# Quantifying!cost

. effectiveness! of!systematic!Leak!Detection! and!Repair!Programs!using! I nfrared !cameras

!

CL#report#CL

) 13

) 27

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### !!!!!!!!!!!!!!!!!! P age! 2 !of! 29 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!cost

H effectiveness!of!systematic!Leak!Detection!and!Repair! Programs!using!I nfrared !cameras Report!number: CL

H 13

H 27 Finalized: December! 2013

This!document!is!issued! for!Clean!Ai r!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!ot her!parties.

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

Pre

) publication#draft#note: !!This!draft!is!subject!to!final!copy!editing!for!cla rity!and!phrasing.!!Analy sis!
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!Vo llgate!6
NO

H 0158!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.24!December!2013!

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## CONTENT

EXECUTIVE#SUMMARY

................................ ................................ ................................ ......................... 4

O VERVIEW

................................ ................................ ................................ ................................ .................. 4
M AIN!RESULTS

................................ ................................ ................................ ................................ ............ 4
Economic!assessments!

– !Individual!facilities

................................ ................................ ................................ ...... 5
Economic!assessments!

– !Aggregate!cost!effectiveness!of!LDAR!programs

................................ ........................ 6

1. INTRODUCTION

................................ ................................ ................................ ........................... 9

2. DATA#SOURCES#AND#ANA LYTICAL#APPROACH

................................ ................................ ............. 9

2.1 D ATA!SOURCES!AND!LEAK !RATES

................................ ................................ ................................ ........ 9
2.2 M ETHODOLOGY!AND!ASSUM PTIONS

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

................................ ................................ ................................ ............................. 12
2.2.2 Assumptions,!base!case!approach,!and!sensitivity!analyses

................................ ............................... 13

3. SUMMARY#OF#THE#ANALY SIS

................................ ................................ ................................ ..... 14

3.1 E CONOMIC!ASSESSMENT!

H I NDIVIDUAL!FACILITIES

................................ ................................ ............... 14
3.2 A GGREGATE !ABATEMENT!COST

................................ ................................ ................................ ........ 16
3.3 C OMPARISON!OF!DIFFERE NT!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 M AIN!FINDINGS

................................ ................................ ................................ ............................ 22
4.2 H OW!ROBUST!ARE!THE!RE SULTS ?

................................ ................................ ................................ ..... 22

APPENDIX#1:#LDAR#COS TS

................................ ................................ ................................ .................. 25

APPENDIX#2:#LEAK#RAT E#PER#COMPONENT#TYPE #AND#PER#FACILITY#TY PE

................................ .......... 25

APPENDIX#3:#GAS#COMP OSITIONS

................................ ................................ ................................ ..... 26

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

................................ ................................ ................. 26

E MISSION!RATES

................................ ................................ ................................ ................................ ........ 26
E CONOMIC!ATTRACTIVENE SS!OF!LEAK!DETECTION !AND!REPAIR

................................ ................................ ........... 28

REFERENCES

................................ ................................ ................................ ................................ ....... 2924!December!2013!

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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! enginee red! vents .! According! to! data! presented! by! the! US! Environmental! Protection!Agency!(EPA)
, !1 6% !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!inf rared!cameras, !detect!sources!of!gas!emissions
, !which!in!addition! to!methane!include!volatile!organic!compounds !( VOCs).!Once!emission!rate s !are!measured!or!estimated,! repair s !can!be!conducted,!reducing!emissions!by!90%!or!more.!The!economic!merits!of!a!LDA R!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! component s, which! were! either! leaking! or! venting ! gas ; leaks! were!
detected! from ! 39,505! components.!A! database! has! been! populated !with!information! on!gas!emission!

rate s ,!repair!costs
, !and!repair!lifetime!for!each!emission!source ,!i n!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!categori es!of!facilities:! (i) g as processingplants
, ( ii)-compressor-stations !in!gas!transmission!and!gas!gathering!systems ,!and (iii) w ell-sites and- wellbatteries
, !including!single!well!heads!and!multi

H well!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!modest ly ,! with! about! one! third! having! no! reported! leaks! and! only! 7%! having! leaks! above! 500! thousand! standard! cubic! fee t (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!M cf!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%24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 5 !of! 29 The!vast!majority!of!leaks!are!economic!to!repair! once!identified:!leaks!amounti ng!to!more!than! 97%!of! gas!emission s ( 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!o nce! 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!faci lities,! where! the! distribution! of! net! present!values! (NPV)! for! facilities! of!each! category!is!examined,!and! (b)! from!a! public! perspective,!where! the!aggregate! cost

H effectiveness!of!conducting! LDAR! programs! for!a! number!of!facilities!(in!a!jurisdiction!or!o wned!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!leak

H detection!survey!at!a!facility,!inc luding!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!cost

H effectiveness!when!altering!key! assumptions,!including! the!assumption! that!all!leaks!are! fixed !and! the! frequency!of!detection!surveys,!
were!examined.!!

Economic&assessments&

– I ndividual&facilities&

We! first! calculated! the! distribution! of! NPV s of ! LDAR! programs ! conducted! at! individual! facilities

.! Although! the! detection! survey s ! result! in! identificatio n! 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!
d oes!not!include!the!benefits!that!can!be!realized!through!cost

H effective!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!cost

H effectiveness!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!pos itive!NPV !(net!gain) .!This!is!because!leak!rate s! for! well!sites!and!batteries!

are! generally! smaller! than ! that! for ! gas! plants! or! compressor! stations.! However,! even! when! implementing!a! LDAR! program! represent s !a! net! cost! for! an! individual! facilit y ,! the! overal l! 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

H 3,000!USD. !The!mean!N PV!for!the!1,424!well! surveys !having!a!negative!NPV!(81%)!was!

H 1,160! 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!

H 8,000!USD. !The!mean!NPV!for!the!393! gas!plant!su rveys !having!a!24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 6 !of! 29 negative!NPV!(64%)!was!

H 4,660!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!

H 2,401!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!bene fit!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 ! surveye d ! 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! survey s ,! the! net- gain ! from! facilities!with! positive! NPV!can!be!quite!high.!

The! aggregate! economic! result! of! c onducting ! LDAR! programs! can! also! be! presented! in! terms! of! abatement!costs! ( e.g.! per!metric!ton!of!CO 2 e!or!VOC!reduced).! A!n egative!abatement!cost!means!that! the!aggregate!NPV!is!positive. LDAR!programs!in!both!gas!plants!and!compressor!stations!have!negati ve! abatement!costs
, even! with!low!gas!prices

. F or!well!sites! and !batteries
, !the!abatement!cost!is! about! zero! in! the! base! case! scenario! and! + 6!USD/tCO 2 e !or! + 300!USD/tVOC!in! the! most! conservative! scenario!we! considered! (assuming! a! value! of! recovered! gas! of! 3 ! USD/ M cf! 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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### !!!!!!!!!!!!!!!!!! P age! 7 !of! 29 Figure! 2 :! Aggregate!VOC!a nd!CO 2 e !abatement!cost!for!different!types!of!facilities

In!addition!to!the!base!case!results,!we!have !also!evaluate d whether! applying!different!repair!strateg ies would!reduce!the!abatement!costs!of!systematic!LDAR!program s !( 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! improve s ! the! economics! of! the!
overall! LDAR! program , by! reduc ing !the!abatement!cost!by!less!than!1 5!USD/tVOC.

The!cost

H effectiveness!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/tCO 2 e !and!800!USD/tVOC.! M onthly!surveys!increases!
the! abatement! cost! to! 55 ! USD/tCO 2 e ! and! 3,400 ! USD/ tVOC.! We! note! that! the! cost! effectiveness ! of! conducting! frequent! survey s ! depends! on! the! facility! type,! maintenance! and! size,! and! the! optimal! frequency! may! best !be! determined by!analyzing !the!results!of! past !surveys. T his !study!focus ed !only!on! LDAR!using!IR !camera s ,!which!appears!to!be!the!dominant!method!at!present

.! A lternative! technologies! in!the!future!may!reduce!cost!and!improve!effectiveness.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 8 !of! 29 Figure! 3 :! Aggregate!abatement!costs!depending!on!the!survey!frequency

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

To!conclude,!this! report !provides! empirical!calculations!of!cost

H effectiveness!of !leak!detection!and! repair!

pr ograms ,!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.24!December!2013!

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## 1. INTRODUCTION&

Methane!is!a!greenhouse!g as!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! f rom! 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!(uninten ded!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! 1 6 %! of! the ! methane! emissions! in! the! onshore! production!sec tor (2) .!!Other!sources!of!methane!emissions!from!oil!and!gas,!such!as!venting!from!tanks! and! other! equipment 1 ,! compressor! seal! leaks,! and! incomplete! combustion! of! methane! in! gas

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



## 2. DATA&SOURCE S &AND& ANALYTICAL&A PPROACH

2.1 Data&source s&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! Ca rbon! 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!sample 2 ,!covering! all!potential!sources!of!emissions !(both!leaks!and!vents)

.! The!surveys!detec ted!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,! f acilities! were! first! screened! using! i nfra r ed! (IR) cameras! to! locate! hydrocarbon! gas! emission s. I dentified! emissions! were! then! either! measured ! (in! general! with! a! high

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

2 !Data!from!oil!sands!and!oil!bitu men!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!manne r!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.!!24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 10 !of! 29 volume!sampler)!or!estimated 4

.! A n!emission!register
, !which!include s!estimations!of !the! costs!of! repair s to! reduce!emission s,!was! then! produ ced! 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!ty pe!of!repair!required,!the!repair! costs!and! repair! lifetime for!each! individual!emission! source ! detected! in! the! surveys 5

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

Three!types!of!facilitie s!were!surveyed,!as!shown!in! Table 2

.!

Table! 2 : Types!of!facilities!and!number!of!surveys 6

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!one 7 !to! three!compressors!and!from!200!to!1000!horsepower!each.!The!majority!
of!these!c ompressor!stations!are!more!than!five!years!old.!

Gas#plant 614 Gas!plants!in!this!category!generally!range!from!10! MM cf/d ay !to!500!
MM cf/d ay .!On!average!gas!plants!tends!to!be!larger!in!USA!than!in!
Canada 8 .!The!vast!majority!of!plants!are!more!than!five!y ears!old

.!

Well#sites#and#
well#batteries 1
, 764 This!category!includes! the!following 9 :!

• 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!separa tor,!etc.).!Multi

H 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! lea k! the! mo s t ,! 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!sub

H categorie s!within! the! three!categories!of! facility!type,!nor!to!analyse!how!leak!rates!or!net!program!costs!vary!between!sub

H categories.

7 !A!large!share!of!the!compressor!stations! have !only!one!compressor.!

8 Natural!Gas!Annual!Respondent!Query!System!(EIA

H 757!Data !through!2012)!and!presentation!by!BlueLine!at!EBRD/GGFR! workshop!on!gas!utilization!in!Moscow!19 th !June!2013 !(for!info!see! http://www.aebrus.ru/en/member

H notice

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

9 !These! three!subcategories!are! used !separately!in! the!dat abase
, !but! due! to!inconsistent! terminology! and!practices! between! the!two!data!providers,!the!category! “ well!site s & !well!batter ies” !is!used!in!this!study.!!24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 11 !of! 29 modest ly ,!with!about! one

H third !having!no! detected !leaks 10 !and!only!7%!having!leaks!above!500!thousand! cubic! feet!per!year! ( M cf/year).! Compressor! stations!leak!more! than!well! sites!an d!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% 2 3% 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!baseli ne!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!cost

H effectively! 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! cost

H effective! 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!a nd!vents, for!various !facility!type s!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 10 !This!is!very!similar!to!the!result!from!reference!(7)!where!no!leaks!were!detected!at!34%!of!the !well!sites.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 12 !of! 29 

## 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!in itial!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

T he!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!e conomic !value of!implementing!LDAR!programs!at!individual!facilities. (ii) The!cost

H effectiveness of!implementing LDAR !program s at a!group!of!facilities of!a!simila r!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.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 13 !of! 29 2.2.2 Assumptions,&base&case&approach,&and&sensitivity&analyses

A! set! of! assumptions! and! realistic! variations! of! key! parameter! values! have! been! us ed! 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! price s ! for! purchasing! such! services 11 ! and! an! estimated!mark

H up! to! reflect! the! facility! owne r ’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!operators 12

. S ensitivity!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!mark

H up!of!0

H 100%!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!lifetime s!are!estimated !based!on!information! provided!by!the!survey!companies!

on !(a)!the!type!of!repair!sugge sted !for!the!component ,!or!(b)!the!type,!sub

H type!and!size!of!the! leaking!component. !!See!Appendix!1!for!minimum,!maximum,!average,!and!median!repair!costs! for!various!component!types.

• Gas#price :!T he! value!of!recovered!gas !has!been!assumed!to!be!similar!fo r!all!emission !sources,! independent! of! the! composition! of ! the! gas.! Gas! values! from! 3! to! 5! USD/ M cf! have! been!
assessed.

• Repair# efficiency :! 95%! repair! efficiency! has! been! assumed! for! leaks,! 80%! for! other! emissions! due!to!improper!conditions 13

.

• 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!
CO 2e ! 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!calculatin g! CO 2 e!tonnage.!!!

The!base!case!scenario!includes!the!following!assumptions:!(i)!the!value!of!recovered!gas!is!4!USD/ M cf;! (ii)! the! total! cost! to! facility! owners! of! conducting! a! leak

H detection! survey! at! a! facility! is!equivalent! to!
150%!of!the!cost!of!hir ing!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.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 14 !of! 29 

## 3. SUMMARY&OF&THE&ANALYSIS

3.1 E conomic&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,!t he!vast !majority !of!the!leaks,!and!the!vast!majority!of!emissions!from!leaks!(more!than! 97%
of! the! total! leak! rate), ! are! economic! to! repai r! (NPV>0),! even! when! the! value! of! gas! is ! 3!USD/ M cf. In! addition,! over! 90% !of!gas!emissions!is! from!leaks!which!can!be!repaire d!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!o f!the!individual!repair!for! all !types!of!facilit ies

– !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 in dependent! 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!a ll!three!categor ies,! the!majority!of! facilities!have!negative!NPV s! (i.e.!net!costs), !with! the!well!sites!&!batteries! having! the!lowest!sha re!of! facilities!with!positive!NPVs!(i.e.!net!gains).24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 15 !of! 29 Figure! 8 !:! Distribution!of!NPV!p er!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

H 3,000!USD. !The!mean!NPV!for!the!1,424!well!surveys!
havi ng!a! negative!NPV! (81%)!was!

H 1,160!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! c ompressor! 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!

H 5,000!USD.!

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

H 8,000!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 !compan ies!is! likely! to! be! h igher! 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!provide r.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 16 !of! 29 

## 3.2 Aggregate&abatement&cost

To! evaluate! the! overall! cost

H efficiency ! 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!NPV s !were! estimated.! Although! the! majority! of ! the! 4,293! facility! surveys! have! negative! NPV s! when! evaluated! individually ,! the!aggregated!NPV! for! all! facilities! is! positive,!meaning! that! those! fac ilities!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! CO 2e or ! VOC! emissions! avoided ) ,! which! is! common! when! environmental! policies! are!
considered.!T he!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!repa ir!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!cost

H efficiency!of!mitigation!options.
As!shown!in!Section! 4.2 ,!the!results!ar e!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!b ase!case!scenario.!This!conclusion!also!holds!when!assuming!a!lower!gas!price!of!3! USD/ M cf! 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! ha ve! abatement! costs! around! zero,!increasing!to! 6!USD/tCO 2 e !or!300!USD/tVOC! applying!the!less!favourable!assumptions!for!gas!price! and!total!survey!costs.

Figure! 9 :!Aggregate!VOC!and!CO 2 e !abatement!cost!for!different!types!of!facil ities24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 17 !of! 29 

## 3.3 Comparison&of&different&approaches&for& LDAR &programs

The!results!presented!in!the!previous!s ection s 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 !repair ed. Section# 3.3.2 !t hen!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!de tection!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!leak ing!

componen ts !with!an!emissions!rate! exceeding !a!certain!threshold,!e.g.! 20! M cf!per!year.

For!each! strategy, the p otential!leak! reduction! and! aggregate!abatement!costs! per!metric! ton!of!CO 2e and!VOC! are! calculated ! for! different! types! of! facilities 16

.! Table# 3# summari zes! how! the ! two!alternative strategies!compare!to!the! base!case!strategy!(i.e.! “ repair! all!leaks” ) !for!two! (sub

H ) categories!of!facilities ; compressor!station s !and!multi!well!batter ies

.! O ther! types!of! facilit ies !show!similar!patterns.!

Table! 4 :!Comparison!o f!three !hypothetical! repair!strategies !for!compressor!stations!and!multi

H well!batteries !(examples) 17

Compressor#Station Base#Case (all!identified!leaks) Strategy#2 (leaks!with!NPV>0) Strategy#3 (leaks!!>!20! M cf/yr) Potential!leak!r eduction!after!each!survey 94.7% 93.0% 87.7%
Methane! abatement!cost!(in!USD/tCO 2e )

H 4.9

H 5.0

H 4.8 VOC!abatement!costs!(in!USD/tVOC)

H 355

H 368

H 357 Average!number!of!leaks!to!repair!per!facility 11.3 10.2 6.9
Multi#well#Battery Base#Case Strategy#2 Stra tegy#3
Potential!leak!reduction!after!each!survey 94.5% 92.6% 88.1%
Methane! abatement!cost!(in!USD/tCO 2e ) 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!th reshold!set!(see!F igure!6).!
Gas!emission!reduction s are !calculated!for!the!year!following!the!survey

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### !!!!!!!!!!!!!!!!!! P age! 18 !of! 29 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/tCO 2e ).! It! is ! also ! important! to!
consider ! that! this! strategy ! would! be! more! complex! to! implement! in! practice

. F or! each! leak
identified
,! at! a! minimum! some! evaluation! (based! on! measurements! or! estimates! of! leak! volume,!etc.)!would!need!to!be!carried!out,!a nd!for!those!leaks!not!repaired,!documentation!of! leak! magnitude,! repair! cost,! etc.,! might! be! required! ( and! possibly! verified).! The! additional!
administrative!costs!this!entail s !are!not!accounted!for!in!this!analysis

.!

• Strategy! 3 does! not! represent! cost! s avings! 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!emi ssion!reductions!and!aggregate!abatement!costs!for!different!emissions!rate!thresholds!
for! this! strategy

.! The! sensitivity! a nalysis! shows! that,! statistically,! it! is! both! more! environmentally!efficient!and!more!economic al !to!repair!all!the!leaks!detected.!

Figure! 10 :! Strategy!3

H !Sensitivity!to!the!emissions!rate!threshold !with!base!case!assumptions 18

To!conclude,!as!the!vast!majority!of!leaks!are!economic!to!repair !on ce!the!survey!has!been!performed,!it! is! most! economic! and! environmentally! effective! to! repair! almost! all! the! leaks.! Adding! an! economic!
constrain t !on!the!repair!program! only! marginally!improves!the!economics!of! the!overall!program

. 19!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 18 !The!abatement!cost s !for!VOC!emission!reduction s (now!shown)!show !the!same!trend!as! for!CO 2e !(illustrated!in!the!figure)

. 19 !The!current!study!does!not!r eview!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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### !!!!!!!!!!!!!!!!!! P age! 19 !of! 29 3.3.2 Impact&of&the&frequency&of&surveys

Increasing!the!frequency!o f!surveys!and!subsequent!repairs!further!reduces!emissions,!but!will!increase!
abatement!costs. !This! s ection! examines!the!effect!of!survey!frequency.

The! database! used! in! this! report! includes! surveys! performed! in! a! variety! of! faciliti es! and! in! several! juri sdictions !in!both!Canada!and!USA .!S ome!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! frequ ency!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! c an ! be! repaired! earl ier! (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!CO 2 e !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/tCO 2 e !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.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 20 !of! 29 Figure! 12 :!Aggregate!abatement!costs!depending!on!the!survey!frequency 21

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!frequency 22

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!foun d!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!can not !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!repair s which!will!be!delayed !is!not!available!in!the!database..!24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 21 !of! 29 distribution!of!leak! rates!shown!in Table 3 )! reflect!lea ks! 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,!t he!abateme nt!costs! for!quarterly!surveys! remain!below!15!USD/tCO 2 e !and!800! USD/tVOC.

We! note! that! the! cost! efficiency! of! conducting! frequent! survey s ! 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! focus ed ! only! on! LDAR! using! IR! camera s,! which! appears! to! be! the! dominant! method!at!present

.! A lternative! technologies!in!the!future!may!reduce!cost!and!improve!effectiveness.!24!December!2013!

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## 4. CONCLUDING&REMARKS&

4.1 Main&findings&

The! s tudy! presented! in! this! report! provides! n ew! 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!m ost!leak s,!once!identified,!are!economic!to!repair!
with! a! payback! period! less! than! one! yea r .! 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!c ost s !a nd!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!

H 8,000!USD! per! survey! and facility)

.


## 4.2 How&robust&are&the&results?

Some! sensitivity! a nalyses! 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! potential ly! 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/ tCO 2 e 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.! A batement! cost s were! calculated! for!the!subset!of!surveys! for!which! more!than!80%!of!total!emission s!was!measured,!as!

o pposed! to! estimated. For! all! categories! of! facilities,! t he! abatement! cost s calculated! for! this!
subset!of! surveys is!very!similar!(within!1 !USD /tCO 2 e )!to!the!results! obtained!using!data!from! the!
entire!database

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### !!!!!!!!!!!!!!!!!! P age! 23 !of! 29 Value # of# recovered# gas: The! value! of! the! rec overed! 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!detecte d!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!ca ses,!the!
total! survey!cost s presented!above !might!be!on!the!high!side.

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

H effective! 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,!
du ring! 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! reduction s from! repairs! requiring! shutdown,!or!other! repairs!which!are!not!carried!out! rapidly! (such!as! for!components! which!are!difficult!to!access),! has!no t!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# c ompressor#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!
i nformation! 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!

H 1.7!USD/tCO 2 e ,!while!the!aggreg ate!abatement! cost!for!LDAR!programs!in!the!transmission!segment!is!

H 8.3!USD/tCO 2 e in!the!base!case!scenario

.! For! the! latter! category! of! compression! stations,! if! the! value! of! recovered! gas! is! zero! (i.e.! no additional !revenue s from!sale!of!gas) ,!the!abateme nt!cost! increase!to 2.3!USD/t CO 2 e

.

US#versus#Canadian#facilities:#
T he!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!a re:!24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 24 !of! 29 • 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,! o n!average,!larger!than!Canadian!ones 23 .!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! i nterviews! 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!necess arily! 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! lea k! 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!samp les!(this!analysis!having!a!far !greater!number!of! observations) ,!type!of!facilities!surveyed !and!analytical!approach

.

The!assumptions!and!considerations,!with!the!exceptio n!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 ! indicate s that !our!assessme nts!of!the value!and!cost

H effectiveness!of !LDAR!programs!are!in!general!conservative.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 23 !Factor!of!about!3 ,!calculated!based!on!data!from! Natural!Gas!Annual!Respondent!Query!System!(EIA

H 757!Data!through !2012)!
and! a! presentation!by!BlueLine!at!EBRD/GGFR!workshop!on!gas!utilization!in!Moscow!19 th !June!2013 !(for!info!see! http://www.aebrus.ru/en/member

H notice

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

24 !See!Alberta!Energy!Regulator!Directive!060!at!8.7;!http://www .aer.ca/documents/directives/Directive060.pdf24!December!2013!

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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
, 50 0 Connector/Connection 23,577 0.01 0.10 60 15 5 6 50 5
, 0 00 Regulator 1,081 0.01 0.12 5 20 18 9 125 1
, 000 Instrument!Controller!(Leak!only) 1,106 0.01 0.14 5 20 129 50 2
, 000



## Appendix&2:&L eak&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 0.0224!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 26 !of! 29 

## Appendix&3:&Gas&compositions&

Based!on!the!description!of!the!type!of!gas!emitted!from!each!source,! the!following !composition s were assumed!for! the !leak s !in!the!database ,!from!which !C O 2 e!and! VOC!emission!factor s !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!%) EF CO2e (kgCO 2 e/scf) VOC (Mol!%) EF VOC (kg VOC /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 :&Comparis ons&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!program s .!This! section !briefly!review s !key!similarities!
and!differences! in !the!appr oach!and!results! of!this!study!and! other!existing!publication s

. !However,!w hile!
use!of!IR!cameras!in!leak

H detection!has!been!discussed!in! previous!work, the!project!team is !not!aware! of! a! study! that! fully! quantifies! costs! and! benefits! of! screening! facilitie s! for! leak ! emissions! with! IR! cameras!using!extensive!field!data.!!



## Emission&rates

Table 9 presents! a! comparison! of! emissions! rate s ! f rom ! a! number! of! published! studies ! (results! from! some!studies!were!analyzed!by!Carb on!Limits!to!categorize!emissions!as!leak!and!vent!emissions)

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### !!!!!!!!!!!!!!!!!! P age! 27 !of! 29 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 Average!vent 1.2 2.4 3.9 This#study 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

Min!emissions NA 0.7 85.4 Natural#gas#star# program,#lessons#
learned#2006 #(4)# (5) Max!emissions NA NA 13 380.5 4 244.4

Average!leak 26 NA NA 60.2
Average!vent 27 NA NA 65.2 Clearstone#2006# (6) Average!emissions 28 12
0.8 7
12.2 5
155.1

University#of#
Texas#2013# (7) Average!emissions 146 0.23 29 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! s tudies! 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,! o n!average,! about!three!times! larger!th an!Canadian!ones .!A! large! number! of! the!gas! plants! in! the! database !are! very! small! plants ,!which!would! have!an!
im pact!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:! C rank! case! vent,! compressor! seals,! open

H ended! lines,! orifice! mete r,! 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,!f l ares,!and!combustion!equipment!are!not!included

29 !Estimate!per!well!site!based!on!the!average!number!of!well s !per!wellsite.24!December!2013!

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### !!!!!!!!!!!!!!!!!! P age! 28 !of! 29 o Compressor! stations! in! the! database! include! a! large! share! of! compressors! situated! in! the! production! seg ment! (i.e.! gathering/boosting! compressors),! which! are! generally!
smaller!than!the!stations!in!the!transmission!sector.!

• Some!of!the!p ast!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! provider s! for! this! study ,! many! gas! plants! in! the! database ! have! been! engineered! to! high! standards
, ! and! many! have! a! number! of! personne l! on

H site! to! identify! and! correct!emission!related!problems!before!th ey!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!surv ey)
, !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! identif y !decrease d!leak!rates

.


## Economic&attractiveness&of&leak&detec tion&and&repair

An! earlier! study ! confirm ed! that! the! vast! majority! of! fugitive! natural! gas! losses (9 6.6 %)! were! cost

H effective! to! repair (6)

.! However,! several! reports ! ( (5)
,! (6) ,! and (4) )! find ! that! in! most! of! the! evaluated! individual! facility! cases ,! th e! full! LDAR! program!

– survey!+! rep airs!

– ! 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.! Th is! difference! can! be! explained! by! the! smaller ! overall! em ission! rate s ident ified!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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### !!!!!!!!!!!!!!!!!! P age! 29 !of! 29 

## References

1.! EPA. ![ Webpage ]

. !2012.!http://e pa.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/SubpartW

H 2012

H Data

H 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. ht tp://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#Enginee ring#Ltd.#Innovative#Environmental# Solutions,#Inc. !Cost

H Effective!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

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