Study says potent greenhouse gas could be partially cut for 'near zero' cost

Canada’s oilpatch could get a big head start on reducing emissions of a powerful greenhouse gas for a "near−zero" cost, says an academic study on the price of methane reduction.

"Industry, as a whole, doesn’t suffer," said David Tyner, a Carleton University professor whose analysis was presented recently at a conference in Ottawa on the issue.

The federal government and Alberta, with industry support, have announced plans to reduce methane emissions by up to 45 per cent by 2025. But the industry disagrees with government estimates of how much that would cost.

Methane is a greenhouse gas considered about 30 times more potent than carbon dioxide. Reducing emissions by sealing off leaks and other releases during energy extraction is considered to be one of the easiest and most cost−effective ways.

Alberta is still considering its approach, but Ottawa released draft regulations in the spring.

The Canadian Association of Petroleum Producers, which supports the reduction goal, has already said the federal plan would cost many times more than Ottawa’s estimate of $1.7 billion over 18 years. It says thousands of jobs are at risk if the regulations are poorly drafted.

The issue became murkier recently when new research suggested that Canada’s actual methane emissions are twice what has been reported.

Tyner, who did the cost analysis with Carleton colleague Matthew Johnson, said reported emissions could be significantly brought down at a minimal cost and, in turn, reduce the overall cost of tackling unreported releases.

"The costs are potentially significant," Johnson said. "But if we’re getting more than our share from ... reported (emissions) — and it’s really not costing much of anything — then maybe that takes some of the overall cost burden away."

Release of about 250,000 tonnes of methane is reported every year in Alberta. That’s equivalent to emissions from more than one million passenger cars.

Johnson and Tyner considered about 9,400 oil sites in their study, including individual heavy oil wells pumping away in farmers’ fields to large oil batteries.

They looked at the cost for a range of mitigation methods such as capturing methane and directing it into a pipeline or burning it in a flare.

They concluded those methods could reduce Alberta’s total methane releases from conventional oil and gas by about nine per cent for almost no cost, calculated over 10 years.

Including larger emissions improve the economics. Johnson and Tyner found methane releases could be cut by as much as one−third for an average cost to industry of roughly one dollar a tonne.

No site would have to pay more than $30 a tonne. That’s in line with the eventual cost of carbon under Alberta’s carbon tax framework. A small number of sites actually would earn extra profit if their flared and vented gas were captured and sold.

Environment Canada says its proposed rules would cost about $3.3 billion over 18 years, offset by $1.6 billion in recovered and saleable gas.

Industry pegs the tab at $4.1 billion over eight years and says it needs greater flexibility on the rules to make methane reduction goals feasible.

Both estimates are based on reductions of reported and unreported emissions. Unreported releases — such as leaky valves — come during production and, until recently, have only been estimated.

In October, Johnson released a study using measurements from an airplane to try to put some hard numbers on those estimates. He found heavy oil sites were releasing 50 per cent more methane than what had been suggested.