Proposed methane regulations

A significant step in addressing climate change in Canada

June 2017

cover image - natural gas venting

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Overview

  • Canada’s commitments
  • What is methane and why Environment and Climate Change Canada (ECCC) is regulating
  • Oil and gas emissions
  • Proposed regulatory coverage
  • Proposed regulatory approach
  • Regulatory impact analysis
  • How to provide comments

Canada’s commitments

  • In the March 2016 Canada-U.S. Joint Statement on Climate, Energy and Arctic, the Prime Minister announced:
    • Canada will reduce methane emissions from the oil and gas sector by 40-45% by 2025 relative to 2012 levels
    • ECCC will publish proposed regulations to reduce methane emissions from new and existing oil and gas sources in early 2017
    • Regulations will be developed in collaboration with provinces/territories, Indigenous Peoples and stakeholders
  • In December 2016, the Pan-Canadian Framework on Clean Growth and Climate Change reiterated Canada’s commitment to reduce methane emissions from the oil and gas sector by 40-45% by 2025.

Methane is a significant greenhouse gas (GHG)

What is it?

  • Colorless, odorless, flammable gas
  • Primary component of natural gas
  • Global warming potential 25 times greater than carbon dioxide (CO2) over a 100-year period
  • Short-lived climate pollutant – relatively short lifetime in the atmosphere and with a warming influence on climate
  • 15% of Canada’s 2012 GHG emissions were methane

Canada's 2014 Total Methane Emissions (110 megatonnes [Mt] of carbon dioxide equivalent [CO2e])

Canada's 2012 Total Methane Emissions (110 Mt CO2e) (See long description below)
Long description of Graphic 2

Sector: Oil and Gas, 44% = 48 Mt CO2e; Agriculture 26%; Other Industries 22%; Electricity 6%; Transportation 2%; Waste and Others 0%; and Commercial and Residential 0%.


Oil and gas methane emissions across Canada (2012)

Oil and gas methane emissions across Canada (2012) (See long description below)
Long description of Graphic 3

Yukon, Northwest Territories, Nunavut, Newfoundland and Labrador, Prince Edward Island, New Brunswick and Nova Scotia = 0 - 55 kt CO2e; Manitoba, Quebec and Ontario = 56 – 1,250 kt CO2e; British Columbia = 1,251 – 2,500 kt CO2e and Alberta and Saskatchewan = 2,501 – 26,000 kt CO2e.


Proposed regulatory coverage

  • The proposed regulations cover over 95% of oil and gas methane emission sources:
    • Natural gas production and processing
    • Oil production
    • Transmission
  • A small portion of the sector emissions are not covered:
    • Distribution
    • Refining
    • Some oil sands emissions

Canada’s Oil and Gas Sector

Canada's oil and gas sector methane emissions (2012) (See long description below)
Long description of Graphic 4

Sector: Oil production - 43%; Natural gas production and processing - 39%; Oil sands - 9%; Transmision - 5%; Distribution - 2%; and Refining 2%


Proposed regulatory approach

Regulations under Canadian Environmental Protection Act, 1999 (CEPA)

  • Methane emission limits are being proposed in 5 key areas:
    1. Fugitive emissions: equipment leaks
    2. Venting
    3. Pneumatic devices (pumps and controllers)
    4. Compressors
    5. Well completions after hydraulic fracturing
  • Requirement for corrective actions (i.e. equipment repairs, gas combustion, gas conservation)
  • Utilization of existing provincial reporting structures when possible, such as production accounting systems

1. Fugitives: equipment leaks
(34% of methane oil & gas emissions)

Implementation of a leak detection and repair program (LDAR) to detect and repair gas leaks
ElementProposed approach
Coming into force2020
CoverageLarger facilities
(facilities receiving at least 60 000 m³ of hydrocarbon gas in a year)
Frequency of inspection3 times per year
Inspection methodsInfrared cameras, sniffers, innovative methods (e.g. satellites, drones, etc.)
Timelines for RepairOffshore: 365 days
Onshore:
 within 30 days, or next shutdown
ExemptionsSingle wellheads

Piechart: 34% of methane oil and gam emissions are from leaks

Leak from a wellhead only visible with an infrared camera
Leak from a wellhead only visible with an infrared camera


2. Venting
(23% of methane oil & gas emissions)

  • Restriction on venting of gas => Reduction of venting emissions by 95%
  • Utilization of current provincial reporting activities
ElementProposed approach
Coming Into Force2023
CoverageLarger facilities (facilities receiving at least 60 000 m³ of hydrocarbon gas in a year)
Maximum allowable venting limit250 m³ / month
ExemptionsEmergency venting
Reduction methodConservation or destruction

Piechart - General venting - 23%

Intentional venting from storage tank
Intentional venting from storage tank


3. Pneumatic devices
(20% of methane oil & gas emissions)

  • Pneumatic device: automated instrument that are driven by hydrocarbon gas widely used in oil & gas industry to maintain a process condition or to pump liquids.
  • Use of non-emitting controllers for larger facilities; low-emitting (i.e. 0.17 m³/hour standard) for smaller ones
  • Use of non-emitting pumps for larger pump rates
ElementProposed approach
Coming into force2023
CoverageControllers: non-emitting if total compressor power rating is at least 745 kW; low bleed if less than 745 kW
Pumps: must not function using hydrocarbon gas for pumping rates of > 20L/day in a month
ExemptionsControllers: exemptions possible for operational needs
Pumps: exemption permits if no feasible non-emitting technology
Reduction methodConservation or destruction or replacement with non-emitting / low-bleed

Piechart - Pneumatic emissions - 20%

Pneumatic controller
Pneumatic controller


4. Compressors
(9% of methane oil & gas emissions)

  • Compressor: a mechanical device that increases the pressure of natural gas and allows the gas to be transported fromthe production site, through the supply chain and to the consumer
  • Requirement for annual measurements of compressor vents
ElementProposed approach
Coming into force2020
CoverageExisting compressors must meet limits, new compressors must conserve emissions
Limit0.17 m³/minute for centrifugal compressors;
0.023 m³/minute per rod packing for reciprocating compressors
Corrective action timelines90 days for centrifugal compressors, 30 days for reciprocating compressors
MeasurementAnnually
ExemptionNo measurement required if emissions are conserved or destroyed.

Piechart - Compressor emissions - 9%

Compressor
Compressor


5. Well completions after hydraulic fracturing
(1% of methane oil & gas emissions)

Prohibition on venting at facilities during fracturing operations at oil & gas wells

ElementProposed approach
Coming into force2020
CoverageFractured wells with high gas- to-oil ratios (>53:1)
Reduction actionconservation or destruction
ExemptionAlberta and British Columbia

Piechart - Well completion emissions - 1%

Well completion
Well completion


Regulatory impact analysis

Cost and benefits

  • Costs for oil and gas industry estimated at $3.3 billion over the 2018-2035 period.
  • Avoided climate change damages expected for proposed reductions are valued at $13.4 billion over 2018-2035 (reduction of 282 megatonnes of CO2e).
  • Value of conserved gas estimated at $1.6 billion over 2018-2035.
  • Expected net benefits of $11.7 billion over 2018-2035
  • Air quality co-benefits from the volatile organic compound (VOC) reductions (not yet factored into the cost analysis)
  • Reducing methane is the lowest cost GHG-related abatement opportunity in energy sector:
    • ECCC: estimated average cost of C$10/tonne CO2e over 2018-2030 period

Figure 1: Baseline and policy methane emissions and compliance costs by year

Figure 1: Baseline and policy methane emissions and compliance costs by year (See long description below)
Long description of Figure 1

The most significant costs would be incurred in 2023. Beyond 2023, emissions of methane would be reduced by more than 20 Mt (in CO2e) annually. In 2030, there would be net GHG emission reductions of about 20 Mt.


Table 1: Industry compliance costs by proposed standard (millions of dollars)
Proposed standard2018-20252026-20302031-2035Total
Facility production venting
749
229
222
1,201
Leak detection and repairs
187
102
85
374
Well completion after hydraulic fracturing
16
17
8
41
Pneumatic controllers and pumps
1,411
53
28
1,492
Compressors
74
45
38
157
Total
2,437
446
381
3,265

Table 2: Summary of benefits and costs
Monetized impacts (millions of dollars)2018-20252026-20302031-2035Total
Climate change benefits
3,858
4,873
4,697
13,429
Value of conserved gas
477
586
521
1,585
Total benefits
4,336
5,460
5,218
15,014
Industry compliance costs
2,437
446
381
3,265
Industry administrative costs
11
6
5
21
Government administrative costs
5
2
2
8
Total costs
2,453
454
389
3,295
Net benefits
1,883
5,006
4,895
11,719
Quantified benefits: Net GHG reduction (Mt CO2e)
80
102
100
282
Quantified benefits: Gas conserved (PJ)
184
241
238
663
Quantified benefits: VOC reduction (kt)
186
286
297
769

Qualitative benefits: Health and environmental benefits due to VOC emission reductions


How to provide comments

  • The proposed regulations have been published in the Canada Gazette, Part I on May 27, 2017.
  • The 60-day public comment period ends on July26, 2017.
  • Comments can be submitted to:

    Helen Ryan
    Director General, Energy and Transportation Directorate
    Environment and Climate Change Canada
    351 St-Joseph Boulevard
    Gatineau, QC K1A 0H3
    Email: ec.methane-methane.ec@canada.ca

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