Quantifying!cost.effectiveness!

of!systematic!Leak!Detection!

and!Repair!Programs!using!

Infrared!cameras!

CL#report#CL)13)27

PREPUBLICATION!DRAFT

Subject!to!final!copy!editing!

24!December!2013
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This!report!was!prepared!by!Carbon!Limits!AS.!

Project!title: Marginal!Abatement!Cost!Curve!for!reduction!of!methane!emissions!from!US!Oil!

Production!and!Natural!Gas!Systems

Client: Clean!Air!Task!Force!(CATF)

Project!leader: Stephanie!Saunier

Project!members: Torleif!Haugland

Anders!Pederstad

Report!name: Quantifying!costHeffectiveness!of!systematic!Leak!Detection!and!Repair!

Programs!using!Infrared!cameras

Report!number: CLH13H27

Finalized: December!2013

This!document!is!issued! for!Clean!Air!Task!Force.!We!accept!no!responsibility! for! the!consequences!of!

this!document!being!relied!upon!by!any!other!party,!or!being!used!for!any!other!purpose,!or!containing!

any!error!or!omission!which!is!due!to!an!error!or!omission!in!data!supplied!to!us!by!other!parties.

Reproduction!is!authorized!provided!the!source!is!acknowledged.!!!

Pre)publication#draft#note:!!This!draft!is!subject!to!final!copy!editing!for!clarity!and!phrasing.!!Analysis!

and!results!are!finalized.!!

Special!thanks!to!the!two!companies!who!provided!the!survey!data!used!for!this!study!H!for!their!

continuous!support!and!precious!information!provided!during!the!course!of!the!study.

GREENPATH!Energy!LTD

http://www.greenpathenergy.ca/

Target!Emission!services

http://www.targetemission.com/

About#Carbon#Limits#AS

Øvre!Vollgate!6

NOH0158!Oslo

Norway

www.carbonlimits.no

Registration/VAT!number:!NO!988!457!930

Carbon!Limits!is!a!consulting!company!with!long!standing!

experience!in!climate!change!policies!and!emission!reduction!

project!identification!and!development.!Our!team!works!in!

close!collaboration!with!industries,!government,!and!public!

bodies!to!reduce!greenhouse!gas!emissions,!particularly!in!the!

oil!and!gas!sector.
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CONTENT

EXECUTIVE#SUMMARY ......................................................................................................................... 4

OVERVIEW.................................................................................................................................................. 4

MAIN!RESULTS ............................................................................................................................................ 4

Economic!assessments!–!Individual!facilities ...................................................................................................... 5

Economic!assessments!–!Aggregate!cost!effectiveness!of!LDAR!programs........................................................ 6

1. INTRODUCTION ........................................................................................................................... 9

2. DATA#SOURCES#AND#ANALYTICAL#APPROACH ............................................................................. 9

2.1 DATA!SOURCES!AND!LEAK!RATES ........................................................................................................ 9

2.2 METHODOLOGY!AND!ASSUMPTIONS ................................................................................................. 12

2.2.1 Analytical!approach............................................................................................................................. 12

2.2.2 Assumptions,!base!case!approach,!and!sensitivity!analyses............................................................... 13

3. SUMMARY#OF#THE#ANALYSIS..................................................................................................... 14

3.1 ECONOMIC!ASSESSMENT!H INDIVIDUAL!FACILITIES ............................................................................... 14

3.2 AGGREGATE!ABATEMENT!COST........................................................................................................ 16

3.3 COMPARISON!OF!DIFFERENT!APPROACHES!FOR!LDAR!PROGRAMS ......................................................... 17

3.3.1 Impact!of!different!repair!strategies................................................................................................... 17

3.3.2 Impact!of!the!frequency!of!surveys .................................................................................................... 19

4. CONCLUDING#REMARKS ............................................................................................................ 22

4.1 MAIN!FINDINGS ............................................................................................................................ 22

4.2 HOW!ROBUST!ARE!THE!RESULTS? ..................................................................................................... 22

APPENDIX#1:#LDAR#COSTS .................................................................................................................. 25

APPENDIX#2:#LEAK#RATE#PER#COMPONENT#TYPE#AND#PER#FACILITY#TYPE .......................................... 25

APPENDIX#3:#GAS#COMPOSITIONS ..................................................................................................... 26

APPENDIX#4:#COMPARISONS#WITH#PAST#WORK................................................................................. 26

EMISSION!RATES ........................................................................................................................................ 26

ECONOMIC!ATTRACTIVENESS!OF!LEAK!DETECTION!AND!REPAIR ........................................................................... 28

REFERENCES....................................................................................................................................... 29
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EXECUTIVE&SUMMARY

Overview&

About!30%!of!the!US!anthropogenic!methane!emissions!originate!from!the!oil!and!gas!sector.!Emissions!

are! partly! leaks! and! partly! engineered! vents.! According! to! data! presented! by! the! US! Environmental!

Protection!Agency!(EPA),!16%!of!the!methane!emissions!in!the!onshore!production!sector!are!leaks!(2),!

which! here! means! fugitive! leaks! past! static! seals! such! as! on! valves,! connectors,! regulators,! or! other!

components.! This! report! presents! results! from! an! empirical! analysis! of! real! data! on! the! costs! and!

benefits!of!leak!detection!and!repair!(LDAR)!programs!for!oil!and!gas!sector!leaks.!LDAR!programs!at!oil!

and!gas!facilities,!in!this!case!using!infrared!cameras,!detect!sources!of!gas!emissions,!which!in!addition!

to!methane!include!volatile!organic!compounds!(VOCs).!Once!emission!rates!are!measured!or!estimated,!

repairs!can!be!conducted,!reducing!emissions!by!90%!or!more.!The!economic!merits!of!a!LDAR!program!

depend! on! the! amount! and! value! of! the! gas! otherwise! leaked! and! the! costs! of! the! LDAR! program,

comprising!both!survey!and!repair!costs.

The!analysis!presented!is!based!on!data!from!4,293!surveys!of!oil!and!gas!facilities!in!USA!and!Canada.!!

These! surveys! identified! 58,421! components, which! were! either! leaking! or! venting! gas; leaks! were!

detected! from! 39,505! components.!A! database!has! been! populated!with!information! on!gas!emission!

rates,!repair!costs,!and!repair!lifetime!for!each!emission!source,!in!addition!to!average!survey!costs.!This!

database!allows!calculation!of! the!costs!and!benefits!of!LDAR!programs!with!various!designs,!which!is!

the!main!product!of!this!work.

Main&results&

Costs!and!benefits!of!LDAR!programs!were!analysed!for!three!categories!of!facilities:!(i) gas processingplants, (ii)-compressor-stations!in!gas!transmission!and!gas!gathering!systems,!and (iii) well-sites and-wellbatteries,!including!single!well!heads!and!multiHwell!batteries!(up!to!15!well!heads).

There!is! considerable! variability!in!leak! rates!across! the! facilities!surveyed.!Gas! processing! plants! leak

the!most;! well! sites! and! well! batteries! leak!more!modestly,! with! about! one! third! having! no! reported!

leaks! and! only! 7%! having! leaks! above! 500!thousand! standard! cubic! feet (Mcf)! per! year.! Compressor!

stations!leak!more!than!well!sites!and!well!batteries,!but!less!than!gas!plants.

Table!1:!Distribution!of!facilities!within!each!category!by!leak!rate!(in!Mcf!per!facility!and!per!year)

Category: No#leaks ≤99 100)499 500)1499 ≥#1500

(i)!!!Gas!processing!plants 3% 17% 32% 25% 23%

(ii)!!Compressor!stations 11% 30% 36% 15% 9%

(iii)!Well!sites!&!well!batteries 36% 38% 18% 5% 2%
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The!vast!majority!of!leaks!are!economic!to!repair!once!identified:!leaks!amounting!to!more!than!97%!of!

gas!emissions (assuming!a!value!of!gas!of!3!US!dollars! (USD)!per!Mcf)!are!worth!repairing.!In!addition,!

over!90%!of!the!gas!emissions!are!from!leaks!which!can!be!repaired!with!a!payback!period!of!less!than!

one!year.!This!means! that!once! the!survey!has!been!performed,!it!is!economic! to! repair!almost!every!

leak,!even!at!low!gas!prices.!This!finding!drives!many!of!the!results!of!this!study.

The!costs!and!benefits!of!LDAR!programs!were!analysed!from!(a)!the!perspective!of!individual!facilities,!

where! the! distribution! of! net! present!values! (NPV)! for! facilities! of!each! category!is!examined,!and! (b)!

from!a! public! perspective,!where! the!aggregate! costHeffectiveness!of!conducting! LDAR! programs! for!a!

number!of!facilities!(in!a!jurisdiction!or!owned!by!a!single!company)!is!considered.!For!these!analyses,!a!

base!case!scenario!has!been!defined!based!on!the!following!assumptions:!(i)!the!value!of!recovered!gas!

is!4!USD/Mcf;!(ii)!the!total!cost!of!conducting!a!leakHdetection!survey!at!a!facility,!including!both!the!cost!

of!the!hiring!the!external!service!provider!to!survey!the! facility!and!internal!costs!that!a! facility!owner!

bears! to!administer!contracts,!etc.,!is!150%!of! the!cost!of!hiring! the!external!service!provider;!and! (iii)!

facility!owners!fix!all!leaks!that!the!survey!identifies.!Base!case!results!show!results!based!on!surveys!as!

they!were!performed!–!with!variable!frequency.!Finally,!changes!in!costHeffectiveness!when!altering!key!

assumptions,!including! the!assumption! that!all!leaks!are! fixed!and! the! frequency!of!detection!surveys,!

were!examined.!!

Economic&assessments&– Individual&facilities&

We! first! calculated! the! distribution! of! NPVs of! LDAR! programs! conducted! at! individual! facilities.!

Although! the! detection!surveys! result! in! identification! of! gas! emissions! from! vented! sources,! such! as!

compressor! seals! or! pneumatic! devices,! this! analysis! considers! the! entire! survey! cost! but! only! the!

benefits!of!leak!repairs.!Surveys!found!more!vented!emissions!than!leaks!at!all!facility!types.!This!report!

does!not!include!the!benefits!that!can!be!realized!through!costHeffective!reductions!of!vented!emissions!

identified!by! the!surveys,!and! therefore!underestimates! the!value!of!LDAR!programs.!Future!work!will!

examine!the!economics!of!mitigation!of!those!vented!emissions!and!will!present!calculations!of!program!

costs!and!costHeffectiveness!including!both!leaks!and!vented!emissions.!!

The!NPV!of!a!LDAR!program!is!highly!dependent!on!the!number!of!identified!emission!sources!and!their!

leak! rates.! Figure 1 shows! the! distribution! of! NPVs! for! individual! facilities.! Overall,! the! majority! of!

facilities!have!negative!LDAR!program!NPV!(net!cost)!with!the!well!sites!and!batteries!having!the!lowest!

percentage!of!facilities!with!positive!NPV!(net!gain).!This!is!because!leak!rates!for!well!sites!and!batteries!

are! generally! smaller! than! that! for! gas! plants! or! compressor! stations.! However,! even! when!

implementing!a! LDAR! program! represents!a! net! cost! for! an! individual! facility,! the! overall! cost! for! the!

facility!owner!will!always!be! relatively!low.!This!is!because!surveys!are! relatively!inexpensive,!and!any!

identified!leaks!are!generally!economic! to!repair.!For!the!well!sites!and!batteries!surveyed,! the!lowest!

NPV!was H3,000!USD.!The!mean!NPV!for!the!1,424!well!surveys!having!a!negative!NPV!(81%)!was!H1,160!

USD,!while!the!mean!NPV!for!the!340!well!surveys!having!a!positive!NPV!was!4,704!USD.!For!the!600!gas!

plants!surveyed,!the!lowest!NPV!was!H8,000!USD.!The!mean!NPV!for!the!393!gas!plant!surveys!having!a!
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negative!NPV!(64%)!was!H4,660!USD,!while!the!mean!NPV!for!the!221!gas!plant!surveys!having!a!positive!

NPV!was! 34,412!USD.!For! the! 1,915! compressor! stations! surveyed,! 1,350! surveys! had!a! negative!NPV!

(with!mean!H2,401!USD)!and!565!surveys!had!a!positive!NPV!(with!mean!17,182!USD).!

Figure!1:!Distribution!of!Project!NPV!per!LDAR!program!for!different!types!of!facilities

Economic&assessments&–&Aggregate&cost&effectiveness&of&LDAR&programs&

To!evaluate!the!overall!benefit!of!systematic!implementation!of!LDAR!programs!for!a!group!of!facilities!

of!a!similar!type!(e.g.!over!a!jurisdiction!or!within!a!large!company!with!a!number!of!facilities),!aggregate!

NPVs! were! calculated.! Although! less! than! 50%! of! all! facilities! surveyed! have! a! positive! NPV,! the!

aggregate!NPV!for!all!facilities!is!positive!in!the!base!case,!or!close!to!zero!in!the!case!of!well!sites!and!

batteries.!We!find!that the!net-cost!associated!with!facilities!with!negative!NPV!is!less!than!the!net-gain

associated!with! those! having! positive!NPV.!While! the!net- cost! for! facilities!with! negative!NPV!is! quite!

limited!due! to! the! low! cost! of! conducting! detection!surveys,! the!net- gain! from! facilities!with! positive!

NPV!can!be!quite!high.!

The! aggregate! economic! result! of! conducting! LDAR! programs! can! also! be! presented! in! terms! of!

abatement!costs! (e.g.!per!metric!ton!of!CO2e!or!VOC!reduced).!A!negative!abatement!cost!means!that!

the!aggregate!NPV!is!positive. LDAR!programs!in!both!gas!plants!and!compressor!stations!have!negative!

abatement!costs, even!with!low!gas!prices. For!well!sites!and!batteries,!the!abatement!cost!is!about!zero!

in! the! base! case!scenario!and!+6!USD/tCO2e!or!+300!USD/tVOC!in! the!most! conservative! scenario!we!

considered! (assuming! a! value! of! recovered! gas! of! 3! USD/Mcf! and! that! the! total! cost! of! obtaining! a!

survey! is! 200%! of! the! cost! of! hiring! the! external! service! provider).! These! abatement! costs are! low!

compared!to!many!other!GHG!or!VOC!mitigation!measures.
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Figure!2:!Aggregate!VOC!and!CO2e!abatement!cost!for!different!types!of!facilities

In!addition!to!the!base!case!results,!we!have!also!evaluated whether!applying!different!repair!strategies

would!reduce!the!abatement!costs!of!systematic!LDAR!programs!(e.g.!(a)!repair!only!the!leaks!that!are!

economic! to! repair,! or! (b)! repair! leaks! with! an! emissions! rate! over! a! certain! threshold).! As! the! vast!

majority!of!the!identified!leaks!are!economic!to!repair!once!the!survey!has!been!performed,!it!is!most!

economic!and!environmentally!effective!to!repair!almost!all!the!leaks.!Adding!an!economic!threshold!to

decide! whether! to! undertake! individual! repairs! only! very! marginally! improves! the! economics! of! the!

overall!LDAR!program, by!reducing!the!abatement!cost!by!less!than!15!USD/tVOC.

The!costHeffectiveness!of!survey!at!different!frequencies!is!also!evaluated.!!Figure 3 shows!the!effect!of!

survey!frequency!on!abatement!cost.!!Increasing!the!survey!frequency!from!annual!to!quarterly!reduces!

the!remaining!emissions!by!68%,!but!increases!the!abatement!costs.!The!aggregate!abatement!costs!for!

quarterly!surveys!remain,!however,!below!15!USD/tCO2e!and!800!USD/tVOC.!Monthly!surveys!increases!

the! abatement! cost! to! 55! USD/tCO2e! and! 3,400! USD/tVOC.! We! note! that! the! cost! effectiveness! of!

conducting! frequent! surveys! depends! on! the! facility! type,! maintenance! and! size,! and! the! optimal!

frequency!may!best!be!determined by!analyzing!the!results!of!past!surveys. This!study!focused!only!on!

LDAR!using!IR!cameras,!which!appears!to!be!the!dominant!method!at!present.!Alternative!technologies!

in!the!future!may!reduce!cost!and!improve!effectiveness.
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Figure!3:!Aggregate!abatement!costs!depending!on!the!survey!frequency

Figure!4:!Remaining!leak!emission!per!facility!in!average!depending!on!the!survey!frequency

To!conclude,!this!report!provides!empirical!calculations!of!costHeffectiveness!of!leak!detection!and!repair!

programs,!based!on!data! from!a!very!large!number!of! facility!inspections.!It!shows!that!leak!detection!

and! repair! programs! at! oil! and! gas! production! and! processing! facilities! using! IR! cameras! have! low!

abatement!costs.
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1. INTRODUCTION&

Methane!is!a!greenhouse!gas!with!short!lifetime!in!the!atmosphere.!For!this!reason,!measures!to!reduce!

emissions! of!methane! can! quickly!lower!atmospheric! concentration,!yielding!a! relatively! rapid! climate!

response.!In! the!United! States,! 30%! of! anthropogenic!methane!emissions!are! from! oil!and!gas! sector!

activities,!and!these!represent!about!3%!of!total!U.S.!greenhouse!gas!emissions!(1).!There!is!increased!

attention! given! to!methane!emission! reduction!measures! in! general! and! to! actions! in! the! oil! and! gas!

sector!in!particular.!!

This! report! presents! results! from! an! empirical! analysis! of! costs! and! benefits! of! emission! reduction!

measures!in!the!oil!and!gas!sector.!The!focus!is!on!programs!to!detect!and!repair!leaks!from!Canadian!

and!U.S.!oil!and!gas!sector!facilities.!Gas!leaks!(unintended!emissions)!can!occur!from!oil!and!gas!sector!

equipment! such!as! connectors,!valves!and! flanges.!According! to!inventories! published! by! the!US!EPA,!

leaks! from! these! types! of! components! account! for! 16%! of! the! methane! emissions! in! the! onshore!

production!sector (2).!!Other!sources!of!methane!emissions!from!oil!and!gas,!such!as!venting!from!tanks!

and! other! equipment1,! compressor! seal! leaks,! and! incomplete! combustion! of! methane! in! gasHfired!

engines,!are!not!covered!in!this!report.

2. DATA&SOURCES&AND&ANALYTICAL&APPROACH

2.1 Data&sources&and&leak&rates&

The! analysis! is! based! on! data! collected! during! surveys! carried! out! by! two! private! sector! firms that!

provide!gas!emission! detection!and!measurement! services! to! the! oil!and!gas! industry.!The! data!were!

made! available! to! Carbon! Limits! in! an! anonymous! form! and! checked! for! quality/consistency! before!

being!entered!into!a!database. In!total,!data!from!4,293 surveys!were!included!in!the!sample2,!covering!

all!potential!sources!of!emissions!(both!leaks!and!vents).!The!surveys!detected!58,421!emission!sources,!

including! 39,505! leaks! from! connectors,! valves,! regulators,! etc.

3

.! Some! 90%! of! the! surveys! were!

performed!in!Canada,!with!the!balance!in!the!U.S.!

As! part! of! the! LDAR! surveys,! facilities! were! first! screened! using! infrared! (IR) cameras! to! locate!

hydrocarbon! gas! emissions. Identified! emissions! were! then! either!measured! (in! general! with! a! highH

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1 Vents!here!include!those!from!pneumatic!controllers, well!completion!and!workover!venting,!dehydrators,!and !unlit!flares.! 2

!Data!from!oil!sands!and!oil!bitumen!emission!sources!were!excluded!from!the!database!and!the!analysis. 3

!The!database!also!includes!255!instances!of!improper!venting!from!damaged!pneumatic!controllers!and!open!thief!hatches.!!

Because!these!are!inexpensive!and!simple!to!repair,!in!a!manner!similar!to!many!leaks,!they!are!included!in!this!analysis,!unlike!

other! vented! emissions! recorded! in! the! surveys.! Due! to! the! small! number! of! these! instances! (less! than! 1%! of! leaks! in! the!

database),!inclusion!of!these!instances!does!not!have!a!significant!effect!on!the!results!of!this!work.!!
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volume!sampler)!or!estimated4.!An!emission!register,!which!includes!estimations!of!the!costs!of!repairs

to! reduce!emissions,!was! then! produced! by! the! company! conducting! the! survey!and! delivered! to! the!

facility!owner.!

The!database contains!information!on!the!emitting!component,!the!type!of!emission!(i.e.!leak!or!vent),!

the!failure!mode,!the!gas!emissions!rate,!the!type!of!gas!emitted,!the!type!of!repair!required,!the!repair!

costs!and! repair! lifetime for!each! individual!emission! source! detected! in! the! surveys5.! Facility! specific!

information!such!as!age,!size,!operating!mode!and!the!technology!used!are!not!available.!!

Three!types!of!facilities!were!surveyed,!as!shown!in!Table 2.!

Table!2: Types!of!facilities!and!number!of!surveys6

Facility#type: No#of#surveys: Description#

Compressor#

station

1,915

This!category!includes!mainly!compressors!upstream!(gathering!

compressors)!and!compressor!stations!in!the!transmission!and!storage!

sector.!Compressor!stations!in!this!category!in!general!range!from!one7!to!

three!compressors!and!from!200!to!1000!horsepower!each.!The!majority!

of!these!compressor!stations!are!more!than!five!years!old.!

Gas#plant 614

Gas!plants!in!this!category!generally!range!from!10!MMcf/day!to!500!

MMcf/day.!On!average!gas!plants!tends!to!be!larger!in!USA!than!in!

Canada8.!The!vast!majority!of!plants!are!more!than!five!years!old.!

Well#sites#and#

well#batteries

1,764

This!category!includes!the!following9:!

• Well!sites!are!sites!with!only!one!well!head

• Well!batteries!include!some!equipment!on!site!in!addition!to!the!well!

head!(e.g.!an!oil/liquids!storage!tank,!and/or!separator,!etc.).!MultiH

well!batteries!include!in!general!five!to!fifteen!well!heads.

As!seen!in!Table 3,!while!there!is!variability!from!site!to!site!and!between!facility!types,!some!trends!in!

emissions! are! observed.! Gas! plants! leak! the! most,! whereas! well! sites! and! well! batteries! leak! more!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4

!In!a!number!of!cases,!the!facility!owners!do!not!need!a!precise!volume!measure;!an!estimate!(evaluated!visually!using!the!IR!

camera!based!on!the!extensive!experience!of!the operators)!would!be!sufficient!to!make!the!decision!to!repair.!In!a!few!cases,

the!component!leaking!is!also!difficult!to!access!for!measurement. 5 Repair!lifetime!in!the!database!range!from!1!to!5!years,!with!30%!of!the!repairs!having!a!lifetime!of!2!years!or!less!and!97%!of!

the!repairs!having!a!lifetime!of!4!years!or!less.! 6 Information!based!on!discussion!with!the!data!providers.!However,!this!information!is!not!documented!in!the!database.!As!a!

result,!it!is!generally!not!possible! to!quantify! the!distribution!of! facility!sizes!or!subHcategories!within! the! three!categories!of!

facility!type,!nor!to!analyse!how!leak!rates!or!net!program!costs!vary!between!subHcategories. 7

!A!large!share!of!the!compressor!stations!have!only!one!compressor.! 8 Natural!Gas!Annual!Respondent!Query!System!(EIAH757!Data!through!2012)!and!presentation!by!BlueLine!at!EBRD/GGFR!

workshop!on!gas!utilization!in!Moscow!19th!June!2013!(for!info!see!http://www.aebrus.ru/en/memberHnoticeH

board/index.php?ELEMENT_ID=259927). 9

!These! three!subcategories!are!used!separately!in! the!database,!but!due! to!inconsistent! terminology!and!practices!between!

the!two!data!providers,!the!category!“well!sites &!well!batteries”!is!used!in!this!study. !!
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modestly,!with!about!oneHthird!having!no!detected!leaks10!and!only!7%!having!leaks!above!500!thousand!

cubic! feet!per!year! (Mcf/year).! Compressor! stations!leak!more! than!well! sites!and!well!batteries,!but!

less!than!gas!plants.

Table!3:!Distribution!of!facilities!within!each!category!by!leak!rate!(in!Mcf!per!facility!per!year)

Category: No#leaks ≤99 100)499 500)1499 ≥#1500

Gas!processing!plants 3% 17% 32% 25% 23%

Compressor!stations 11% 30% 36% 15% 9%

Well!sites!&!well!batteries 36% 38% 18% 5% 2%

It! is! important! to! highlight! that! the! distributions! presented! in! Table 3 are! not! representative! of!

distributions!of!baseline!gas!emissions!in!the!U.S.,!where!systematic!leak!detection!and!repair!programs!

are!less!common.!The!database!largely!consists!of!identified!leaks!at!Canadian!facilities!that!have!been

subject! to! regular!leak!detection!and! repair. Currently,! there!are!no! such! systematic! requirements! for!

most! natural! gas! facilities! in! the! U.S.,! outside! of! gas! processing! plants! built! after! 1984.! ! As! a! result,!

current!emissions!from!most!U.S.!facilities!are!expected!to!be!higher!than!the!emissions!typical!in!these!

surveys.!!

Using!the!information!in!the!database,!in!addition!to!average!survey!costs!for!facility!types!provided!by!

the! two! leak! detection! firms,! costs! and! benefits! of! leak! detection! programs! of! various! design! can! be!

calculated.!Although!the!focus!of!this!analysis!is!on!leaks,!it!should!be!noted!that!vents!are!the!dominant!

source!of!emissions!(see Figure!5),!and!some!portion!of!these!venting!emissions!can!be!costHeffectively!

mitigated.!Vents! from!instrument!controllers!and!compressor! rod!packing! represent!about!40%!of! the

vent! emissions! and! will! be! covered! in! a! separate! report.! Other! significant! sources! of! venting! are!

production/storage! tanks,!lube! oil!vents,! compressors,! pumps!and!engines.!Since! this! report! does! not!

include! the! benefits! of! the! costHeffective! venting! emissions! reductions! identified! by! the! surveys,! it!

underestimates!the!overall!value!of!LDAR!programs.!!

Figure!5:!Share!of!the!detected!emissions!(both!measured!and!estimated)!as!leaks!and!vents, for!various!facility!types

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 10!This!is!very!similar!to!the!result!from!reference!(7)!where!no!leaks!were!detected!at!34%!of!the!well!sites.
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2.2 Methodology&and&assumptions&

2.2.1 Analytical&approach&

The! primary! source! of! information! used! for! the! analysis,! i.e.! data! from! 4,293! LDAR! surveys! from! two!

service!providers,!was!subject!to!an!initial!quality!control!prior!to!being!compiled!into!a!database.!The!

manual! coding! done! by! the! survey! firms! were! checked! (e.g.! facility! type,! type! of! emissions,! failure!

mode)!and!inconsistencies!were!rectified.!The!cost!data!were!also!carefully!reviewed!and!changes!made!

in!cases!of!obvious!errors.!

Figure!6:!Overview!of!the!project's!methodology

The!costs!and!benefits!of implementing!LDAR!programs!at!oil!and!gas!facilities!have!been!assessed!and!

used!to!determine the!economic!attractiveness!of!leak!detection!and!repair!programs!at!two!levels:

(i) The!economic!value of!implementing!LDAR!programs!at!individual!facilities.

(ii) The!costHeffectiveness of!implementing LDAR!programs at a!group!of!facilities of!a!similar!type!

(aggregate!abatement!costs).!

Results!of!the!analysis!at!these!two!levels!are!presented!in Section#3.1 and!Section#3.2!respectively.!In!

addition,!Section#3.3!presents!a!comparison!of!different!strategies!for!LDAR!programs.
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2.2.2 Assumptions,&base&case&approach,&and&sensitivity&analyses

A! set! of! assumptions! and! realistic! variations! of! key! parameter! values! have! been! used! in! the! analysis!

presented!in!this!report,!and!are!summarized!below:!!

• Survey#costs: The!total!survey!costs!in! the!database!are!based!on!the!current!average!market!

prices! for! purchasing!such! services11! and! an! estimated!markHup! to! reflect!the! facility! owner’s!

internal! cost.! These! internal! costs! include! not! only! procurement! costs! to! contract! a service!

provider,!but!also!staff!time!that!may!be!required!during!the!field!survey.!The!total survey!costs!

can!vary!between!operators12. Sensitivity!analyses!have!been!conducted!for!total!survey!costs!to!

operators!varying!from!100%!–!200%!of!the!current!market!prices!for!hiring!an!external!service!

provider!(i.e.,-an!estimated!markHup!of!0H100%!of!the!external!cost).!

• Repair#costs#and#lifetime:#The!estimated!repair!costs!and!repair!lifetime!per!leak!are!provided!

by! the! two! data! providers! for! the! majority! of! components.! For! the! remaining components,!

repair!costs!and!lifetimes!are!estimated!based!on!information!provided!by!the!survey!companies!

on!(a)!the!type!of!repair!suggested!for!the!component,!or!(b)!the!type,!subHtype!and!size!of!the!

leaking!component.!!See!Appendix!1!for!minimum,!maximum,!average,!and!median!repair!costs!

for!various!component!types.

• Gas#price:!The!value!of!recovered!gas!has!been!assumed!to!be!similar!for!all!emission!sources,!

independent! of! the! composition! of! the! gas.! Gas! values! from! 3! to! 5! USD/Mcf! have! been!

assessed.

• Repair# efficiency:! 95%! repair! efficiency! has! been! assumed! for! leaks,! 80%! for! other! emissions!

due!to!improper!conditions13.

• Discount#rate:!A!7%!per!year!real!term!discount!rate!has!been!assumed.

• Gas#compositions#and#emission#factors:!Based!on!the!qualitative!description!of!the!type!of!gas!

emitted!from!each!source,!a!gas!composition!was!assumed!for!each!leak!in!the!database!and!a!

CO2e! and! a! VOC! emission! factor! have! been! calculated! (see! Appendix! 3).! Per! US! regulatory!

definitions,!neither!methane!nor!ethane!are!included!in!the!calculations!of!VOC!emissions.

• Global#warming#potential!(GWP)!of!methane!has!been!set!at!25,!for!the!purpose!of!calculating!

CO2e!tonnage.!!!

The!base!case!scenario!includes!the!following!assumptions:!(i)!the!value!of!recovered!gas!is!4!USD/Mcf;!

(ii)! the! total! cost! to! facility! owners! of! conducting! a! leakHdetection! survey! at! a! facility! is!equivalent! to!

150%!of!the!cost!of!hiring!the!external!service!provider!to!survey!the!facility;!and!(iii)!facility!owners!fix!

all!leaks!that!the!survey!identifies.!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11! Service! here! includes! gas! emission! detection! and! quantification! survey! and! the! delivery! of! a! monitoring! report! to! the!

operator.!An!average!survey!cost!has!been!assumed!per!type!of!facility!category.

12!Depending!on!the!number!and!size!of!the!facilities,!distance!between!the!facilities,!internal!organization,!etc. 13!Estimates!based!on!discussion!with!technology!providers.
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3. SUMMARY&OF&THE&ANALYSIS

3.1 Economic&assessment Q&Individual&facilities&

The! net! present! values! (NPVs)! of! repairing! individual! leaks! identified! in! surveys! have! been! calculated!

based! on! estimated! repair! costs! and! the! value! of! the! recovered! gas.! This! analysis! shows! that! the!

economic! value! of! the! recovered! gas! exceeds! the! repair! cost! in! almost! all! cases.! Once! they! are!

identified,!the!vast!majority!of!the!leaks,!and!the!vast!majority!of!emissions!from!leaks!(more!than!97%

of! the!total! leak! rate),! are! economic! to! repair! (NPV>0),! even! when! the! value! of! gas! is! 3!USD/Mcf. In!

addition,!over!90%!of!gas!emissions!is! from!leaks!which!can!be!repaired!with!a!payback!period!of!less!

than!one!year!(see!Figure 7).!There!is!almost!no!difference!in!these!results!across!the!three!categories!of!

facilities.

Figure!7:! Economic!attractiveness!of!the!individual!repair!for!all!types!of!facilities –!only!repair!costs!included.

We!now!consider! the! full!program!cost,!including! the! total! survey!cost.!!Calculated!NPVs!of! the!LDAR!

program! per! facility! survey,!assuming!all!identified!leaks!are! fixed independent! of! the! size! of! the!leak!

and!the!economics!of!repairing!it,!are!more!variable.!The!resultant!distributions!of!facility!level!NPVs!for!

each!of!the!three!categories!of!facilities!are!shown!in!Figure 8.!For!all!three!categories,!the!majority!of!

facilities!have!negative!NPVs! (i.e.!net!costs),!with! the!well!sites!&!batteries!having!the!lowest!share!of!

facilities!with!positive!NPVs!(i.e.!net!gains).
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Figure!8!:!Distribution!of!NPV!per!LDAR!program!for!different!types!of!facilities!–!survey!and!repair!costs!included.

14

The!low!leak!rates!which!are!typical!for!well!sites!&!well!batteries!(see Table 1)!explain!the!large!share!of!

negative! NPVs! found! for! this! category.! While! the! individual! leaks! are! economic! to! repair,! for! many!

facilities! the!economic!benefit! from! repairing! the!leaks!is!less! than! the! total!cost!of! the! survey! so! the!

NPV!of!the!LDAR!program!at!those!facilities!is!negative.!However,!the!relatively!low!survey!costs!(600!to!

1,800!USD!per!facility!in!total!survey!costs!in!the!base!case)!limit!the!magnitude!of!net!costs.!For!the!well!

sites!and!batteries!surveyed,!the!lowest!NPV!was H3,000!USD.!The!mean!NPV!for!the!1,424!well!surveys!

having!a! negative!NPV! (81%)!was!H1,160!USD,!while! the!mean!NPV! for! the! 340!well! surveys! having!a!

positive!NPV!was!4,704!USD.!

For!compressor!stations,!about!30%!of!the!surveys!have!positive!NPV,!and!as!many!as!10%!have!NPVs!

exceeding! 10,000!USD.! For! the! 565! compressor! station! surveys! having!a! positive!NPV,! the!mean!NPV!

was!17,182!USD.!In!contrast,!none!of!the!surveys!have!a!NPV!of!less!than!H5,000!USD.!

Gas!plants!typically!have!survey!costs exceeding!5,000!USD 15.!Almost!a!third!of!the!600!gas!plant!surveys!

have!a!positive!NPV,!with!about!120!gas!plant!surveys!having!a!NPV!above!10,000!USD.!The!mean!NPV!

for!the!221!gas!plant!surveys!having!a!positive!NPV!was!34,412!USD.!This!category!also!has!the!lowest!

proportion!of!surveys!with!negative!NPVs,!and!none!with!a!negative!NPV!of!less!than!H8,000!USD.!

The! economic! attractiveness! assessed! at! the! survey/facility! level! shows! considerable! variability,!

particularly! for!gas!plant!and!compressor!station!surveys,!but! the!net!cost!per! facility!survey!is!always!

relatively!low.!However,!it!is!important! to!consider! that! the!NPVs!illustrated!in!Figure 8!are!calculated!

per!facility!and!most!companies!own!several!facilities.!As!a!result,!the!aggregated!NPV!for!companies!is!

likely! to! be! higher! than! that! of! the! median! facility! as! displayed! in! Figure! 4! and!may! be! positive! (see!

below).

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 14!Taxes!have!been!excluded!from!the!analysis.

15!5,000!USD!represents!the!typical!cost!of!hiring!an!external!service!provider.
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3.2 Aggregate&abatement&cost

To! evaluate! the! overall! costHefficiency! of! systematic! implementation! of!regular! LDAR! programs! for! a!

group!of! facilities!of!a!similar!type! (over!a!jurisdiction!or!over!a!large!company),!aggregate!NPVs!were!

estimated.! Although! the! majority! of! the! 4,293! facility! surveys! have! negative! NPVs! when! evaluated!

individually,! the!aggregated!NPV!for! all! facilities! is! positive,!meaning! that! those! facilities!with!surveys!

with!negative!NPVs!(net!cost)!are!outweighed!by!those!having!surveys!with!positive!NPV!(net!gain).!This!

is!due!to!the!asymmetry!in!NPV!distributions!for!individual!facility!surveys!(see!Figure 8).!The!aggregate!

economic! results! of! the! LDAR! programs! can! also! be! presented! in! terms! of! abatement! costs! (e.g.! per!

metric! ton! of! CO2e or! VOC! emissions! avoided),! which! is! common! when! environmental! policies! are!

considered.!The!aggregate!abatement!costs!have!been!calculated!as:!

The!discount!rate!applied!is!7%!in!the!base!case!both!for!cash!flow!elements!and!emission!reductions.

Other!approaches,!such!as!applying!a!lower!(even!zero)!discount!rate!for!future!emission!reductions,!or!

amortizing!costs!of!repair!over!its!lifetime!and!then!calculating!annual!net!costs!for!emissions!avoided!in!

a!given!reference!year,!can!also!be!used!to!evaluate!and!compare!costHefficiency!of!mitigation!options.

As!shown!in!Section!4.2,!the!results!are!not!very!sensitive!to!variations!in!discount!rate!(due!to!limited!

repair!lifetimes).!!

Figure 9!shows!that!gas!processing!plants!and!compressor!stations!have!negative!abatement!costs!(i.e.!

positive!NPV)!in!the!base!case!scenario.!This!conclusion!also!holds!when!assuming!a!lower!gas!price!of!3!

USD/Mcf! and! higher! total! survey! costs! (equivalent! to! 200%! of! the! cost! of! hiring! an! external! service!

provider).! With! the! base! case! assumptions,! well! sites! &! well! batteries! have! abatement! costs! around!

zero,!increasing!to!6!USD/tCO2e!or!300!USD/tVOC!applying!the!less!favourable!assumptions!for!gas!price!

and!total!survey!costs.

Figure!9:!Aggregate!VOC!and!CO2e!abatement!cost!for!different!types!of!facilities
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3.3 Comparison&of&different&approaches&for&LDAR&programs

The!results!presented!in!the!previous!sections are!based!on!the!base!case!assumption!that!the!operator!

would!repair!all!the!leaks!which!have!been!identified!during!a!survey.!In!Section#3.3.1,!we!consider!ways!

to!potentially! increase! the! value! of! routine! LDAR! by!using!economic! or!emissions! thresholds! to!allow!

certain!leaks!not!to!be!repaired. Section#3.3.2!then!examines!costs!and!benefits!of!LDAR!programs!with!

different!survey!frequencies.!

3.3.1 Impact&of&different&repair&strategies&

Two!alternative!strategies!to!the!base!case!strategy!of!repairing!all!identified!leaks!are!analysed:

• Strategy 2:!Perform!a!leak!detection!and!quantification!survey,!and!only!repair!the!leaks!which!

are!economic!to!repair!–!i.e.!those!components!that!can!be!repaired!with!a!net!gain!(NPV>0).

• Strategy 3:!Perform!a!leak!detection!and!quantification!survey,!and!only!repair!leaking!

components!with!an!emissions!rate!exceeding!a!certain!threshold,!e.g.!20!Mcf!per!year.

For!each! strategy, the potential!leak! reduction!and!aggregate!abatement!costs!per!metric! ton!of!CO2e

and!VOC!are! calculated! for! different! types! of! facilities16.!Table# 3#summarizes! how! the! two!alternative

strategies!compare!to!the!base!case!strategy!(i.e.!“repair!all!leaks”)!for!two!(subH)categories!of!facilities;

compressor!stations!and!multi!well!batteries.!Other!types!of!facilities!show!similar!patterns.!

Table!4:!Comparison!of!three!hypothetical!repair!strategies!for!compressor!stations!and!multiHwell!batteries!(examples)17

Compressor#Station Base#Case

(all!identified!leaks)

Strategy#2

(leaks!with!NPV>0)

Strategy#3

(leaks!!>!20!Mcf/yr)

Potential!leak!reduction!after!each!survey 94.7% 93.0% 87.7%

Methane!abatement!cost!(in!USD/tCO2e) H4.9 H5.0 H4.8

VOC!abatement!costs!(in!USD/tVOC) H355 H368 H357

Average!number!of!leaks!to!repair!per!facility 11.3 10.2 6.9

Multi#well#Battery Base#Case Strategy#2 Strategy#3

Potential!leak!reduction!after!each!survey 94.5% 92.6% 88.1%

Methane!abatement!cost!(in!USD/tCO2e) 1 0.8 1.7

VOC!abatement!cost!(in!USD/tVOC) 46 41 79

Average!number!of!leaks!to!repair!per!facility 3.8 3.5 2.9

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 16! Only! corrective! maintenance! program! approaches! are! reviewed! here.! Preventive! maintenance! programs! have! not! been!

evaluated!as!part!of!this!project.!

17 The!trend!is!similar!for!other!types!of!facilities.!The!results!of!Strategy!3!depend!on!the!volume!threshold!set!(see!Figure!6).!

Gas!emission!reductions are!calculated!for!the!year!following!the!survey.
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When!comparing!the!results!of!the!analysis!of!the!two!alternative!repair!strategies!with!the!base!case!

results,!the!main!findings!are:

• !! Strategy!2 results!in!lower!aggregate!abatement!costs,!since!repairs!which!are!uneconomic!are!

not! performed.! However,! the! difference! is!minimal! (<0.2!USD/tCO2e).! It! is! also! important! to!

consider! that!this! strategy! would! be! more! complex! to! implement! in! practice. For! each! leak

identified,! at! a! minimum! some! evaluation! (based! on! measurements! or! estimates! of! leak!

volume,!etc.)!would!need!to!be!carried!out,!and!for!those!leaks!not!repaired,!documentation!of!

leak! magnitude,! repair! cost,! etc.,! might! be! required! (and! possibly! verified).! The! additional!

administrative!costs!this!entails!are!not!accounted!for!in!this!analysis.!

• Strategy! 3 does! not! represent! cost! savings! of! any! significance,! and! there! are! markedly! less!

emission!reductions.!For!multi!well!batteries,!the!aggregate!abatement!costs!actually!increase!

(this!is!due!to!the!fact!that!small!leaks!can!be!economic!to!repair). !!Figure#6!explores!further!

the!emission!reductions!and!aggregate!abatement!costs!for!different!emissions!rate!thresholds!

for! this! strategy.! The! sensitivity! analysis! shows! that,! statistically,! it! is! both! more!

environmentally!efficient!and!more!economical!to!repair!all!the!leaks!detected.!

Figure!10:!Strategy!3 H!Sensitivity!to!the!emissions!rate!threshold!with!base!case!assumptions18

To!conclude,!as!the!vast!majority!of!leaks!are!economic!to!repair!once!the!survey!has!been!performed,!it!

is! most! economic! and! environmentally! effective! to! repair! almost! all! the! leaks.! Adding! an! economic!

constraint!on!the!repair!program!only!marginally!improves!the!economics!of!the!overall!program.

19

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 18!The!abatement!costs!for!VOC!emission!reductions (now!shown)!show!the!same!trend!as!for!CO2e!(illustrated!in!the!figure). 19!The!current!study!does!not!review!the!administrative!cost!of!implementing!and!enforcing!the!regulation.!However,!we!can!

highlight! that!Strategy!2! (and! to!some!extent!Strategy!3)!are!more!complex! to!implement!and! to!enforce! than!the!base!case!

strategy!of!repairing!all!identified!leaks.
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3.3.2 Impact&of&the&frequency&of&surveys

Increasing!the!frequency!of!surveys!and!subsequent!repairs!further!reduces!emissions,!but!will!increase!

abatement!costs.!This!section!examines!the!effect!of!survey!frequency.

The! database! used! in! this! report! includes! surveys! performed! in! a! variety! of! facilities! and! in! several!

jurisdictions!in!both!Canada!and!USA.!Some!of!the!facilities!are!surveyed!once!every!year!or!once!every!

two!years,!while!others!are!surveyed!less!frequently.!It!was!possible!to!extract!definitive!information!on!

the!survey!frequency! for!12% of! the!total!surveys in! the! database! (i.e.!542! surveys)20.!Almost! 80%! of!

these!repeated!surveys!were!performed!on!a!yearly!basis!and!17%!were!performed!every!two!years.!For!

the! analysis! of! the! impact! of! survey! frequency! presented! below,!only! data! for!surveys! with! a! known!

frequency!of!one!year!(427!surveys!in!the!database)!have!been!used.

Increasing! the! frequency! of! the! leak! detection! and! repair! survey! will! have! a! positive! impact! on! the!

emission! reductions! that! can! be! achieved,! as! the! leaks! are! detected! and! can! be! repaired! earlier! (see!

Figure!11).!

Figure!11:!Schematic!overview!of!emission!reductions!within!a!year!depending!on!the!frequency!of!the!surveys

However,!more! frequent! surveys! increase! program! costs.! Figure 12 shows! the! increase! in! abatement!

costs!for!VOC!and!CO2e!as!a!function!of increased!survey!frequency.!However,!even!with!these!increased!

costs,!in!all!the!cases!evaluated,!the!abatement!costs!remain!below!55!USD/tCO2e!and!3,500!USD/tVOC.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 20!While!definitive!frequency!information!is!only!available!for!12%!of!the!surveys,!it!is!clear,!based!on!interviews!and!reference

(8),!that!the!facilities!in!our!database!are!typically!surveyed!every!one!or!two!years.
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Figure!12:!Aggregate!abatement!costs!depending!on!the!survey!frequency21

Figure 13 presents!the!remaining!average!VOC!emissions!per!facility!depending!on!the!survey!frequency.

Figure!13:!Average!remaining!leak!emissions!per!facility!depending!on!the!survey!frequency22

We!note! that!it!is!not! straightforward! to!compare!leak! rates! from!U.S.! facilities,!where!leak!detection!

surveys!are!not!generally!routine,!to!the!calculated!leak!rates!shown!in Figure 13,!since!these!(like!the!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 21 Base!case!assumptions!are!applied,!and!repair!lifetimes!are!maintained!for!all!components.!It!is!assumed!that!leaks!arise!over!

time!H!more!frequent!detection!will!lead!to!quicker!repairs!of!identified!leaks,!but!fewer!leaks!will!be!detected!per!survey.!The!

repair!cost!for!a!component!found!to!be!leaking!is!independent!of!the!survey!frequency.! 22!It!is!important!to!highlight!that!we?!assumed!that!all!the!leaks!are!repaired!quickly!after!the!survey.!This!assumption!is!not

realistic!for!leaks!which!cannot!be!repaired!without!shutdown!of!the!facility!or!process!unit!(generally,!repair!of!those!leaks!will!

be!delayed!until!the!next!planned!shutdown),!or!for!repair!of!some!other!leaks,!such!as!those!that!are!difficult!to!access!.!As!a!

result,!emissions!reduction!overestimated,!and!abatement!cost!(per!ton)!is!underestimated!in!regards!to!this!aspect.!!Note:!the!

share!of!repairs which!will!be!delayed!is!not!available!in!the!database..!
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distribution!of!leak! rates!shown!in Table 3)! reflect!leaks! from! facilities!with! routine!LDAR!programs!in!

place!(see!Section#2.1).!!

To! conclude,! by! increasing! the! survey! frequency,! remaining! emissions! are! reduced,! but! at! increased!

abatement!costs.!Still,!the!abatement!costs!for!quarterly!surveys!remain!below!15!USD/tCO2e!and!800!

USD/tVOC.

We! note! that! the! cost! efficiency! of! conducting! frequent! surveys! depends! on! the! facility! type,!

maintenance!and!size,!and!the!optimal!frequency!may!best!be!determined by!analysis!of the!results!of!

past! surveys.! This! study! focused! only! on! LDAR! using! IR! cameras,! which! appears! to! be! the! dominant!

method!at!present.!Alternative!technologies!in!the!future!may!reduce!cost!and!improve!effectiveness.!
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4. CONCLUDING&REMARKS&

4.1 Main&findings&

The! study! presented! in! this! report! provides! new! insight! into! leak! detection! and! quantification! survey!

costs!and!benefits,!as!it!is!based!on!data!collected!from!over!four!thousand facility!surveys!and!data!on!

almost! forty! thousand!leaks.!This!allows! calculation!of! the!economic!value! of! LDAR! programs! under!a!

range!of!program!designs!and!frequencies,!with!a!robust!dataset.

The!evaluation!of!available!survey!data!shows!that!most!leaks,!once!identified,!are!economic!to!repair!

with! a! payback! period! less! than! one! year.! As! a! result,! once! the! survey! has! been! performed,! it! is!

economic!to!repair!almost!all!the!leaks.!

Overall,! LDAR! programs! at! oil! and! gas! production! and! processing! facilities! using!IR! cameras! have! low!

abatement!costs!on!an!aggregate!basis.!Program!costs!and!emission! reduction!potentials!are!not!very!

sensitive!to!program!design,!although!aggregate!abatement!costs!are!sensitive!to!the!survey!frequency.!

From! a!facility’s! owner! perspective,! implementing a!routine! LDAR! program!may! represent! a! net! cost!

(NPV!<!0) for!many!facilities.!However,!even!in!those!cases,!the!overall!cost!is!always!relatively!low!due!

to! the!low! survey!costs! (no! LDAR! program! studied! had!a!NPV!of!less! than!H8,000!USD! per! survey!and

facility).

4.2 How&robust&are&the&results?

Some! sensitivity! analyses! were! presented! in! Section# 3! with! variations! in! survey! costs! and! gas! prices.!

However,! there! are! other! assumptions! being! made! (see! Section# 2.2.2)! that! potentially! impact! the!

results.!These!assumptions!are!considered!below,!either!quantitatively!or!qualitatively.!

Discount#rate:!A!discount!rate!of!7%!(real!terms)!has!been!applied!in!all!of!the!analyses!presented!

in!Section#3.!With!an!increase!in!the!discount!rate!to!12%,!aggregate!abatement!costs!increase!by!

less!than!0.5!USD/tCO2e or!30!USD/tVOC.!

Measured#versus#estimated#emissions:!Leak!rates!are!to!some!extent!uncertain!since!a!number!

of!them!were!estimated!and!not!measured.!A!sensitivity!analysis!was!performed!to!evaluate!if!the!

inclusion! of! estimated! leak! rates! impact! the! results! of! the! analysis.! Abatement! costs were!

calculated!for!the!subset!of!surveys!for!which!more!than!80%!of!total!emissions!was!measured,!as!

opposed! to! estimated. For! all! categories! of! facilities,! the! abatement! costs calculated! for! this!

subset!of!surveys is!very!similar!(within!1!USD/tCO2e)!to!the!results!obtained!using!data!from!the!

entire!database.
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Value# of#recovered# gas: The! value! of! the!recovered! gas! has! been!assumed! to! be! similar! for!all!

emissions!sources,!independent!of!the!composition!of!the!gas.!This!is!a!conservative!assumption!

when! calculating! the! abatement! costs! of! LDAR! programs,! as! richer! gas! (propane,! butane,! etc.)!

leaks!are!detected!in!many!cases,!and!the!value!of!this!gas!would!typically!be!higher.

Survey# costs:! Operators! may! consider! it! economic! to! perform! the! survey! internally! instead! of!

outsourcing!the!services,!as!was!the!case!for!the!surveys!analyzed!in!this!work.!In!these!cases,!the!

total!survey!costs presented!above!might!be!on!the!high!side.

Exclusion# of# benefits# from# reductions# in# venting:! The! exclusion! of! benefits! from! costHeffective!

repairs! of! venting! sources! identified! in! the! surveys,! while! including! the! full! cost! of!the! survey!

identifying!those!vents!in!addition!to!leaks,!underestimates!the!value!of!the!LDAR!programs!and!

the!emissions!reductions!resulting!from!such!programs.!!As!Figure 5!shows,!most!of!the!identified!

emission! sources! at! facilities! are! venting,! so! this! effect! may! be! significant.! ! Future! work! will!

attempt!to!include!analysis!of!venting!emissions!to!address!this!effect.!!

No# specific# shutdown# required:! Repairs! are! assumed! to! be! performed! rapidly! after! surveys,!

during! the! normal! (ongoing)! operations! of! the! facilities.! Hence! repair! activities! do! not! cause!

production!losses,!and! no! potential! revenue!losses!are!accounted! for!in! the!analysis.!When! the!

facility!needs!to!be!shut!down!to!perform!the!repair,!the!repair!is!assumed!to!be!postponed!to!the!

next! planned! maintenance.! The! potential! delay! in! realizing! emission! reductions from! repairs!

requiring! shutdown,!or!other! repairs!which!are!not!carried!out! rapidly! (such!as! for!components!

which!are!difficult!to!access),!has!not!been!accounted!for!in!the!analysis.!The!abatement!costs!per!

ton!are!underestimated,!to!some!degree,!by!this!approximation,!since!the!analysis!overestimates!

emissions!abatement.!!

Gathering#compressor#stations#versus#transmission#compressor#stations:!As!described!in!Section#

2,!the!database!includes!compressor!stations!in!the!production!segment!(e.g.!gathering!stations)!

and! compression! stations! in! the! transmission! segment.! It! was! possible! to! extract! definitive!

information! on! the! location! of! the! compressors! for! about! half! of! the! surveys! of! compressor!

stations.! For! these! 1,032! surveys,! the! aggregate! abatement! cost! for! LDAR! programs! on!

compressor!stations!in!the!production!segment!is!H1.7!USD/tCO2e,!while!the!aggregate!abatement!

cost!for!LDAR!programs!in!the!transmission!segment!is!H8.3!USD/tCO2e in!the!base!case!scenario.!

For! the! latter! category! of! compression! stations,! if! the! value! of! recovered! gas! is! zero! (i.e.! no

additional!revenues from!sale!of!gas),!the!abatement!cost!increase!to 2.3!USD/tCO2e.

US#versus#Canadian#facilities:#

The!majority!of!the!surveys!included!in!the!database!have!been!performed!in!Canada,!with!about!

500!surveys!in!USA.!The!key!relevant!similarities!and!differences!between!the!two!countries!are:!
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• Results!from!analysis!of!data!contained!in!the!database:!In!general,!the!average!leak!

emissions!per! facility!is!higher! for! the!US! facilities!compared! to! the!Canadian!ones,!

which!indicates! that! the!abatement!costs!presented!in! this!analysis!are!higher! than!

they! typically! would! be! for! the! sample! of! US! facilities.! However,! it! is! important! to!

highlight! that! the! surveys! conducted!in!USA!are! not! necessarily! repeat! surveys!and!

thus!may!not!be!representative!of!systematic-repeat!LDAR!programs!examined!in!this

report.!

• Size!of!the!facilities: Gas!plants!in!USA!are,!on!average,!larger!than!Canadian!ones23.!A!

large! number! of! the! gas! plants! in! the! database! are! very! small! plants! and!thus! the!

abatement!costs!presented!above!for!this!facility!type!may!be!conservative.

• Other! similarities: According! to! interviews! with! technology! providers,! the! practices!

are!very!similar!in!the!two!countries,!with!similar!designs,!equipment!and!suppliers.!

Maintenance!practices!vary!significantly!from!site to!site,!but!there!is!not!necessarily!

a! significant! difference! between! the! two! countries,! with! the! exception! of! different!

regulations,!such!as!the!requirements!to!perform!regular!LDAR!in!Alberta.24

Finally! it! should! be! added! that! other! analyses! for! US! facilities! generally! show! higher! leak! rates!

than! presented! in! this! analysis,! see! Appendix# 3.! This! review! suggests! that! the! results! of! the!

analysis! performed! in! this! study! may! be! conservative! when! considering! US! facilities. However,

comparison!with!other!studies!as!shown!in!Appendix#3 should!be!interpreted!with!great!caution!

because!of!the!great!variation!in!statistical!samples!(this!analysis!having!a!far!greater!number!of!

observations),!type!of!facilities!surveyed!and!analytical!approach.

The!assumptions!and!considerations,!with!the!exception!of!the!assumption!that!all!leaks!can!be!repaired!

without! waiting! for! shutdown,! all! tend! to! overestimate! the! cost! of! LDAR! programs! and/or!

underestimate! of! the! mitigation! potential! associated! with! such! programs.! In! summary,! this! indicates

that!our!assessments!of!the value!and!costHeffectiveness!of!LDAR!programs!are!in!general!conservative.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 23!Factor!of!about!3,!calculated!based!on!data!from!Natural!Gas!Annual!Respondent!Query!System!(EIAH757!Data!through!2012)!

and!a!presentation!by!BlueLine!at!EBRD/GGFR!workshop!on!gas!utilization!in!Moscow!19th!June!2013!(for!info!see!

http://www.aebrus.ru/en/memberHnoticeHboard/index.php?ELEMENT_ID=259927). 24!See!Alberta!Energy!Regulator!Directive!060!at!8.7;!http://www.aer.ca/documents/directives/Directive060.pdf
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Appendix&1:&LDAR&costs&

Table!5:!Average!cost!of!hiring!an!external!service!provider!to!conduct!a!survey,!depending!on!the! facility!type! (not!including!

any!internal!administrative!costs)

Facility#type: Cost#of#hiring#an#external#service#provider,#USD:

Compressor!station 2,300

Gas!plant 5,000

Multi!well!batteries! 1,200

Single!well!batteries!! 600

Well!site! 400

Table!6:!Leak!rate!and!repair!costs!depending!on!the!component!type!(main!component!types!only;!rates!are!in!cubic!feet!per!

minute!(cfm))

Rate#(cfm) Repair#Cost#(USD)

#!in!DB Min Average Max Min Average Median Max

Valve 10,575 0.01 0.12 36 20 90 50 5,500

Connector/Connection 23,577 0.01 0.10 60 15 56 50 5,000

Regulator 1,081 0.01 0.12 5 20 189 125 1,000

Instrument!Controller!(Leak!only) 1,106 0.01 0.14 5 20 129 50 2,000

Appendix&2:&Leak&rate&per&component&type&and&per&facility&type

Table!7:!Total!average!leak!rate!from!facilities,!only!from!specific!component!types!(cfm)!

Compressor#

station

Gas#plant Well#sites#and#

well#battery

Connector/Connection 0.58 1.69 0.11

Instrument!Controller!(Leak!only) 0.04 0.05 0.03

Valve 0.41 0.77 0.04

Open!Ended!Line 0.10 0.11 0.02

Regulator 0.04 0.05 0.02
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Appendix&3:&Gas&compositions&

Based!on!the!description!of!the!type!of!gas!emitted!from!each!source,!the!following!compositions were

assumed!for!the!leaks!in!the!database,!from!which!CO2e!and!VOC!emission!factors!have!been!calculated:

Table!8:!Assumed!gas!compositions!and!emission!factors!for!the!main!gas!types!used!(these!are!used!for!>!99%!of!the!gas!leaks)

Type#of#gas#

(described!in!database)

Methane

(Mol!%)

EFCO2e

(kgCO2e/scf)

VOC

(Mol!%)

EFVOC

(kgVOC/scf)

Methane 100% 0.48 0.0% 0.0000

Custom!gas 83% 0.40 6.8% 0.0047

Sweet!gas 79% 0.38 7.5% 0.0045

Sour!gas 71% 0.35 3.6% 0.0023

Propane 0% 0.00 100% 0.0813

Ethane 0% 0.00 0.0% 0.0000

Appendix&4:&Comparisons&with&past&work&

A! number! of! other! published!studies! evaluate! either! the! emissions! rates! of! different! facilities! or! the!

economics!of!performing!leak!detection!and!repair!programs.!This!section!briefly!reviews!key!similarities!

and!differences!in!the!approach!and!results!of!this!study!and!other!existing!publications.!However,!while!

use!of!IR!cameras!in!leakHdetection!has!been!discussed!in!previous!work, the!project!team is!not!aware!

of! a! study! that! fully! quantifies! costs! and! benefits! of! screening! facilities! for! leak! emissions! with! IR!

cameras!using!extensive!field!data.!!

Emission&rates

Table 9 presents! a! comparison! of! emissions! rates! from! a! number! of! published! studies! (results! from!

some!studies!were!analyzed!by!Carbon!Limits!to!categorize!emissions!as!leak!and!vent!emissions).!
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Table!9:!Comparison!of!the!current!study!with!past!published!work!(results!presented!in!cfm)

Wellsite#&#well#

batteries

Compressor#

stations

Gas#plants

#!of!

assessments

results

#!of!

assessments

Results

#!of!

assessments

Results

Average!leak 0.4 1.4 3.3

This#study Average!vent 1.2 2.4 3.9

Average!emissions

1,764

2.1

1,915

3.8

614

7.3

Average!leak NA 6.4 13.5

Average!vent NA 4.3 45.2

Fort#Worth#

Natural#Gas#air#

quality#study#

(3)25 Average!emissions

375

3.1

7

10.7

1

59.1

Natural#gas#star# Min!emissions NA 0.7 85.4

program,#lessons#

learned#2006#(4)#

(5)

Max!emissions

NA

NA

13

380.5

4

244.4

Average!leak26 NA NA 60.2

Average!vent27 NA NA 65.2

Clearstone#2006#

(6)

Average!emissions28

12

0.8

7

12.2

5

155.1

University#of#

Texas#2013#(7) Average!emissions 146 0.2329 NA NA NA NA

It! is! important! to! highlight! that! the! studies! compared! in! Table 9 have! been! performed! using! very!

different! approaches! and! methodologies,! and! with! very! different! sample! sizes.! As! a! result,! any!

comparison!should!be!interpreted!carefully.!

Overall,! the! results! for! well! sites! are! in! the! same! order! of! magnitude! for! all! the! studies! presenting!

measured!gas!rates.!A!few!hypotheses!may!explain!the!differences!observed!in!emissions!rates!from!gas!

plants!and!to!some!extent!from!compressor!stations:!

• Sizes!of!facilities:

o Gas!plants!in!USA!are,!on!average,!about!three!times!larger!than!Canadian!ones.!A!large!

number! of! the!gas! plants! in! the!database!are! very! small! plants,!which!would!have!an!

impact!on!the!average!emissions!presented.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 25!Annex!3A

26!Includes:!Pressure!relief!valves,!regulators,!block!valves,!connectors!(unions,!flanges,!and!plugs),!and!control!valves 27! Includes:! Crank! case! vent,! compressor! seals,! openHended! lines,! orifice! meter,! glycol! dehydrators,! pneumatic! controllers,!

equipment!blowdowns!and!purging!activities,!tank!vents,!combustion!equipment

28 For! well! sites! and! compressor! stations,! glycol! dehydrators,! pneumatic! controllers,! equipment! blowdowns! and! purging!

activities,!tank!vents,!flares,!and!combustion!equipment!are!not!included 29!Estimate!per!well!site!based!on!the!average!number!of!wells!per!wellsite.
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o Compressor! stations! in! the! database! include! a! large! share! of! compressors! situated! in!

the! production! segment! (i.e.! gathering/boosting! compressors),! which! are! generally!

smaller!than!the!stations!in!the!transmission!sector.!

• Some!of!the!past!studies!have!focused!on!very!limited!samples!of!facilities!per!survey.!It!is!not!

clear! what! the! selection! criteria! have! been! and! how! representative! the! sampling! has! been!

relative!to!the!overall!distribution!of!facilities.

• According! to! the! data! providers! for! this! study,! many! gas! plants! in! the! database! have! been!

engineered! to! high! standards,! and! many! have! a! number! of! personnel! onHsite! to! identify! and!

correct!emission!related!problems!before!they!are!detected!by!third!party!companies.

• In! a! number! of! the! other! studies! reviewed,! the! leak! detection! and! repair! programs! were!

performed! for!the! first!time! (pilot!study!or!baseline!survey),!and!a!large!number!of!leaks!were!

detected.! When! leak! detection! surveys! are! repeated! regularly,! repeat! year! surveys! (which!

constitute!the!majority!of!the!data!used!for!this!study)!may!identify!decreased!leak!rates.

Economic&attractiveness&of&leak&detection&and&repair

An! earlier! study! confirmed! that! the! vast! majority! of! fugitive! natural! gas! losses (96.6%)! were! costH

effective! to! repair (6).!However,! several! reports! ((5),! (6),! and (4))!find! that! in! most! of! the! evaluated!

individual! facility! cases,! the!full! LDAR! program!– survey!+! repairs!–! is!economic! to! implement. In! this!

report,! we! find! that! LDAR! programs! at!most! individual! facilities! will! have! negative!NPV,! although! the!

aggregated! NPV! is! positive.! This! difference! can! be! explained! by! the! smaller! overall! emission! rates

identified!at!each!facility!in!this!study!(see!above).

This! review! of! past! work! shows! that! the! results! of! the! analysis! performed in! this! study! may! be!

conservative!when!considering!US!facilities.!
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References

1.!EPA.![Webpage].!2012.!http://epa.gov/climatechange/ghgemissions/gases/ch4.html.

2.!EPA.!Petroleum!and!Natural!Gas!Systems!–!2012!Data!Summary.!Greenhouse!gas!reporting!program.!

2013. http://www.epa.gov/ghgreporting/documents/pdf/2013/documents/SubpartWH2012HDataH

Summary.pdf

3.!Eastern#Research#Group.!Fort!Worth!Natural!Gas!Air!Quality!Study.!2011.!

http://fortworthtexas.gov/uploadedFiles/Gas_Wells/AirQualityStudy_final.pdf

4.!Natural#Gas#Star#Program.!Directed!Inspection!and!Maintenance!at!Processing!Plants!and!Booster!

Stations.!2006. http://www.epa.gov/gasstar/documents/ll_dimgasproc.pdf

5.!Natural#Gas#Star#Program.!Directed!Inspection!and!Maintenance!at!Compressor!Stations.!2006.

http://epa.gov/gasstar/documents/ll_dimcompstat.pdf

6.!National#Gas#Machinery#Laboratory,#Clearstone#Engineering#Ltd.#Innovative#Environmental#

Solutions,#Inc.!CostHEffective!Directed!Inspection!and!Maintenance!Control!Opportunities!at!Five!Gas!

Processing!Plants!and!Upstream!Gatllering!Compressor!Stations!and!Well!Sites.!2006.

http://www.epa.gov/gasstar/documents/clearstone_II_03_2006.pdf

7.!David#T.#Allen,#&#al. Measurements!of!methane!emissions!at!natural!gas!production!sites!in!the!

United!States.!2013.!http://www.pnas.org/content/early/2013/09/10/1304880110.full.pdf+html

8.!CAPP.!Management!of!Fugitive!Emissions!at!Upstream!Oil!and!Gas!Facilities.!2007.

http://www.capp.ca/getdoc.aspx?DocId=116116&DT=PDF