Methane emissions can fall, but oilpatch needs to see fine print
Lack of details and money are obstacles for oil and gas sector to reduce harmful emissions
Alberta's oilpatch could start tackling harmful methane emissions, but must first wait for details from government.
A strategy to reduce methane was included in Alberta's climate plan and further action was taken by the federal government as Prime Minister Justin Trudeau and U.S. President Barack Obama struck an agreement last week to set a goal to cut the emissions.
Private companies are now waiting to see the fine print.
How that is implemented is tremendously important- Yvan Champagne, Blue Source Canada
"Details in our industry really, really matter," said Yvan Champagne with Blue Source Canada, a Calgary-based company that sells carbon offsets and develops greenhouse gas reduction projects. "The longer we wait for those rules the longer you are delaying any action."
Methane is considered the logical first step to reduce greenhouse gases because it is more potent than other emissions and more cost-effective to capture. Technology already exists to reduce methane emissions. While some companies already capture their leaks and control methane, for some there hasn't been enough financial incentive to make the changes.
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Since most oil and gas companies don't have any money to spare right now, Champagne hopes new government incentives will create an opportunity for a company like his to pay the upfront costs of new equipment to reduce methane gases for oil and gas producers. It's not clear whether government policy will entice companies to take action or force industry's hand.
"How that is implemented is tremendously important," he said. "We're looking to deploy a significant amount of money in this sector to pay for those reductions. But we can only do that if we have certainty that the reductions we will be creating are going to have value and we will be able to credit them."
Champagne says his company wants to invest between $70-100 million over the next three years to reduce methane emissions in Alberta.
Methane gases in 2013 from Alberta's oil and gas sector were 30.4 megatonnes, according to the provincial government. The oil and gas industry accounted for 70 per cent of provincial methane emissions and methane accounted for 25 per cent of total emissions from the oil and gas sector.
It is very difficult to assess the cost until you see the policies- Jackie Forrest, ARC Financial
The province already provides some offsets to promote methane reductions. Its new goal is to reduce methane emissions by 45 per cent by 2025 through design standards and increased measurement and reporting of venting and fugitive emissions.
"There is this leaking methane problem. I think we will learn more about it," said Jackie Forrest, with ARC Financial. "We have a reduction target of 45 [per cent], but I don't think we even know exactly how much we have. So we have to measure that and figure out how to reduce and it will cost the industry some money."
Forrest says methane emissions are the near term cost for companies, while carbon pricing is a longer term expense for industry.
"It is very difficult to assess the cost until you see the policies roll out over the next year," she said.
To reduce methane emissions some companies may choose to replace equipment or decide to capture leaks on tank tops, for instance.
The cash crunch for companies big and small in the oil and gas sector can't be ignored as governments try to improve environmental performance.
"It's more challenging to invest in infrastructure that might help to lower your carbon footprint when you have an economy that is struggling," said Arlene Strom, a vice president of sustainability for Suncor Energy.
Canada is the fourth largest oil and gas methane emitter in the world.