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Canada takes methane emissions reduction lead

The country’s oil and gas industry, often maligned for an overall high carbon footprint, is setting the pace on a GHG hot button issue

The Canadian government is forging ahead with its commitment to reduce methane emissions with regulations that came into effect at the start of this year, putting the country at the forefront of global efforts to clean up oil and gas production. 

Methane, the main component of natural gas, is a powerful, albeit relatively short-lived, greenhouse gas (GHG) when released directly into the atmosphere. This regulatory move could help open new markets for Canada’s oil and gas exports among environmentally conscious energy consumers in places like Japan and Europe. 

The new regulations require the oil and gas sector to slash methane emissions by 40 and 45-45pc from 2012 levels by 2025. To try to achieve these goals, Ottawa is targeting so-called fugitive leaks from oil and gas facilities, venting during normal production activities, and venting from well completions involving hydraulic fracturing of tight geological formations. 

“Reducing methane emissions is the lowest cost GHG reduction opportunity in the energy sector,” according to the federal government. “Through these regulations, Canada’s oil and gas sector will become a global leader in responsible energy production.” 

A paper published in the journal Science in August 2018 found that GHG emissions from global oil and gas production could be cut by almost a quarter if other producing countries adopted regulations similar to Canada’s—even before its new methane emission regulations. 

Ironically, the geneses of Canada’s stringent new regulations were Obama-era ones in the US, which the Trump administration is currently rolling back. In May 2016, the then US president announced the first-ever federal regulations on methane emissions—including monitoring fugitive emissions from wells, pipelines and storage facilities—and formal reduction targets for new or modified oil and gas wells. 

The Obama administration’s goal was to expand these regulations to existing facilities as well, decreasing the industry’s methane emissions by as much as 45pc below 2012 levels by 2025, a target the Canadian government subsequently agreed to match. 

Last August, the US Environmental Protection Agency (EPA) announced plans to repeal President Obama’s regulations on methane emissions for the country’s oil and gas industry. “EPA’s proposal delivers on President Trump’s executive order and removes unnecessary and duplicative regulatory burdens from the oil and gas industry,” said EPA Administrator Andrew Wheeler at the time. 

The geneses of Canada’s stringent new regulations were Obama-era ones in the US, which the Trump administration is currently rolling back

The Canadian government is in negotiations with three major producing provinces—British Columbia (BC), Alberta and Saskatchewan—to allow their oil and gas industries maximum regulatory flexibility to minimize the cost of meeting the strict new targets. 

BC at the vanguard 

BC is thought to be closest to cutting a deal with Ottawa on an alternate regulatory regime, which is perhaps not surprising as the province has had the strictest methane emission reduction regulations among producing provinces in the past. 

The fledgling BC LNG industry is planning to produce the “cleanest” gas in the world—in part to try to provide it with a competitive advantage over projects in other countries, especially as the global environmental lobby is increasingly bringing into question whether new projects will remain economic over their planned 40-year lifespans. 

Oil and gas producers in BC, where the majority of the massive Montney shale formation is situated, must by law follow a method of “green completions” to capture blowback and prevent venting when a well is first fracked and put into production. This has helped lower the province’s methane emissions intensity to 0.3pc, according to the BC government. The US’ EIA estimates that global average methane emissions from gas production is 1.7pc, and 1.3pc for US gas production. 

In addition, some companies producing gas from the Montney, such as Shell, have installed electric actuator valves, instead of pneumatic valves that release methane every time they are activated. Shell estimates methane emissions from its Groundbirch operations to be a mere 0.1pc of gas production.

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