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Trans-Alaska Pipeline
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Methane, a potent greenhouse gas, is emitted during the production and transportation of oil and natural gas. Methane emissions occur throughout the oil and natural gas supply chains—from fugitive leaks from imperfections in equipment, intentional emissions from operations and maintenance procedures, and equipment designed to bleed methane. Managing methane releases can reduce greenhouse gases in the atmosphere.

Methane Leak Management

Methane, a potent greenhouse gas, is emitted during the production and transportation of oil and natural gas. Managing methane emissions in this sector can reduce greenhouse gases in the atmosphere.

Reduce SourcesOther EnergyOther Energy-Related
19.81 to 4.5
Gigatons
CO2 Equivalent
Reduced/Sequestered
2020–2050
116.95 to 44.4
Billion US$
Net First Cost
To Implement
-47.81 to -9.45
Billion US$
Lifetime Net
Operational Savings
Research Fellow: Jay Barlow; Senior Fellow: Mamta Mehra; SeniorDirector: Chad Frischmann

Impact

Methane management in oil and gas supply chains could reduce greenhouse gas emissions by 4.50–19.81 gigatons of carbon dioxide equivalent by 2050. This analysis is based on the 100-year global warming potential equivalency of methane and draws on global estimates of the annual emissions of methane from this sector. Our estimates are conservative; the UN's Global Methane Assessment (2021) suggests that annual mitigation could be two to five times higher. Cost data for this solution set indicate that a large portion of this emissions savings can be had at low or no net cost when factoring in savings from reduced natural gas losses. 

Introduction

Project Drawdown’s Methane Leak Management solution focuses on deploying practices that reduce methane emissions in the oil and natural gas supply chains. These supply chains release methane accidentally from imperfections in equipment and intentionally from operations and maintenance procedures and from equipment designed to bleed methane for operational purposes. In many cases emissions mitigation yields natural gas that can be used as an energy product. 

Methane emissions in this sector can be managed through a number of technologies and practices. The simplest solutions on this spectrum entail finding and fixing leaks in pipes, valves, compressors, and other supply-chain components. More complex solutions include upgrading control equipment and even pipeline materials themselves in order to reduce emissions. This solution comprises many practices and technologies with varying attributes. They are all currently in use to some extent. 

Methodology

To quantify the costs and benefits of methane leak management, we 1) estimated the current technical abatement potential from literature sources; 2) estimated abatement potential for each year from 2020 to 2050 by scaling the initial value to a trajectory for the oil and gas sector as a whole; 3) defined adoption cases of varying ambition in reference to this total potential; and 4) calculated costs per unit of methane abatement. The trajectory was defined by Project Drawdown’s Integrated Electricity Generation model. 

Total Addressable Market

Based on two global data sets (IEA, 2021; US EPA, 2019), we estimated the current total addressable market as 37 million metric tons of methane per year. 

Adoption Scenarios

We developed two adoption scenarios to represent varying levels of abatement and varying scenarios with respect to the role of natural gas in the integrated electricity generation model. 

  • Scenario 1: A linear increase to 50 percent of total addressable market in 2030, followed by continued linear increase on the same trajectory until 100 percent of the total addressable market is reached, then maintaining 100 percent of total addressable market in each year thereafter (–0.18 million metric tons by 2050).

  • Scenario 2: A linear increase to 75 percent of total addressable market in 2030, followed by continued linear increase on the same trajectory until 100 percent of total addressable market is reached, then maintaining 100 percent of total addressable market in each year thereafter (–0.18 million metric tons by 2050).

Financial and Emissions Model 

A literature review yielded more than 70 methane leak management technologies and practices with varying costs and effectiveness. We have grouped these leak management technologies and practices into categories based on the International Energy Agency (IEA) and US Environmental Protection Agency (EPA) data sets and the US EPA’s Gas STAR Recommended Technologies repository. We modeled a generic abatement device with a weighted average first cost of US$1.54 billion per million metric tons of methane abatement per year installed capacity. This modeled device has a weighted average operating cost of US$74.6 million per million metric tons of methane abatement and a lifetime of 9.81 years operating full time before replacement is required. 

We applied an operating cost credit of US$4 per thousand cubic feet of natural gas to abatement measures that save usable natural gas, corrected for the methane content at the point of implementation. Each metric ton of methane abatement equals 28 metric tons of carbon dioxide equivalent reduction, based on global warming potential equivalency from the Intergovernmental Panel on Climate Change. 

Integration 

The future trajectory of the oil and gas sector, and by extension the methane emissions expected from this sector, was scaled from the share of natural gas in Project Drawdown’s integrated electricity generation model. Each adoption scenario was paired with the respective post-integration scaled total addressable market. 

Results

Total emissions reductions of 19.81 and 4.50 gigatons of carbon dioxide equivalent could be attained at a net first cost to implement of US$116.95 billion and US$44.40 billion, respectively, for Scenario 1 and Scenario 2. Lifetime operational costs are US$47.81 billion and US$9.45 billion, respectively. 

Discussion

The abatement cost indicates that this solution can be attained at low cost. This is aligned with cost-curve studies in the literature that indicate a large fraction of abatement can occur at negative lifetime cost, based on natural gas savings. 

Our estimates are conservative; the UN's Global Methane Assessment (2021) suggests that annual mitigation could be two to five times higher.

The modeling approach used here transparently presents capital and operating costs, which are not clearly reported by cost-curve studies in the literature. However, it also relies on several assumptions and estimates that must be addressed in future model versions. Chiefly, the weighted-average approach to cost modeling used here does not convey that cost per unit of abatement increases as lower-cost options are exhausted. Furthermore, the share of natural gas in our integrated electricity generation model may not be fully representative of the trajectory of the entire oil and gas sector. We present two alternative scenarios that attempt to address these considerations in the technical report. 

References

IEA. (2021). Methane Tracker Database. International Energy Agency. https://www.iea.org/articles/methane-tracker-database

UN (2021). Global Methane Assessment: Benefits and costs of mitigating methane emissions. https://www.unep.org/resources/report/global-methane-assessment-benefits-and-costs-mitigating-methane-emissions.

US EPA. (2019). Global Non-CO2 Greenhouse Gas Emissions Projections & Mitigation 2015-2050. US Environmental Protection Agency Office of Atmospheric Programs. https://www.epa.gov/global-mitigation-non-co2-greenhouse-gases