Report: Canadian Oil and Gas Operators Have Ample Opportunity to Reduce Methane Emissions

Contact:
Lauren Whittenberg, (512) 691-3437, lwhittenberg@edf.org
Faye Roberts, Scout Public Affairs, (647) 924-4454, faye.roberts@scoutpublicaffairs.com
Chris Severson-Baker, Pembina Institute, (403) 899-7423, chrissb@pembina.org

(Edmonton, Alberta) An independent analysis conducted by ICF International (ICF), a leading energy industry research firm, estimates that emissions of the potent greenhouse gas methane from the Canadian oil and gas sector can be reduced by 45 per cent below projected 2020 levels, all while using existing technologies. The research was commissioned by Environmental Defense Fund (EDF), a leading international environmental non-profit. EDF partnered with the Pembina Institute, Canada’s leading clean energy think tank, on the development of the project and dissemination of the ICF report.

Canada’s oil and gas sector is the largest source of methane emissions. ICF reported a significant opportunity to reduce methane emitted from multiple sources in Canada’s oil-and-gas rich provinces, spanning from drilling to delivery. Achieving this 45 per cent reduction across Canada would allow for the recovery and potential sale of otherwise lost natural gas and would be the equivalent of eliminating 27 million metric tonnes of carbon dioxide emissions.  At a low cost of C$2.76 per metric tonne of CO2, this reduction would provide the same immediate climate benefit as taking every passenger car off the road in British Columbia and Alberta according to data from Statistics Canada and Canada’s National Inventory Report.

Alberta and British Columbia are the country’s main oil-and-gas producing regions, responsible for nearly 70 per cent of Canada’s total methane emissions. ICF analyzed the reduction opportunity in each, concluding that upstream methane emissions in Alberta could be reduced by 45 per cent for C$2.57 per metric tonne of CO2 and in British Columbia by 37 per cent for C$1.69 per metric tonne of CO2. All told, the C$726 million initial investment to achieve Canada’s 45 per cent reduction from oil and gas represents about 1 per cent of industry’s annual capital expenditure, according to Oil and Gas Journal data, or costs less than one cent per Mcf of gas produced.

“Curbing highly potent methane emissions offers a huge, untapped opportunity to better protect the climate now,” said Drew Nelson, Senior Manager, Environmental Defense Fund. “ICF’s new report confirms that Canada can gain substantial greenhouse gas reductions using simple, cost-effective solutions to control methane emissions. Even during these challenging economic conditions, methane reductions are one of the lowest-cost, highest-value ways to tackle climate change in the energy business today.”

“This analysis clearly demonstrates that controlling methane emissions is an important opportunity to cost-effectively contribute to meeting our climate change objectives,” said Chris Severson-Baker, Alberta Director, Pembina Institute. “With both Alberta and B.C. in the process of updating their climate plans, now is the perfect time to implement rules that require methane emissions to be reduced significantly.” 

“When methane leaks from oil and gas facilities, operational efficiency can suffer,” said Mike Shorts, President of the Fluid Sealing Association, a membership group of companies in the methane mitigation sector, and Vice President and General Manager of Triangle Fluid Controls, a sealing product manufacturer based in Belleville, Ontario. “This report outlines the clear opportunity Canadian oil and gas companies have to prevent product waste with simple and cost-effective fixes, while supporting good-paying jobs for Canadians who manufacture the technologies and deliver the services that curb emissions.”

Achieving the 45 per cent reduction in oil and gas methane relies on the sector implementing currently available technologies and processes for reducing and recovering emissions. Furthermore, the analysis shows that 90 per cent of the emissions in the next five years will come from sources in operation today, and that the 45 per cent reduction is in addition to reductions that are achievable by current regulatory and projected voluntary actions by 2020. Reducing methane also reduces conventional pollutants such as volatile organic compounds (VOCs) and hazardous air pollutants (HAPs) that are directly contributing to poor air quality conditions across Alberta at no additional cost (Government of Alberta, September 9, 2015).

The report, titled “Economic Analysis of Methane Emission Reduction Opportunities in the Canadian Oil and Natural Gas Industries,” is based on data from numerous sources, including oil and gas producers, equipment vendors, governments and regulators, academics experts and trade associations, and has been peer reviewed by multiple experts in the Canadian oil and gas industry. The report uses Canadian-specific data supplemented by U.S. data where Canadian data is unavailable. The U.S. EPA Greenhouse Gas inventory and the Greenhouse Gas Reporting Rule are used in conjunction with Canadian reports to develop emission factors and equipment and facility information for Canadian segments.  

Why Methane Matters

Natural gas is over 95 percent methane and is a potent greenhouse gas contributing to climate change, because its short-term impact is many times greater than carbon dioxide.  According to data from Canada’s greenhouse gas inventory, oil and gas methane emissions are one of Canada’s largest sources of greenhouse gas emissions and are almost double the size of the next largest source of methane in Canada. 

ICF’s report, “Economic Analysis of Methane Emission Reduction Opportunities in the Canadian Oil and Natural Gas Industries,” is available here. This new Canadian analysis builds on and complements other work undertaken by EDF and the Pembina Institute to help advance methane science and provide deeper understanding of methane emissions from the oil and natural gas supply chain, in order to advance information about opportunities to reduce methane emissions. Learn more about EDF’s methane research series here.