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Methane reduction sparks a business opportunity

Innovation brings together specialists to create a win-win program

Reducing methane emissions from operating equipment is a key way to lower greenhouse gas (GHG) emissions at oil and natural gas sites. The Alberta and federal governments have set a target to reduce methane emissions in Alberta by 45 per cent from 2014 baseline levels, by 2025. But with the current low price of natural gas, it’s a challenge for producers to make the expensive upgrades that may be needed to achieve this goal.

Enter the Bluesource Methane Reduction Program, which swaps high-emitting pneumatic controllers for lower-emitting equipment – at no cost to the operator. The program is so unique and innovative it earned an Energy Excellence Award from June Warren Nichols (JWN), publishers of the Daily Oil Bulletin.

Bluesource was established in the early 2000s in Salt Lake City, Utah, and has been a leader in creating projects for the voluntary and compliance carbon markets across North America. In the Alberta case, the company saw a business opportunity that also benefits the environment, and helps oil and natural gas operators in the province achieve regulatory compliance.

It’s all about controllers

“Pneumatic controllers use natural gas to perform process and operational control at oil and natural gas wellsites, batteries, and other small facilities,” explains Kelsey Locke, manager, Methane Program. “Once the natural gas within the system has done the job of opening or closing a valve, it’s vented to the atmosphere uncombusted. These small venting events release methane.”

Equipment manufacturers estimate that, on average, each controller emits approximately 60 tonnes of carbon dioxide equivalent (CO2e) annually – about the same as emissions from 15 vehicles – and Locke estimates there are 70,000 to 120,000 such controllers throughout Alberta. That’s a lot of methane, and a huge opportunity to reduce emissions with some simple changes.

How the program works

“We’re not equipment suppliers or installers, we’re carbon offset managers,” Locke says. “We pull together partners and create a program to replace high-venting natural gas-driven controllers with devices that reduce venting by up to 95 per cent, to perform the same function.”

She notes such controllers are not new technology, in fact they’re quite common. Natural gas has typically been used to power equipment at small and remote installations because of availability and low cost.

The Bluesource Methane team first develops an inventory of an operator’s high-emitting controllers, determines which could be retrofitted, and creates a work plan. Logistics, delivery, and installation are done by third-party partners. Bluesource Methane then tracks the emission reductions and registers carbon offset credits within the Alberta Emission Offset system, currently worth approximately $20 per tonne of CO2e. Bluesource is able to provide this service at no cost through the sale of offset credits. Once the cost of the new controllers has been recovered, Bluesource shares the ongoing credit revenue with the producer.

Results to date

Pine Cliff Energy Ltd. is among the program’s participants. Says Heather Isidoro, vice-president, Business Development, “We’re a small natural gas producer and with the current price of natural gas it was hard to justify spending money to replace legacy equipment. When Bluesource approached us, we were intrigued with their program because we didn’t have to put up any capital and could reply on their expertise in tracking and reporting emission credits. We also don’t have the time, resources or personal to manage and track a replacement program, which would have been either difficult or expensive to do on our own.”

To date, Bluesource Methane has swapped out 369 units in Pine Cliff’s Ghostpine, Viking and Edson fields. That’s resulted in 2,000 to 2,200 tonnes of CO2e reduction per month, equivalent to taking 467 cars off the road. Isidoro says the company expects ongoing carbon credits to generate a nice revenue stream in the future.

But the overall program is showing even bigger success. Waheed Zaman, Environmental Engineer for Bluesource, says, “At the current rate of swapping old controllers for new ones, we believe our program will reduce Alberta’s methane emissions by two to three million tonnes by the end of 2022. We’ve accomplished about 5,200 swap-outs to date, with 20 producers participating in the program.”

The ultimate goal is to replace 7,000 units across Alberta, but Locke says the program could hit 10,000 swap-outs. Based on the program’s success in Alberta, Bluesource Methane is exploring expansion to B.C., Saskatchewan and eventually the U.S. and international countries.

Congratulations to the Bluesource Methane Reduction Program, not only for receiving an Energy Excellence Award but also for innovating and facilitating a win-win program.

Bluesource Methane staff (left to right) Alex Fritz, Kelsey Locke, Yvan Champagne (CEO), Alexis Rogers, Dave LaBarre, Waheed Zaman after receiving an Energy Excellence Award in May 2019. Photo courtesy JWN.
In this article, Context speaks with:
  • KL
    Kelsey Locke
  • HI
    Heather Isidoro