It seems obvious that to manage the reduction of methane emissions an operator needs to measure its current emissions, report them accurately to regulators, and then take action to mitigate them, starting with the biggest sources. That simple observation frames one of the themes being progressed by the Measuring What Matters pathway in the SPE Gaia Sustainability Program framework. But what might seem obvious gets tricky: Just what matters, and how can an operator efficiently and accurately measure those factors?
The industry is not new to measurements. We measure and monitor many attributes of equipment performance and production flows in a variety of ways. But the goalposts are moving, and we need to re-examine if we are really measuring what matters in today’s energy-transition climate.
More widely, we know how to measure, but do we know what matters when it comes to the sustainability of human life on this planet? Even if we do know what matters, it is the planet that hosts human life among other forms. Are we able to measure our impacts to the point we can gain insights and underpin decisions in day-to-day life to connect the micro to the macro and recalibrate our decisions accordingly?
Four Stages of Measuring What Matters: A Short History
Stage 1: Crude oil at $100/bbl. With high crude oil prices, what mattered was production growth, so the industry focused on production and sales. US light crude surpassed $100/bbl on 2 January 2008 amid the financial crisis, but it only lasted to early August 2014. Measurement focus was on well testing, lease automatic custody transfer (LACT) meters, and reservoir characterization. Key communications with investors were about growth. Managers were motivated to grow production; higher commodity prices cured all ills. Engineers and geoscientists who have entered our industry since this 2014 peak of activity have had to learn a new set of realities. Crude prices are rising again, but industry fundamentals have changed.
Stage 2: Crude oil below $60/bbl. Crude oil commodity prices hit $60/bbl by mid-December 2014 and bottomed out in April 2020 because of the demand destruction caused by the COVID-19 pandemic. There were nearly 1,700 active drilling rigs in the US in 2011 and more than 1,900 for a short time in 2015, but following the oil price collapse, it fell to 700 in mid-2017 and really hit the bottom in 3Q 2021 with only 250 rigs working.
We are back now to around just below 600 rigs at the end of 2021 (with crude oil prices nearing $90/bbl again), but this is only 30% of drilling activity at the most recent peak. What mattered in Stage 2 was operations efficiency and reducing costs. So, the industry focused on costs, all kinds of costs from procurement (suppliers and supply chain costs) to offshoring back-office functions (for large operators anyway) and field instrumentation and SCADA (as the digital oilfield became more of a reality). The answers most often spoken by operators in this stage were capital discipline, production restraint, and consolidation with an eye on environmental impact. Measurement was focused on these targets.
Drilling automation and the “drilling factory” concept helped to improve the way the industry drilled wells. Measuring what matters when drilling a well helps to drive drilling costs down. Understanding nonproductive time on a rig drove operators and service companies to address many problems, and soon the highest cost of an unconventional (shale) well was seen in the completions phase, not the drilling phase.
Stage 3: Safety. “Everyone goes home every night safe.” In addition to measuring production and costs, the industry measured accidents, made a greater effort to measure safety factors, not just injuries and fatalities but the pyramid of slips, trips, falls, and near-miss events. Safety performance was added to managers’ bonus formulas and Stop Work Authority was extended to everyone on a drilling rig or production facility.
But as safety performance improved, fatalities continued at a similar pace, so it may be that we aren’t measuring the “black swan” events that rarely occur but when they do, bad things happen. The industry can take away some useful lessons from our combined private and public actions to measure a nonfinancial metric such as safety and turn that into effective actions to improve the safety of our workforce. Those lessons will be useful in Stage 4.
Stage 4: Environmental stewardship. Interest is growing on our impacts on the natural world on which human life depends (and on the economy where 50% of global GDP is dependent on nature’s services). Emissions and particularly methane abatement are now becoming table stakes to operate in many communities. The industry needs to respond to growing public pressure on measuring emissions, produced water and injection (issues of induced seismicity), recycling of produced water in unconventional basins, and greenhouse gases (CO2 but especially methane by basin, by facility, and by component). Effective and efficient leak detection and repair (LDAR) and reducing flaring is front and center.
What Really Matters Now
Super-emitters. Several studies now show that emissions of methane from producing basins are falling (especially when measured by methane intensity of large producers), but as the economy picks up, methane emissions are returning to 2019 levels. Most of the time, things work well in the oil field and improved maintenance practices seem to find and fix leaks. But other studies show that a small percentage of equipment (particularly tanks) produce most of the current emissions, so continuous monitoring and better facilities designs are called for.
Venting (and flaring) vs. leaking (fugitive emissions). A useful way to look at emissions is to divide them into two categories: vents and leaks. Some facilities in the oil field are designed to vent pressure in specific vessels to avoid unsafe conditions. Those venting practices, such as a thief hatch on a tank, can sometimes be caught in a flare stack system and combusted. Although the methane problem has been mitigated, a smaller but not insignificant CO2 problem has been created. Ultimately the operator must re-examine facilities designs to mitigate venting, considering options such as central gathering facilities, electrification, and eliminating diesel engines and pneumatic controllers.
For leaks, the challenge is timely detection, maintenance, and repair. Identifying the occurrence of an emissions event, locating its source, and replacing or repairing the broken piece of equipment is the responsibility of the LDAR and maintenance crew.
Nowhere to hide. Technology trends are leading to increasing accuracy and availability of satellite data for methane emissions, but operators still need to know what economic value is created in maintenance and operations activity. But what happens when proactive regulations get ahead of our ability to gather and understand data and to comply with new regulations economically and operationally? Are you guilty before being proven innocent or even being aware of what the data are telling you? Oil and gas operators are on the defensive before they even get started. Are these regulations issued ahead of our ability to comply with them? The example here is reporting emissions data.
Several states are asking oil and gas operators to self-report their flaring and fugitive emissions data to get regulatory permits to operate (North Dakota, Colorado, New Mexico). That is a good start but only if the data are trusted. Environmental researchers and NGOs are turning to satellite data to check on those self-reporting oilfield and midstream operators. The headlines are not good. You can argue about the spatial and temporal limitations of satellite data or the sensitivity of the instruments, but the emerging studies are telling a story that not all flaring, venting, and leaks are being reported. That news doesn’t help to develop trust.
Technology never seems to be the problem. We have a lot of data to look at (with more coming) and use to build event alarms and predictive models. But without trust, the arguments still divide operators from communities and regulators. Where is that trusted messenger? Where is the deeper understanding of the field data?
Conclusion
Clearly, the issue of reducing the carbon footprint of oil and gas operations is a very high priority for our industry, along with safety, efficiency, and effective production of hydrocarbon resources. Most operators are serious and responsible in their efforts to meet these objectives and are investing in programs to reduce their carbon footprint. Using data to make better decisions is essential, but we need to understand what the data are really telling us. Many operators may be under-reporting, but they need help understanding their data and use it to provide a more accurate report. What about the correlation vs. causation questions, false positives, unrepresentative observations, and accurate identification of locations? Does that context come out in the headlines, the hearings, and the regulations?
All of these questions call for us to better understand the data, not throw out all the analysis and modeling work. It calls for everyone to let the data tell its story, but that story may not be the one we believe at the start. Turning compliance to regulations without really understanding the data can be dangerous. This requires more work, which is often the hard work in data profiling, verification, and model building that doesn’t make the headlines. It takes skills in programming, statistics, and production engineering. This is the hard work that needs to get more attention.
To move forward, we need a better understanding of the practical application of monitoring, whether it is from a satellite, a drone, an aircraft, or monitoring stations just beyond the fence line. Collect the data and understand what it is telling us and be objective and just a bit skeptical before the appropriate context is made. Then maybe the data will tell its story, one that we all can believe and use to make the right decision from a common understanding. This isn’t the easy way. It is the harder path, but one that gets to the truth for all of us.
Contributions were made to this article by Johana Dunlop, SPE, David Shackleton, SPE, and Mike Kyrylovych, SPE.
Additional SPE Resources Related to Methane
Global Methane Pledge: Who Ya Gonna Call? by Josh Etkind, Johana Dunlop, David Shackleton, Jim Crompton, and Aimé Fournier
SPE Energy Stream: Methane Emissions Management for Operations
