Natural Gas Emissions: Drivers of Policy and R&D

Bob Morris

Gas Technology Institute (GTI)

June 2015

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Company OverviewESTABLISHED 1941

> Independent, not-for-profit established by the natural gas industry

> Providing natural gas research, development and technology deployment services to industry and government clients

> Performing contract research, program management, consulting, and training

> Wellhead to the burner tip including energy conversion technologies

Our Staff

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Thank You to Our Members

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Addressing Key Issues Across the Energy Value Chain

Expanding the supply of clean,

abundant, and affordable natural gas

Transforming natural resources into

clean fuels, power, and chemicals

Ensuring a safe and reliable energy

delivery infrastructure

Promoting the clean and efficient use

of energy resources

REDUCING CARBON EMISSIONS TO THE ENVIRONMENT

SUPPORTING SUSTAINABLE ECONOMIC GROWTH

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Natural Gas Industry Emerging Technology Drivers

Distinct gas industry needs and opportunities, driven by key societal needs to reduce energy intensity, strive for sustainability, achieve renewable energy integration, lower carbon/methane emissions, ensure public safety, and boost economic welfare

Production Advancements to boost productivity and minimize environmental impacts

Delivery Advancements to reduce risks, replace aging infrastructure, automate operations, and minimize environmental impacts

End Use Advancements to address core markets (electric competition) and capitalize on shale gas resources to expand industrial, power, and vehicle use and realize economic and environmental gains

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“New Technology” Fundamentally Transformed U.S. Gas Market in 2008

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“New Technology” Fundamentally Transformed U.S. Gas Market in 2008

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Emissions Have Declined Even as Pipeline Miles Have Grown

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

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600

700

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1,000

1,100

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Pipeline Replacement Lowers Emissions

Estimated Potential Emissions from Main PipeInstalled Main Pipe

Million Metric Tons CO2-equivalent

Thousand Miles of Main

Source: AGA Analysis based on Department of Transportation data and EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2012

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U.S. Methane Emissions by Source

Agriculture 25% Natural Gas

Systems23%

Landfills18%

Coal Mining10%Manure Management

9%

Petroleum Systems

6%

Other9%

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Natural Gas Systems Represent a Small Share of Annual GHGs

Source: Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2012, Environmental Protection Agency

American Gas Association (AGA)

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Emissions Leakage Rates

Production130 Bcf0.41%

Processing122 Bcf0.38%

Transmission & Storage

84 Bcf0.27%

Distribution66 Bcf0.24%

Only

0.24%

of produced natural gas is emitted from

systems operated by natural gas

utilities

Approximately 1.3% of gross natural gas production (31 Tcf) is estimated to be emitted throughout the supply chain

Source: U.S. Department of Energy and U.S. Environmental Protection Agency

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Technological Advances, Industry Best Practices, and Infrastructure

Add up to a declining emissions trend

1990 2005 2008 2009 2010 2011 2012 - 5

10 15 20 25 30 35 40

33 30 30 29 28 28 26

Natural Gas Distribution Systems Methane Emissions

(Million Metric Tons of Carbon Dioxide Equiva-lent)

EPA Estimates of Natural Gas System Methane Emissions Show a Continued DeclineSource: Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2012, Environmental Protection Agency

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Are EPA’s Numbers Too High? Yes.

> We think EPA’s Inventory numbers are still too high

─ based on 20-year old emission factors

> “Bottom-up” studies

─ Measure emissions directly from specific sources

─ Multiply average measured emissions times number of widgets or miles of pipe to estimate overall emissions

> Environmental Defense Fund (EDF) Methane Studies:

─ Production: Texas University (TU)—EDF Production study published (Sept 2013) showed emissions from well completions much lower than EPA estimated

> Partly offset by higher emissions from pneumatic valves

> Net result somewhat lower than EPA Inventory estimate

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EPA OIG Report: Current Data Results in More Precise Emission Factors

Improvements made but additional data will improve accuracy

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Need to Increase Efforts to Address Fuel and Methane Emissions

> Administration releases Climate Action Plan which includes reducing emissions from the gas industry

> EPA Office of Inspector General: conducted an evaluation of what EPA has done to reduce methane emissions from distribution pipelines. Recommendations include:

─ EPA and PHMSA to work together to address methane leaks from a combined environmental and safety standpoint

─ Establish performance goals and track emissions from distribution sector

─ Assess whether data from current studies should be used to update emission factors. Work with research community to update the distribution sector emission factors

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Major Industry Initiatives: Guidelines

> AGA Natural Gas Emission Reduction Guidelines─ Approved by AGA Board – May 17, 2014

─ Outlines voluntary practices for continuing the downward trend in emissions, focusing on safety and system integrity

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Major Industry Initiatives: Guidelines

> List of 8 practices (not all are applicable everywhere)

1. Modernize Distribution Systems – replace cast iron, bare steel, or

other pipe based on fitness for service, at a pace approved by

state utility commission

2. Replace High Bleed Pneumatic Devices

3. Damage Prevention Programs

4. Reduce Venting during Blow Downs

5. Annual System Inspection and maintenance

6. Composite wrap to repair non-leaking pipe defects, to avoid

venting the line

7. Encapsulate or replace joints

8. Modernize systems by lining existing pipe as appropriate

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Benefits of GTI Methane Emissions and Detection Program

> Goal

─ Facilitate the reduction of methane emissions by developing methods, processes and new technologies to detect, quantify and reduce emissions

> Safety

─ Enhance safety for employees, customers and general public through better detection of leaks and reduced emissions

> Environmental

─ Reduce GHG emissions and overall carbon footprint

─ Maintains social license to operate

> Economic

─ Prioritize leaks and repair

─ Reduces lost gas

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Defining the Problem: More Accurate Emissions Information

> GTI is…

─ Developing a methodology for calculating methane emissions that will provide an increased level of accuracy

─ Providing technical validation of methodologies and emission data

─ Coordinating work with AGA, EPA, and other appropriate stakeholders

> Method is based on leak measurements made at the surface using current technology, Hi-Flow Sampler

> Emission estimates will be based on leak rates and company specific leak records

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Distribution Pipeline Emission Factors

> Value: Current estimates for methane emissions are based on outdated data and practices

─ Improving emission factors will provide a more accurate representation of a utilities emissions profile and satisfy regulatory requirements of EPA requirements in 40 CFR Part 98 Subpart W

> Objective: Collect field data from distribution pipeline leak rates to revise the emission factors for plastic pipe, cast iron and unprotected steel

> Revised Emission Factors for Plastic Pipe

> Cast iron and unprotected steel: Collecting field data to revise emission factors

Revised Plastic Pipe EF 3.72 scf/leak-hr

GRI/EPA 1996 Plastic Pipe EF 12.45 scf/leak-hr

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Emerging Technology for Low-Cost Methane Sensing

> Better data collection and measurement of methane emissions will enable quicker emission reductions by:

─ Providing an accurate count of emissions

─ Ranking high priority sources

> Low-cost methane sensing technologies can enable wide spread deployment for all infrastructure assets

> In collaboration with RedWave Energy, 3M and Desert Research Institute, GTI is developing a measurement system based on Terahertz (THz) technology to detect methane in conjunction with signal processing and advanced computational fluid dynamics (CFD) to estimate the location and intensity of methane leaks

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Prioritizing Leaks Based on Safety and Environment

> Concentration of methane does not tell the entire story

> Traditional leak survey equipment can be used to initially locate

suspected leaks

> Prioritize leaks based on safety and emission/leak rates

> Allows for the optimization of methane emission reductions through

leak repair and main/service replacement programs

OTD is developing an inexpensive and repeatable device that can provide a coarse measurement of the gas leakage rate in the field while investigating leaks on distribution piping

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Industry Needs and Next Steps for GTI and OTD

> Continuous improvement in the quantification of distribution sector

emissions to enable accurate utility level tracking of emission profiles

─ Build robust data set of leak emission characteristics to better

quantify methane emissions

─ Implement utility specific methodology to establish baseline emission

profiles and quantify subsequent reductions

> Leak survey technology that will enable prioritization based on safety

and environment

> Continuous monitoring of leaks (e.g., high consequence areas)

> Mapping of leak detection and repair

> Real-time imaging of low ppm gas distribution leaks during leak

surveys

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EPA Proposed 111(d) CO2 Rule for Existing Power Plants

> AGA not commenting on how to set the state emission reduction goals

> AGA is advocating for flexible compliance options:

─ Natural gas not just for power plants

─ Reduce cost by looking outside the fence for compliance:

> Demand side management> Renewable Energy, and yes…> Natural Gas for homes and businesses

> Natural gas used for direct thermal load

─ heating water and space

─ Cuts net CO2 emissions by 50% on average

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End-use technologies for the next-generation.

Highly efficient and low emission factor.

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Direct Use of Natural Gas…the Clean, Efficient Energy Choice

> The direct use of natural gas in America’s homes and businesses maintains about 92% of its usable energy, and a household with natural gas versus all-electric appliances produces 37% lower greenhouse gas emissions

> Converting natural gas or any other fossil fuel into electricity to power comparable electric end-use products and appliances only maintains 32% of usable energy

Consumers can save on their monthly utility bills through converting their households to natural gas

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End-Use Technology

> Water Heating> Space Conditioning> Commercial Food Service> Industrial Processes> Power Generation/CHP> Transportation

UTD Working Groups

> Energy Efficiency> Renewable Energy and Alternative Fuels> Environmental> Smart Energy Future

Crosscutting

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U.S. DOE Mandate

The New DOE Standards for Manufacturers (Effective April 16, 2015)

Product Class Rated Storage Volume Energy Factor

Tank Gas Water Heaters

20-55 gallons 0.675

56-100 gallons 0.8012

Electric Tank Water Heaters

20-55 gallons 0.96

56-120 gallons 2.057

Tankless Gas Water Heaters

Less than 2 gallons 0.82

Tankless Electric Less than 2 gallons 0.93

Tank Oil Water Heaters 50 gallons or less 0.68

Table Top Water Heater 20-100 gallons 0.93

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The Answer:The Gas Heat Pump Water Heater

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The U.S. DOE Mandate

> Submitted February 2015

> 996 page document

> APGA, AGA to file documents to stop implementation documentation supported by GTI technical analysis.

> Scheduled to become efficiency standard early 2016 with 5 year trigger to 2021implementation

> 92% condensing furnace nationwide

92% Efficient Home Furnace

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Tackling Important Energy Challenges and Creating Value for Customers in the Global Marketplace

Bob Morris

Manager, Business Development, GTI

robert.morris@gastechnology.org

469-223-5951

www.gastechnology.org

@gastechnology