March 3 (Bloomberg) -- Methane leaks from oil and natural gas production can be cut by 40 percent for less than 1 cent per thousand cubic feet of gas, according to a study backed by an environmental group.
By plugging leaks in compressors and pipes, producers can cut emissions of methane, a potent heat-trapping gas, according to a report set for release today by the Environmental Defense Fund and ICF International Inc., a consultancy specializing in energy and the environment. The $2.2 billion cost would be offset over time by the sale of captured gas, the study estimates.
Methane, the main component of natural gas, is 21 times more potent at trapping heat in the atmosphere than carbon dioxide, leading environmental groups to call for stricter controls to help curb climate change. Producers say they are addressing the issue and that over-regulation could slow the energy boom that has lowered prices for consumers.
“There is huge opportunity here for little or no cost,” Mark Brownstein, chief counsel for the New York-based Environmental Defense Fund, said on a conference call with reporters. “In some ways, moving industry in this direction is going to actually help industry be more productive and more profitable.”
The U.S. Environmental Protection Agency in 2012 addressed methane leaks in a rule that covered only new natural gas wells. Lobbyists for companies including Chesapeake Energy Corp. sought to delay and scale back the rule claiming that equipment needed to comply wasn’t available in sufficient quantities.
Companies were given until 2015 to meet the most stringent requirements.
“The industry has led efforts to reduce emissions of methane by developing new technologies and equipment,” Carlton Carroll, a spokesman for the Washington-based American Petroleum Institute, said in an e-mail. “Methane is natural gas, so capturing more of it helps companies deliver more energy to consumers.”
Brownstein said regulations should be expanded to include existing gas and oil wells.
“The industry is in such a rush to drill the next well, they often forget to do the right thing with the wells they’re drilling,” Brownstein said. “We’re talking to both state and fed regulators. This is an easy one to fix.”
Research estimates have differed on the extent of the problem. Earlier this month, a study funded by a foundation set up by the late George Mitchell, the engineer who pioneered the use of horizontal drilling and hydraulic fracturing, found methane leaks from drilling and transporting gas are 25 percent to 75 percent greater than estimates produced by the EPA’s models.
By implementing systems to detect and capture methane at wells and production facilities, 163 billion cubic feet of methane a year can be captured, or 40 percent of projected leaks from onshore wells in 2018, according to today’s report. Cost estimates for the cuts are based on a gas price of $4 per thousand cubic feet. Natural gas futures in the past year have averaged $3.969 per million British thermal units on the New York Mercantile Exchange.
Reaching the 40 percent target would require the industry to deploy about a dozen emissions control strategies over five years including a shift to lower-emitting valves and improved leak detection. The measures would result in about $150 million in annual savings.
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