BHGE: Innovating to a Cleaner Climate

BHGE: Innovating to a Cleaner Climate bhge.com Managing methane: how tech can help oil and gas recover $30bn1 in revenue The oil and gas industry is under pressure from shareholders and regulators to cut methane emissions, but new technology and evolving economics are making change more likely. Methane emissions have 80 times the climate-change effect of The irony is that methane has value. If captured instead of emitted carbon dioxide (CO2) over a 20-year timeframe, and are responsible it could be sold as natural gas—a cleaner energy source than for a quarter of today’s global warming2. The oil and gas sector is coal – or used in chemicals manufacture. By some estimates, this responsible for a quarter of this output and is under increasing could recoup as much as $30bn for the industry, but the oil and gas pressure from shareholders, consumers and regulators to improve sector points out that the upgrades required to capture and take environmental practices. In addition to that, costs of oil and gas financial advantage of methane that would otherwise be released processing are increasing, in the form of regulatory penalties, would often cost more than the value of the gas collected. emissions taxes, and so on, while the industry must also cope with the ‘easy reserves’ having been reached already. Now, new technologies, such as drones and advanced sensors, are making it easier to monitor leaks and cut emissions, putting the industry in a position to recover the lost revenue that each year’s methane emissions represent. Vents, flares, and fugitives To take advantage of changing technologies, and allay shareholder Finally, there are fugitive emissions – unintentional releases from and regulatory pressure, different approaches are needed leaks or faults. Companies often do not know the extent of these depending on the types of emissions involved. Vented emissions until a fault is discovered, and they may leave repairs until the are released deliberately, usually for safety reasons, such as next scheduled maintenance because an emergency fix is not cost when methane builds up in tanks of liquid gas, or when it is used effective. EPA regulations4 state that repairs must be conducted to move mechanical parts in plants that have no other power within 30 days of finding a leak. Fugitive emissions are not sources. Removing the need for venting typically requires costly monitored as strictly as venting and flaring, but some estimates plant changes so that methane that builds up in storage tanks, for suggest that more than two percent5 of all gas produced is lost example, can be captured and transported long distances to where through leaks. it could be put to profitable use. Some of these leaks are obviously costly, such as the Aliso Canyon Flaring is the process of burning excess or unwanted methane, leak of 2015-16, which had an estimated cost of more than $1bn6. turning it into CO2. Often, because methane is inexpensive, it And yet, estimates suggest that up to half of all methane leaks is blown down pipes to clear them of accumulated debris and could be fixed profitably7, or at no cost. Research puts the lost blockages, and burnt off later. Here, too, the challenge is to make revenue at more than $30bn, or around 3 percent of global natural it cost effective to collect, store and transport the flare gas, rather gas production8. than burn it off. The industry is now putting more emphasis on reducing flare. For instance, the Oil and Gas Climate Initiative3, which counts more than a dozen major oil and gas companies as members, has declared a target of zero routine flaring by 2030. 1 https://rhg.com/research/untapped-potential-reducing-global-methane-emissions-from-oil-and-natural-gas-systems/ 2 https://www.sciencedirect.com/science/article/pii/B9780128118740000052 3 https://oilandgasclimateinitiative.com/policy-and-strategy/#our-agenda 4 https://www.epa.gov/sites/production/files/2016-09/documents/nsps-overview-fs.pdf 5 https://www.cnbc.com/2018/07/06/the-us-natural-gas-industry-leaking-way-more-methane-than-ever-before.html 6 https://www.reuters.com/article/us-sempra-alisocanyon-natgas/socalgas-raises-estimated-cost-of-aliso-canyon-natgas-leak-to-1-07-billion-idUSKCN1SE27E 7 https://www.iea.org/weo2017/ 8 https://rhg.com/research/untapped-potential-reducing-global-methane-emissions-from-oil-and-natural-gas-systems/ 2 of 4 BHGE: Innovating to a Cleaner Climate Decreasing methane release Various technological approaches are now focused on either based sensors, such as BHGE’s LUMEN equipment, provide a more reducing emissions or capturing more of the released methane. complete picture of what is happening. A drone can survey a site One option is improving flaring efficiency so that a greater more quickly than a manual inspection and detects methane leaks percentage of the methane is turned into CO2. BHGE’s FlareIQ using an optical gas-imaging camera and laser imaging. The ground advanced control algorithm can help customers by measuring sensors create a continuous, wireless monitoring network around features of the flare, such as temperature, velocity and pressure, a site – inside and outside – and give customers feedback on the then control flare-assist systems to optimize efficiency. When methane leaks they find, anywhere on the site. flare systems are not present, it provides transparency into operations so plants can improve the efficiency of their processes. In one example, a Canadian oil and gas company wanted to understand why one of its plants experienced more fugitive Improved flaring can cut up to 12,100 metric tons of CO2 equivalent emissions per flare annually. emissions in summer. The problem was severe enough that the gas was getting into the air-conditioning system and forcing regular Another solution under consideration is to improve leak detection shutdowns. A sensor network would have helped it trace the so that fixes can be implemented more quickly. Ground and drone- source of the problem more quickly. Methane pressure builds Now, it is not just technology that is providing an incentive to In March, after months of pressure, ExxonMobil announced a 40 better tackle leaks, but shareholder action, too. Investors in listed percent reduction in methane leaks over 18 months. Its investors, companies in every sector are bringing resolutions calling for including New York State, want more; they are continuing to push improved environmental action, such as lower emissions. It is not for an independent chairman11. just a question of sustainability, but increasingly one of long-term viability; companies right across industry are understanding Other energy companies, including Norwegian firm Equinor and that future growth and prosperity are becoming more linked to US company Chevron, have faced similar challenges from investors 12 environmental, social and governance practices. and there is no reason to think these will cease . Shell has recently agreed to link executive pay to emissions Across oil and gas, executives are increasingly determined to targets, following pressure from investors including the Church of tackle emissions. Fortunately, the technology now exists to help England9. Similar pressure led to BP agreeing, in February 2019, them do so more cheaply – and there are billions of dollars in to publish more details of how its operations, including emissions rewards to be collected. policies, align with the Paris climate agreement10. 9 https://www.ft.com/content/de658f94-f616-11e8-af46-2022a0b02a6c 10 https://www.theguardian.com/business/2019/feb/01/bp-to-explain-how-business-chimes-with-paris-climate-agreement 11 https://www.ft.com/content/5acb32f8-6f4a-11e9-bbfb-5c68069fbd15 12 https://www.ft.com/content/baffdc7a-6656-11e9-9adc-98bf1d35a056 3 of 4 BHGE: Innovating to a Cleaner Climate About the Author Diarmaid Mulholland Vice President, Measure and Sensing, Baker Hughes, a GE company Watch us on YouTube For more information, feel free to contact us here: industrial.ai/contact bhge.com Copyright 2020 Baker Hughes Company. All rights reserved. GEA34348 (08/2019).

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