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Canada has announced new draft regulations to enhance emissions-monitoring requirements and reduce fugitive methane emissions in the oil and gas sector.
The draft regulations set facility level restrictions on the amount of methane that can be vented, restrict emissions from pneumatic devices, and require the oil and gas sector to regularly inspect equipment to ensure that no unintentional emissions are occurring.
The sector is the largest industrial emitter of methane in Canada, accounting for about 40% of Canada’s methane emissions. The majority of methane emitted comes from fugitive emissions or venting sources, says Environment and Climate Change Canada. The proposed amendments would prohibit the venting of hydrocarbon gas, or methane, to the environment with limited exceptions.
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The new draft regulations are intended to ensure a reduction of methane emissions in the upstream oil and gas sector by at least 75% below 2012 levels by 2030.
Steven Guilbeault, Minister of Environment and Climate Change, made the announcement to address methane emissions from the oil and gas sector at the COP28 Global Methane Pledge Ministerial hosted in the United Arab Emirates.
“Lowering methane emissions from our oil and gas sector is one of the fastest and most cost-effective ways we can cut the pollution that is fueling climate change,” Guilbeault announced in a statement. “As the world’s fourth largest oil and gas producer, we have both the responsibility and the know-how to do everything we can. At this time of robust profit margins and high energy prices, there has never been a better time for the oil and gas sector to invest in slashing methane emissions,” added Guilbeault.
Methane is included in the list of toxic substances under Part 2 of Schedule 1 of the Canadian Environmental Protection Act (CEPA). It is released directly into the atmosphere during oil and gas exploration and production. These releases occur during normal operation of equipment and from leaks. To comply with Canada’s existing methane regulations, industry had to adopt practices to monitor for leaks and ensure that repairs happen to reduce the amount of gas intentionally vented into the air, which typically occurs as a controlled release of gases into the atmosphere during production.
In terms of facility flaring, a controlled burning that takes place during production and processing, its use must be supported by an engineering study examining options for the use of hydrocarbon gas to produce useful heat or energy, the regulations state, except for use to avoid serious risk to human health or safety arising from an emergency.
To combat fugitive emissions, facilities with equipment that have the most potential for emissions must undertake more frequent inspections, the regulations state. This is suggested at 12 times per year for screening and four times per year for comprehensive assessments. All inspections must be conducted using instruments with a standard minimum detection limit, and repair timelines will depend on emission rates.
Environment and Climate Change Canada estimates that the cost to comply with the draft regulations will be about $70 per tonne of greenhouse gas emission reductions.
Further, the regulations introduce an audit system, requiring one annual third-party inspection to validate company program results. The first set of requirements under the proposed measures will come into force in January 2027.
Additionally, combustion systems used to comply with the proposed amendments must operate with a pilot flame, an automatic ignition device and an automatic flame failure detection system, and when hydrocarbon gas is routed to the system, it must achieve a minimum carbon conversion efficiency of 98%, the regulations state.
The requirements related to managing fugitive emissions would come into force for all facilities in 2027. Also starting in 2027, facilities increasing gas production would need to design and operate systems to eliminate venting and to follow other new requirements such as limits on flaring. All facilities in the oil and gas sector would be subject to the new requirements in 2030.
Alberta Premier, Danielle Smith and Minister of Environment and Protected Areas, Rebecca Schulz, issued a joint statement that criticized the new draft regulations for being “unilaterally established” and that a “province-led approach” would be in the best interest of Alberta.
“Once again, the federal government is setting unrealistic targets and timelines,” the statement suggests. “Infrastructure can only be updated as quickly as technology allows. For example, Alberta will not accept nor impose a total ban on flaring at this time, as it is a critical health and safety practice during production. Any regulation that completely prohibits this is putting lives at risk. A total ban would also be costly, resulting in shut-ins and loss of production.”
In November 2022, at the United Nations Climate Change Conference (COP27), Canada and the United States agreed to increase cooperation on reducing oil and gas emissions, with a special focus on methane, since it is one of the fastest and most cost-effective ways to combat climate change.
Between the 2021 and 2023 National Inventory Reports, improvements to oil and gas emissions estimates resulted in upward revisions to previously published data. However, oil and gas methane emissions have decreased since 2005.
To support Canada’s methane reduction plan, the federal government has also announced a $30-million investment to establish a Methane Centre of Excellence in the near term that will improve the country’s understanding and reporting of methane emissions, with a focus on collaborative initiatives to support data and measurement.
Equivalency agreements with Alberta, British Columbia, and Saskatchewan are currently in place for the 2018 Methane Regulations. Each agreement is valid for a maximum of five years. Equivalency agreements under the federal Environmental Protection Act are a formal regulatory process that requires robust analysis to demonstrate that provincial regulations meet the requirements to replace federal regulations.
From 2027 to 2040, the proposed amendments are estimated to have incremental costs of $15.4 billion, while the cumulative GHG reductions are estimated to be 217 Mt of CO2e, valued at $27.8 billion in terms of the estimated social benefits of avoided global damages.
Methane is estimated to be responsible for 30% of observed global warming to date and levels of atmospheric methane continue to rise.
Comments are requested to be submitted through the new Online Regulatory Consultation System. The deadline for comments is February 14, 2024.