Reducing Greenhouse Gas Emissions: Good Business for Natural Gas Producers

Published November 2nd, 2000 - 02:00 GMT

Executive Summary: 

Working through the Environmental Protection Agency’s Natural Gas STAR Program a voluntary government-industry initiative ¾ NGSA member companies have reduced over 50 Bcf of methane emissions that would have been lost to the atmosphere.  


Currently, almost half of NGSA’s member companies participate in the STAR Program, and together contribute over 99 percent of the reductions reported by the production sector.  


Although the production sector represents only 27 percent of emissions from the whole natural gas industry, NGSA members have reduced methane emissions constituting over two-thirds of the total reductions achieved by the program. This 50 Bcf of reductions exceeds EPA’s goal by 130 percent.  


NGSA natural gas producers view the Natural Gas STAR Program as a highly successful industry and government partnership, and will continue to support it through further improvements in operational efficiency. 


Natural Gas Producers and The STAR Program:  

The Natural Gas Supply Association (NGSA) and producers of natural gas support programs that create operational efficiencies while at the same time contribute to a healthier environment. The reduction of greenhouse gases is one of the areas where producers are achieving those goals.  


During the last 10 years, natural gas producers have found numerous methods that reduce methane emissions cost effectively. Although natural gas is the cleanest burning fossil fuel available today, the Federal Government estimates that the natural gas industry emits approximately 315 Bcf of methane annually. 

Of that, natural gas producers are responsible for approximately 27 percent, or 85 of the 315 Bcf.The main sources of methane releases are fugitive emissions (equipment and pipe leaks), venting and combustion emissions.  


The producers of natural gas are involved in one program, in particular, that highlights a cooperative effort between the government and natural gas industry to reduce greenhouse gas emissions: the Environmental Protection Agency’s Natural Gas STAR Program (STAR).  


STAR, which started in 1993, is a voluntary partnership between the U.S. Environmental Protection Agency and the natural gas industry. Designed to find cost-effective ways to reduce emissions of methane, STAR has three components: transmission and distribution sectors, the production sector, and the gathering and processing sectors. This report addresses only the production sector portion of STAR.  


STAR encourages companies to adopt cost-effective best management practices that reduce leaks and losses of natural gas that can lead to increased methane emissions. Companies are asked to implement those best management practices that make economic sense for their operations, providing a good example of flexible market-based mechanisms for controlling emissions. 


Natural gas producers have supported STAR from the beginning, not only by participating in the program, but also by reducing their methane emissions. In doing so, natural gas producers have found that they have also improved the efficiency of their internal operations.  


STAR was one of the first voluntary programs developed by EPA and industry to find cost-effective methods of reducing greenhouse gas emissions. [3] Based on the success of this program and others, EPA and the White House developed the Climate Change Action Plan, a list of 52 voluntary programs designed to reduce greenhouse gases. Most of these programs follow the same structure as STAR.  


During the development of the program, the NGSA and its member companies worked closely with EPA to help identify sources of emissions and cost-effective best management practices for reducing these emissions.  


NGSA also helped develop a reporting process that is accurate yet minimizes administrative burden. This voluntary approach was strongly embraced by natural gas producers, and when the producer program was created, all eight-charter partners were NGSA members.  


NGSA continues to work closely with EPA to support and promote STAR. Currently, half of all NGSA member companies or their affiliates voluntarily participate in STAR. [4] To date, NGSA members have reported savings of over 50 Bcf of methane. These reductions represent 67 percent of total program reductions and over 99 percent of total producer reductions. 


The producer program requires members to submit reports on two core best management practices, and offers the opportunity to report additional practices that reduce methane emissions. Supporting this flexible reporting structure, NGSA member companies have identified 28 additional practices that reduce methane emissions cost effectively.  


These “partner reported opportunities” account for 64 percent of the reductions reported by the production sector. This is substantially more than either EPA or the industry anticipated.  


Since 1990, natural gas producers are responsible for over two-thirds of total program reductions. These reductions continue to grow as producers expand their implementation of STAR.  


Currently, NGSA member companies are reducing 13 Bcf of methane annually. These reductions surpass the goals that EPA set for the producer’s program by 130 percent, as shown in A more complete summary of each best management practices and the partner reported opportunities is found in the appendix, including:  

· Summary of the economics of reducing methane emissions;  

· Description of each best management practice and partner reported opportunity;  

· Rundown of the total savings achieved for each practice by NGSA member companies;  

· Estimates of the average cost of each practice; and,  

· Description of the payback for each practice.  


Continuing the Commitment to Reducing Emissions:  

NGSA is committed to supporting voluntary approaches to reduce emissions. Natural gas producers will continue to demonstrate support for the Natural Gas STAR Program and expect to achieve results that exceed EPA’s expectations for reducing methane emissions even though the program’s goals increase significantly in the next few years.  


As more producers join STAR and implement the best management practices and partner reported opportunities, EPA will continue to see that the producer segment is serious about reducing emissions using cost effective techniques.  

NGSA will continue to promote STAR and provide technical and economic assistance to the program. 


In addition, NGSA will seek opportunities for the natural gas producers to take a larger role in demonstrating how environmental protection and economic progress are synonymous. 


Appendix: Economics of Reducing Methane Emissions:  

Natural gas producers have found that reducing methane emissions is good business. Producers have employed 30 different cost-effective best management practices (BMPs) for reducing methane emissions from operations, the majority having a payback ranging from immediate to five years.  


In most cases, the value of the methane represents nearly all of the savings, however, in many instances partners have found that implementing these practices also reduces regulatory compliance costs, improves equipment life, reduces maintenance costs, and increases the life of the well.  


This section provides more detail on the program’s two best management practices and three of the most widely used partner reported opportunities.  


This section also provides greater detail on the source of methane emissions, the best management practice, estimates of total emissions from these sources, along with total savings, cost and typical payback that NGSA member companies have realized.  


Although the economics of each practice will vary from operation to operation, natural gas producers have found the following best management practices to be the most cost effective:  

BMP 1: Replacing high bleed pneumatic devices with low or no bleed,  

BMP 2: Installing flash tank separators on glycol dehydrators,  

PRO 1: Reducing glycol circulation rates in glycol dehydrators,  

PRO 2: Installing vapor recovery units on storage tanks, and  

PRO 3: Using plunger lifts to prevent well blow downs.  


BMP 1: Replacing high bleed pneumatic devices with low or no bleed:  

Pneumatic devices that use pressurized natural gas as the source of power are used throughout the production sector, including liquid level controllers, pressure regulators, and valve controllers.  


These devices are designed to either bleed the natural gas continuously to maintain constant pressure on the valve, or vent methane each time they actuate.  


The Gas Research Institute (GRI) estimates that there are between 180,000 and 250,000 pneumatics devices in the production sector, controlling liquid and gas levels and flows in tanks, dehydrators and separators, temperature in dehydrator regenerators, and pressure in flash tanks.  


These devices lose approximately 31 Bcf of natural gas each year. Production companies have found that there are three options for reducing methane emissions from pneumatics: 1) replace high bleed devices with low or no bleed; 2) provide proper maintenance of springs, leaks and gain settings; and 3) retrofit the device with a low bleed kit.  


Total savings: 

NGSA members have reported a reduction of 15.5 Bcf of methane from replacing pneumatic devices. There are several additional benefits from replacing pneumatics, including more efficient operation of valves, less maintenance of other equipment and fewer accidents.  


Average Cost : 

The average cost of replacing a pneumatic controller is $520; liquid level controllers are less expensive while pressure controllers cost more. The cost of a low/no-bleed device is approximately $150 more than a high-bleed design. 


In addition, partners in the Natural Gas STAR Program have been able to improve the performance of pneumatics through maintenance, costing from $45 - $260, and using retrofit kits that cost approximately $230.  



Depending on the option to replace, maintain, or retrofit pneumatics, Natural Gas STAR Partners have achieved impressive returns. On average, producers have found that replacing a pneumatic has a payback of between six months to two-and-one-half years.  


Maintenance will pay for itself in between zero and seven months, while retrofits achieve a payback of 1.1 years on average. 


BMP 2: Installing flash tank separators on glycol dehydrators  

During the production of natural gas, operators use glycol dehydration systems to remove water and other impurities from the natural gas. As the glycol absorbs the water, it also absorbs methane, other volatile organic compounds, and hazardous air pollutants.  


As glycol is regenerated (heated to remove the absorbed water), the absorbed methane, VOCs and HAPs are also released to the atmosphere. Installing a flash tank separator on a glycol dehydrator enables the operator to collect the vented gases and natural gas liquids that would otherwise be vented.  


Total savings:  

NGSA members have reported savings of 2.4 Bcf of methane. Producers have also reduced the emissions of significant amounts of other VOCs, HAPs and natural gas liquids.  


In many cases, the use of the flash tank separator has reduced VOC levels below MACT compliance thresholds, further reducing compliance costs. And producers who collect the natural gas liquids from the flash tank have been able to further improve their investment.  


Average Cost:  

The average flash tank separator costs between $2,500 - $5,000. Installation will cost an additional $1,200.  



There are several factors that affect the economics of installing a flash tank separator, including the glycol circulation rate, whether an energy exchange pump or an electric pump is used, and the revenues that occur from the natural gas liquids. Natural Gas STAR partners have achieved an average payback of six-to-30 months. 


PRO 1: Reducing glycol circulation rates in glycol dehydrators:  

The glycol circulation rates in dehydrators are often set two-to-three times higher than necessary to remove water from natural gas. And over time, as wells decrease production while the circulation rate remains constant, a major operational inefficiency occurs.  


The amount of methane absorbed, and subsequently vented, is directly proportional to the circulation rate of the glycol, therefore over circulation creates excessive losses of methane, other VOCs and HAPs.  


This over circulation not only wastes methane, but also can increase the emissions of VOCs beyond the MACT threshold, making the dehydrator subject to strict MACT regulations.  


Natural Gas STAR partners have found that optimizing the glycol circulation rate can save large amounts of methane, and reduce VOCs and HAPs below regulatory compliance thresholds.  


Average Cost:  

The only cost incurred is the labor to recalculate the optimal circulation rate, and to adjust the dehydrator, approximately $50. If the operation of a dehydrator is the responsibility of a contractor, the operator incurs the costs. 



Partners in the Natural Gas STAR Program found that they were losing between $260 and $26,000/year in methane losses from dehydrators. The payback for optimizing glycol circulation rates is between immediate and two months.  


PRO 2: Installing vapor recovery units on storage tanks  

Storage tanks are used throughout the natural gas industry to collect liquids, including oil, natural gas liquids and water.  


While these liquids are in storage, entrapped light hydrocarbons vaporize and collect in the space between the liquid and the fixed roof of the tank.  


These vapors are vented to prevent the build up of pressure in the tank. Vapor recovery units (VRU), which act as a small vacuum attached to the top of the tanks, can be installed on all of these storage tanks to collect methane and other VOCs. The most cost effective practice is to install a VRU on heavy crude oil storage tanks.  


Total savings:  

NGSA member companies have reported saving almost 20 Bcf of methane. Most of these savings occur on oil storage tank batteries.  

Producers have also reduced the emissions of significant amounts of other VOCs, HAPs and natural gas liquids. In many cases, the use of a vapor recovery unit has reduced VOC levels below MACT compliance thresholds, further reducing compliance costs.  


Average Cost:  

The cost of installing a VRU varies considerably. Equipment costs are determined by the capacity of the unit, compression requirements to deliver the gas to a sales line, the number of tanks handled by one unit, and the level of automation. Capital and installation costs range from  

$22,000 - $88,000, and annual operating and maintenance costs can run from $5,000 - $12,000.  


Payback : 

Partners in the Natural Gas STAR Program sometimes achieve paybacks in as little as six months, although most find they pay for their investment within three years. Additional benefits of installing a VRU are to avoid the permitting and compliance costs associated with Title V MACT rules of the Clean Air Act. 


PRO 3: Using plunger lifts to prevent well blow downs  

As natural gas wells age, they lose pressure and can start to fill with water and other fluids. The weight and volume of these liquids reduce and can even stop the production of natural gas.  


To remove these fluids, operators use swabbing techniques, or blow down the well by producing it at atmospheric pressure. This process is expensive and results in large losses of natural gas. One option is to install a plunger lift system for removing the liquids.  


The plunger lift acts as a bottom hole plug, building reservoir pressure until the plunger is lifted to the surface.  


The plunger lifts liquids to the surface and the well is able to continue production until liquids re-accumulate in the well. This practice can extend the life of a well significantly, reduce blow down costs, and can reduce methane emissions significantly.  

Total savings:  

Currently partners have reported a savings of over 88 MMcf of methane.  

Average Cost:  

Installing a plunger lift costs approximately $1,500 - $3,000 per well.  



Partners in the Natural Gas STAR Program have achieved paybacks of four-to-43 months. However, companies that compare current costs for blowing down a well, including equipment and lost natural gas costs, will realize a greater return.

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