• United Nations Framework Convention on Climate Change was introduced–March 1994– 197 countries ratified the Convention and are called the Parties to the

Convention.

• Kyoto Protocol December adopted in 1997 and in force in 2005– Commits Parties by setting internationally binding GHG emission reduction

targets– Under the Protocol, countries' actual emissions have to be monitored and

precise records have to be kept of the trades carried out.

“…stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system…”

Global Commitments

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• Paris Agreement 2016

• As of April 1, 2018 - 175 of 197 Parties have ratified the Convention.

“… aim to strengthen the global response to the threat of climate change by keeping global temperature rise this century well below 1.5 degrees Celsius above

pre-industrial levels”

Canada’s Commitments

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• In March 2016 Canada-U.S. Joint Statement on Climate, Energy and ArcticLeadership, leaders commit to:

– reduce methane emissions from the Oil & Gas sector by 40-45% by2025 relative to 2012 levels and explore new opportunities foradditional methane reductions.

• Canada commits that ECC will regulate methane emissions from new andexisting oil and gas sources and put in place regulations and publish aninitial phase of proposed regulations by 2017.

• In December 2016, the Pan-Canadian Framework on Clean Growth andClimate Change was adopted

– Aims to reduce emissions, build resilience to a changing climate andenable clean economic growth across all sectors of the Canadianeconomy.

– reiterates Canada’s commitment to reduce methane emissions from the Oil & Gassector by 40-45% by 2025.

Canadian GHG Emissions to UNFCCC

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Canadian GHG Emissions to UNFCCC

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28% reduction from 722 Mt

Methane Emissions

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Source: http://ec.gc.ca/lcpe-cepa/default.asp?lang=En&xml=BF68F2B3-03F9-4B3D-B5A9-1D5BC0A25A21

Methane Emissions

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ECCC Proposal Regulatory Coverage

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Proposed Regulation to cover:• Natural Gas production and processing• Oil Production• Transmission

But not• Distribution• Refining• Some oil sands emissions

Environment and Climate Change Canada (ECCC) Proposed Regulations

Environment and Climate Change Canada (ECCC) proposed Methane emissionlimits at the facility and equipment level in the Regulations RespectingReduction in the Release of Methane and Certain Volatile Organic Compounds(Upstream Oil and Gas Sector) in five key areas:

1. Fugitive emissions: equipment leaks

2. Facility Production Venting

3. Pneumatic devices (pumps and controllers)

4. Compressors

5. Well completions by hydraulic fracturing

Methane Emissions from Five Key Areas

Source: Proposed methane regulations: A significant step in addressing climate change in Canada, ECCC, June 2017

Fugitives 34%

General Venting 23%

Pneumatic Emissions

20%20

Compressor Emissions 9%

Well Completions

1%

Other 13%

1. Fugitive Equipment Leaks

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Key MethaneEmission Source

Proposed Requirement Coverage Proposed Flexibility Proposed Date of Implementation

Fugitive Equipment Leaks

• Implementation of a Leak Detection and Repair (LDAR) program to detect and repair gas leaks

• Inspections three times per year

• Corrective action within 30 days for onshore facilities and within 365 days for offshore facilities

Larger Facilities • Scheduling of shut-down so that the emissions from the repair do not exceed the emissions from the leak

• Exclusion of single well-heads.

January 1, 2020

2. Facility Production Venting

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Key MethaneEmission Source

Proposed Requirement Coverage Proposed Flexibility Proposed Date of Implementation

Facility Production Venting

• Limit of 250 m3 per month (3,000 m3 per year)

• Conservation or flaring / clean incineration of natural gas

Larger Facilities Permission to vent in case of an emergency

January 1, 2023

3. Pneumatic Devices

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Key Methane Emission Source

• Proposed Requirement Coverage Proposed Flexibility Proposed Date of Implementation

Pneumatic Devices • Non-emitting pneumatic controllers for larger facilities; low emitting pneumatic controllers for smaller facilities

• Non-emitting pneumatic pumps for larger pump rates

• Switch to non- or low-emitting pneumatic controllers

• Switch to non-emitting pneumatic pumps

Larger Facilities and larger pumping rates

• Pneumatic controllers: exemptions possible for operational needs

• Pumps: exemption permits possible if no feasible non-emitting technology

• Both: exemption where emissions are conserved or destroyed

January 1, 2023

4. Well Completions - Hydraulic Fracturing

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Key MethaneEmission Source

Proposed Requirement Coverage Proposed Flexibility Proposed Date of Implementation

Well Completions by Hydraulic Fracturing

• No venting• Conservation or flaring / clean

incineration of natural gas

Fractured wells with high gas-to-oil rations

Exemption for well completions in Alberta and British Columbia

January 1, 2020

Key MethaneEmission Source

Proposed Requirement Coverage Proposed Flexibility Proposed Date of Implementation

Compressors • Annual measurements of compressor vents

• Corrective action within 30 or 90 days based on compressor type

All existing compressors at oil and gas facilities must meet emissions limit and all new compressors must conserve emissions

No measurement where emissions are conserved or destroyed

January 1, 2020

5. Compressors

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Estimate Costs to Comply

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Source: Environment Canada

Current Provincial Regulations - Methane

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• British Columbia – Flaring and Venting Reduction Guideline – flaring, incineration and venting of natural gas at well sites, facilities and pipelines

• Alberta – Directive 060 – requirements for incineration and venting at all petroleum wells and facilities. This regulation does not include pneumatics and pumps.

• Saskatchewan – Directive S-10 – has requirements for the reduction of flaring and venting of gas from oil wells, processing plants and wells that vent, flare or incinerate gas. S-20 provides performance requirements for flaring and incineration.

Let’s do the math – are we really

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• Current estimations

• 722 Mt of CO2e annually in Canada

• 102 Mt of that CO2e is methane

• 48 Mt of that CO2e (methane) is from Oil and Gas activities

• We are aiming for 21 Mt reduction in CO2e by implementing the 5 strategies.– Leaks – 16 Mt ?

– Venting – 11 Mt ?

– Pneumatics – 10 Mt ?

– Compressors – 4 Mt ?

– Completions – 0.5 Mt ?

Canada’s Methane Commitments

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Anticipated Benefits and Costs

• These emission reductions would contribute to meeting Canada’s international obligations.

– It is expected that the proposed regulations would lead to a 21 megatonne (Mt) reduction in methane emissions in 2025, a reduction of 41 percent below 2012 levels, falling in the range of a 40-45 percent reduction as committed in March 2016.

• The total compliance costs attributable to the proposed regulations are estimated to be $3.3 billion over an 18-year period. These compliance costs would be offset, in part, by the recovery of 663 PJ of natural gas with a market value of $1.6 billion.

• Saskatchewan has not yet adopted the Pan-Canadian Framework

Where will that put us globally?

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• 102 Mt CO2e of methane was emitted in Canada in 2015

• 48 Mt CO2e of that was from Oil and Gas

• If we reduce that by 40-45% in 2025, it would be a reduction of 21 Mt of CO2e or 0.27% of global anthropogenic methane emissions.

Thank you!

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