Blog: EDF Europe

Shell becomes latest oil and gas company to test smart methane sensors

Methane Detector Challenge
Canada
2017

This week, the oil and gas giant Shell took a positive step toward addressing methane emissions. The company announced a new technology trial at a wellsite in Alberta, Canada, where it is piloting a specially designed laser to continuously monitor emissions of methane, a powerful pollutant known to leak from oil and gas equipment.

The move by Shell is a glimpse into the future and demonstrates growing market interest in smart, sensor-based methane detection technology. Shell’s project joins a similar field test already underway in Texas, operated by the Norwegian producer Statoil, and a California utility pilot run by Pacific Gas and Electric Company.

Each of these deployments is promising, but the ultimate test will be broad-scale adoption of innovations that generate actual methane reductions.

For industry, there is an incentive to move ahead. An estimated $30 billion of natural gas (which is largely methane) is wasted every year due to leaks and flaring from oil and gas operations worldwide. In addition, roughly 25 percent of global warming is driven by methane. Oil and gas methane emissions also contain chemicals that adversely affect public health.

For these reasons, methane is a problem that has caught the attention of regulators, investors and consumers alike. Advancing new technologies to enable the oil and gas industry to tackle this challenge more efficiently is key, even as companies use established tools to manage emissions now.

 

Collaborations Spark Methane Innovation

When you bring the right people to the table, innovative solutions will follow. Behind the Shell, Statoil and PG&E demonstration projects is a collaborative initiative, the Methane Detectors Challenge, begun by the Environmental Defense Fund four years ago. The project united eight oil and gas companies, R&D experts, and technology innovators in an effort to accelerate the development of next-generation methane detectors.

The formation of this project was motivated by a key insight: new technology to manage emissions needs to be created and deployed faster than ever. The Methane Detectors Challenge offers a unique resource to innovators – access to real facilities and collaboration with potential customers – which is essential to help entrepreneurs understand the market, demonstrate demand, and ultimately achieve economies of scale.

Both the Statoil and Shell pilots are using a solar-powered laser, created by Colorado-based Quanta3. The technology uses the Internet to provide real-time data analytics to wellsite managers via mobile devices or web portals.

 

Continuous Visibility, Faster Response

The oil and gas industry has a lot to gain from smart methane sensors that can prevent the loss of valuable product and reduce pollution.

Imagine a future where continuous leak detection systems allow operators to digitally monitor methane emissions occurring across thousands of sites. It’s a game-changer on the horizon. The burgeoning field of continuous methane monitoring offers a range of possibilities – including technologies capable of identifying emission spikes in real-time, allowing operators to cut mitigation time from months to days. Over time, smart sensors on wells may even help predict and prevent leaks and malfunctions before they occur.

Smart Methane Sensors Triggering New Market

 

The methane-sensing laser deployed by Shell and Statoil is one of many technologies in the emerging methane mitigation industry. In North America alone, more than 130 companies provide low-cost methane management technologies and services to oil and gas customers – a number likely to expand as innovators innovate, pollution requirements tighten, and producers increasingly appreciate the urgency of dealing with methane to maintain their social license to operate.

Smart automation technologies are already being used across the oil and gas industry to improve operating and field efficiencies. Continuous methane detection technology is the next logical step, which has the potential to provide significant economic, environmental and societal benefits.

The Shell pilot is a milestone to celebrate and we recognize the company for its early leadership. Now, we need governments and industry to show the determination needed to meet the methane challenge head-on. Sustained leadership is a prerequisite. But the keys to solving this problem are smart policies that incentivize ongoing innovation, and clear methane reduction goals—supported by technologies like continuous monitoring.

Image source: Shell/Ian Jackson

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Global Investor Touts Methane Opportunity with Oil & Gas Industry

Institutional investors worldwide are increasingly encouraging oil and gas companies to improve and disclose their management strategies to minimise methane risk.

Methane – an invisible, odorless gas and main ingredient in natural gas – is routinely emitted by the global oil and gas industry, posing a reputational and economic threat to portfolios.

Natural gas is widely marketed as a low-carbon fuel because it burns roughly 50 percent cleaner than coal. But this ignores a major problem: methane. Natural gas is almost pure methane, a powerful pollutant that speeds up Earth’s warming when it escapes into the atmosphere.

Last month marked a significant milestone in investor action on the methane issue. The Principles for Responsible Investment (PRI) launched a new initiative representing 30 investors and $3 trillion in assets that will engage with the oil and gas industry across five different continents to improve its methane management and disclosure practices. The PRI initiative complements existing methane engagement efforts focused on the US led by the Interfaith Center on Corporate Responsibility and CERES.

EDF Senior Manager Sean Wright recently sat down with Sylvia van Waveren, a Senior Engagement Specialist with Robeco Institutional Asset Management (Robeco), a Dutch-based investment firm managing over $160 billion, to discuss the matter and understand why some investors are keen to affect the status quo on methane.

Sylvia van Waveren, Senior Engagement Specialist, Robeco Institutional Asset Management

Wright: Why is methane a focus of your engagements? What do you see as the risks of unmanaged methane emissions? 

van Waveren: Methane is one of the most important drivers of engagement with the oil and gas industry. We invest in oil and gas companies worldwide. A year ago, we started engaging them, specifically on climate change – and within that the methane issue is included.

In the past, methane was viewed as a U.S. shale gas issue, but more recently it has become important in Europe as we learned that methane is a powerful greenhouse gas. So in that sense, we learned a lot from the U.S. discussions and we still do.

I would like to stress that we see the methane issue more as a business opportunity than a risk. What we often say to companies is that methane is a potential revenue source. It would be a waste if companies do not use it.

Wright: The scope of PRI’s initiative is global, with investors from 3 different continents as far away as Australia and New Zealand, and a plan to engage with companies from the Latin America, Europe, North America and Asia-Pac. What does this level of global collaboration convey about methane emissions?

van Waveren: I am happy and it is good to see that others have taken up the seriousness of this issue, as well. Methane is no longer a U.S. only problem. The issue is being raised and discussed in all kinds of geographies.

I’m a firm believer in collective engagements. They can be a powerful force when the issue is not contained within borders. That is the case with greenhouse gases. So yes, I’m happy to see the PRI initiative taking off and I am an active believer in getting this solved and bringing attention to this subject.

Wright: In your conversations thus far with companies about methane, what resonates best when making the business case for improving methane management and disclosure?

van Waveren: When we talk about motivation at the company level, I have to be honest, it’s still early days. The European companies are talking in general terms and just now conceptualising methane policies. If we’re lucky, they have calculated how much methane is part of their greenhouse gas emissions. And if we’re more fortunate, they are producing regional and segregated figures from carbon, but it’s really very meager how motivated the companies are and what triggers them most.

I really feel we should emphasise more with companies to get them motivated and to really look at the seriousness of methane. One issue that is particularly bothersome is that many companies do not know how to calculate, estimate and set targets to reduce methane. It is still a mystery to many of them. That’s why we come in with engagements. We need to keep them sharp on this issue and ask them for their actions, calculations and plans.

Wright: Who are other important allies that have a role in solving this problem, and why?

van Waveren: We always would like to have an ally in the government. For example, carbon pricing or carbon fixations are all topics that we look for from the government. But in practice, that doesn’t work. Governments sometimes need more time. So we do not always wait for the government. When companies say they will wait for government, we say, “You should take a proactive approach.”

We rely very much on our knowledge that we get from within the sector. We review data analyses and make intermediate reports of scoring. We find best practice solutions and we hold companies accountable. There are also times when we name names. So in that sense, that is how engagement works. The data providers and other organisations with good knowledge and good content on methane – and EDF is certainly one of them – are very instrumental to get the knowledge that we need.

Wright: Can you give me an example of a widespread financial risk facing an industry in the past that was proactively improved by investors leading the charge – similar to this initiative?

van Waveren: More than 20 years ago, we had a greenhouse gas issue – acid rain. Investors helped solve that problem. Because of this, I’m hopeful that investors can also play a positive role in reducing methane.

I would also say the issue of Arctic drilling. Not so long ago, this was top of mind when we talked to our portfolio companies. A lot of companies have now withdrawn from Arctic drilling, especially from offshore Arctic drilling. I think investors were quite successful in sending a clear signal to the industry in a collective way that we didn’t see Arctic drilling as a good process. Maybe profitable – if at all – to the companies, but certainly not for the environment

Wright: Thank you, Sylvia. We really appreciate your time and your thoughtful answers showing how investors can be part of the solution on methane.

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How blockchain could upend power markets

Talk about a disruptive technology. The “world’s leading software platform for digital assets,” blockchain
may be little known, but it could revolutionise electricity markets.

What is blockchain?

Blockchain, in short, is a secure, decentralised, and highly efficient way to manage and keep track of infinite transactions. Rather than being stored on a central server, peer-to-peer transactions are replicated across a number of computers, creating a data store that records exchanges in almost real time. To ensure t
he transactions are secure, authenticity and identity are maintained through cryptography and digital signatures.

Bitcoin – perhaps the most-recognised blockchain application – already is challenging conventional money exchangers. According to Cambridge University researchers, almost 6 million people use this cryptocurrency in order to make electronic peer-to-peer transactions without an intermediary such as a bank. And because blockchain technology is decentralised and accessible from multiple locations, Bitcoin funds can’t be frozen, withheld, seized, or taken.

New electricity opportunities

When it comes to electricity, blockchain could offer a reliable, rapid, and low-cost means to record and validate financial and operational transactions. These transactions could include selling and buying electricity – again without an intermediary, in this case the incumbent utility monopoly. In light of the rapid rise of distributed (decentralised) energy resources like batteries and solar panels, some analysts even believe the market for blockchain applications is significantly larger in the energy sector than for financial services.

Blockchain could serve as a backbone technology for electricity markets based on multiple sellers and buyers, or peer-to-peer transactions. This type of market stands in contrast to tradition: “The old system of a few big power plants and vertically-integrated utilities didn’t really need blockchain,” says Michael Liebreich, chairman of Bloomberg New Energy Finance.

But the new, evolving energy system – which gives people more choice and control over their electricity use and costs – could take advantage of the disruptive technology.

European progress

Blockchain is gaining particular attention in Europe where utilities have less market control and distributed generation, like home solar and electric vehicles, is accelerating:

  • German electric utility RWE is testing a blockchain application for charging electric vehicles.
  • Vattenfall AB, the largest Nordic utility, plans a blockchain app that would enable customers to buy and sell power independently of the utility.
  • Austria’s Wien Energie, is participating in a blockchain trial focused on energy trading with two other utilities.
  • Finland’s Fortum aims to enable consumers to control appliances over the internet in connected homes.
  • Grid Singularity, a startup firm in Austria,is using blockchain technology to validate electricity trade and monitor grid equipment.

In the United States, Brooklyn residents are testing blockchain technology to buy and sell solar energy.

What next?         

Who will take most advantage of blockchain remains an open question when it comes to electricity markets.

The ability to trade electricity could increase substantially the power of customers, as well as grid flexibility and efficiency. Blockchain also could enable customers to easily switch to electricity suppliers with better offers. For example, Electron and Data Communications Company have a platform that enables British customers to sign up to a new seller within a day.

Businesses also may benefit. For instance, a factory with solar panels could sell its excess electricity to another manufacturer.

So, on one hand, the technology’s ability to circumvent a central point of authority – aka, the utility – suggests individuals and companies will safely and quickly exchange energy services, eliminating a key portion of the utility’s business and revenue.

Yet others argue that a blockchain platform will be a key asset to electric utilities, or:

“… part of the answer to updating and improving centralised, legacy systems with a distributed hybrid system made up of a patchwork of both large power plants and microgrids powered by distributed energy resources such as solar power.”

These analysts admit blockchain will disrupt electricity markets by enabling decentralised power, yet they believe “the established utilities are best placed to evaluate and make strategic bets on blockchain technology’s potential applications.”

Blockchain likely will face opposition from entrenched utilities, and regulators will want to ensure the platform is safe and reliable. Diverse stakeholders in electricity markets also will need to establish common industry standards. Yet as more stakeholders consider grid modernisation and new utility business models, this disruptive technology suggests innovative models and approaches for delivering efficient, reliable, affordable, and clean energy.

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Paris Agreement signing should give Britain confidence to lead on low carbon strategy

April 22, 2016 — This article first appeared on Business Green.

The historic climate agreement reached in Paris last year was widely hailed as a major diplomatic breakthrough. For the first time, virtually all nations have agreed to take action together to try to reduce the global risk of climate change. As we approach the signing ceremony in New York this week the sense of momentum is clear and the USA, Canada and China have all recently contributed with announcements to collaborate closely on existing and new climate commitments.

In Britain, however, climate change policies have just run up against an industrial crisis centering on the potential closure of Tata’s UK steel division and the ongoing quest to find a buyer. Measures to address climate change have been directly blamed for the potential loss of tens of thousands of jobs and some have even tried to blame me personally for my role in the drafting of the Climate Change Act which was, in fact, specifically crafted to give policy makers the tools to guide a sensible transition over long timescales.

There are many reasons for Tata Steel’s decision to put its plants up for sale, some external, such as global over-capacity, some internal to the company but climate policy is not one of them. Like most industrial companies, Tata’s participation in the European Emissions Trading Scheme has delivered it a subsidy in recent years thanks to more emissions allowances being granted to them than were needed to match emissions. Rather than rip up our climate ambitions, just as others are now arriving on the same page, the answer to the UK steel crisis is to embrace the challenge of eliminating emissions of greenhouse gases from industry and to invest in future proofing industrial processes.

The UK is ahead of other countries when it comes to climate change; we have legally binding caps on our economy that stretch all the way out to 2050, reducing our emissions by 80% compared to 1990 levels. Getting emissions down to this level will be no easy task and we do not yet know which technologies will get us there or their future costs, but this is no reason to slow the transition we have begun. On the contrary, because environmental policies are exempt from State Aid rules, we can use targeted climate policies to provide supportive investment frameworks, bringing new investment to our shores, in clean infrastructure that will create future proof jobs and export opportunities.

Rather than bemoaning policies that over the last 25 years have steadily brought on more renewable energy and improvements in efficiency, industry should be demanding supportive environmental policies of their own. Including those which can unlock investments to take advantage of the abundance of low carbon, low price electricity at times of high supply that National Grid is now predicting for this summer and in to the future. The majority of industries’ response to climate policies to date has been to seek exemptions and compensation. This has worked up to a point. The European emissions trading scheme for example has provided companies such as Tata with useful cushions against falling demand for their products, thanks to allocations of emissions allowances set according to historically high ‘grandfathered’ benchmarks. But as caps tighten this strategy cannot last forever. The attitudes of both industry and government need to change to develop specific targeted policies to support investment in the necessary transition to low and zero carbon industrial production.

Industries that have been able to switch their fuels to renewable sources easily, where additional green support policies exist, have already shown transition is possible, particularly in the paper sector. Unfortunately renewable forms of energy are not yet at the point where they can be used easily to decarbonize the production of metals since they are very energy intensive and also use coal for part of the production process. There are alternatives including electrification and carbon capture and storage, but to invest in these solutions will require significant sums and high degree of confidence in market demand. Tata themselves have been exploring options including their HISana project in Holland and Swedish steel maker SSAB is also at the forefront of exploring new investment options. Yet the challenge is to get the UK Government to provide industrial companies with policies that support industrial transformation with a widening of focus away from renewables only. UK leadership on climate change needs to be matched by leadership in industrial modernisation and innovation which will enhance our competitiveness.

The necessary policy tools already exist, carbon pricing provides the overarching framework and generates revenues that can be used to support transformative investments. While other countries move to implement carbon pricing policies alongside us, supplementary policies to bring technologies down the cost curve, should also be introduced. Contracts for difference, have been tested and proven in deploying large scale investment in renewable energy and they can be adapted for use in industrial sectors and should now be the main policy focus. Electrification of British steel capacity can be made to work if some of the risks of capital investment are reduced and new industrial electricity tariffs are introduced to provide time of use incentives to coincide with periods of high supply and reward storage technologies. We are currently exporting scrap steel for it to be recycled in furnaces elsewhere and then paying to import the finished product. Clearly this is a sign that a new approach to this hugely important primary industry can and must be adopted.

I look forward to the Paris Agreement coming in to force which should give the UK the confidence to continue with its own climate leadership and support a new era of investment in clean steel production and a broader industrial base. With the right policies, we can show that climate action can act as a spur for industrial innovation and investment, securing jobs for the remainder of this century. I look forward to working with industry in my new role, as Executive Director of Environmental Defense Fund Europe, to help find the ways that work to achieve that objective.

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