Oil and gas companies have made tremendous strides in integrating data into most aspects of their operations, but they still lack a critical dataset to ensuring their long-term profitability: the extent and location of their emissions of methane, a potent greenhouse gas. However, just as advances in seismic imaging have revolutionized the exploration segment, another technology breakthrough may hold the answer for emissions management: orbital imaging via low-cost microsatellites.
The Methane Challenge for Oil and Gas
Concern over methane emissions has risen in tandem with the increasing importance of natural gas to the oil and gas industry’s long-term business strategy. Methane (CH4) is the primary component of natural gas, and leaks of this invisible gas can occur throughout the natural gas supply chain, as well as from the oil production segment.
For years, these leaks were disregarded, much as natural gas itself was considered a waste byproduct of the oil production process. However, as natural gas has become highly valued as a cleaner-burning alternative to oil and coal, there has been increased scrutiny over the climate impacts of its production and distribution. Methane is a greenhouse gas over 80 times stronger than CO2 over a 20-year period, and it is estimated to account for 20% of current global warming.
Methane leaks are easy enough to fix, and since repairing them means retaining more saleable natural gas, the International Energy Agency estimates that half of the industry’s leaks could be fixed at a profit. However, detecting these invisible leaks in a timely manner across hundreds of thousands of production, storage, and industrial sites, and 3 million kilometers of natural gas pipelines, is a massive challenge.
At the same time, the oil and gas industry is pledging strong action on cutting methane emissions - because they have to. Beyond $30 billion in annual revenues lost, and billions more in liabilities from accidents such as the San Bruno pipeline explosion and the Aliso Canyon storage leak, methane poses an existential threat to industry financing in an era where shareholders and investors have become highly sensitive to climate risk.
That’s why Exxon Mobil has committed to reducing its methane emissions by 15% by 2020, and why both the American Petroleum Institute and a consortium of international oil majors have committed to a methane reduction agenda. And these companies are partnering with innovative methane detection technology providers—including Bluefield Technologies— because existing paradigms of methane detection simply aren’t up to the task.
Status Quo is Slow, Expensive, and Not Scalable
Currently, oil and gas operators largely rely on a suite of methane detection technologies that are distinctly “old school.” Sites are surveyed once or twice per year by workers wielding infrared cameras, which can be mounted on trucks or helicopters when large areas (e.g. pipelines) must be covered. In recent years, companies have adapted these approaches to airplane and drone platforms to increase the speed and coverage of leak surveys, but this has only provided incremental improvements.
Suffice to say, these methods are sufficient for satisfying minimum safety regulations, but not the growing demands of shareholders, banks and more ambitious environmental regulators. Ground and aerial surveys are far too limited in frequency to detect leaks in a timely manner, let alone provide reliable estimates of emission volumes, and are clearly unable to meet the global scale of the problem. Despite these shortcomings, oil and gas companies still spend an estimated $6 billion a year on these solutions as the best (currently) available technology.
In recognition of this problem, there was a push several years ago to develop innovative new real-time, ground-based sensor technologies that would be used throughout natural gas production sites and infrastructure. Most notably, the MONITOR (Methane Observation Networks with Innovative Technology to Obtain Reductions) program sponsored by the U.S. Department of Energy in 2014 aimed to catalyze the technology breakthroughs required to make such sensor networks cost-competitive.
While these technologies are still being pursued, they have yet to find commercial success. Not only that, but even if sensor costs can be reduced by orders of magnitude, the expense of deploying them at a comprehensive, global scale would likely be exorbitant. Fortunately, rapid advances in the field of low-cost orbital imaging since 2015 have opened up a new, more promising pathway for a truly scalable, cost-effective solution to the methane challenge.
Look Up: The Orbital Imaging Revolution
Over the past several years, the costs of building and launching small satellites has plunged, creating a new paradigm for the space industry often referred to as “NewSpace” or “Space 2.0.” Compared to the previous era, where satellites were the size of school buses and required the budgets and expertise of government agencies to launch, “Space 2.0” is characterized by standardized satellite designs as small as a backpack, with dozens at a time launched by innovative startups that have more in common with Uber or Google than NASA.
This “smallsat” revolution has enabled a host of satellite imaging companies to provide a host of new, global-scale datasets at costs that would have been unthinkable just a few years ago. The impacts of this data are already being felt across numerous industries worldwide, including the oil and gas industry. For example, smallsat companies like Orbital Insight and Planet Labs are selling information to commodity traders on the movement and likely cargos of oil tankers going to and from China, as well as monitoring the effectiveness (or lack thereof) of oil sanctions against countries like North Korea.
So, while government satellites have measured global and regional-scale emissions for years, “Space 2.0” promises emissions tracking at lower cost and at the granular scale required by industry to actually pinpoint and fix leaks. And just as Planet (formerly Planet Labs) now operates a constellation of small satellites capable of photographing every inch of the Earth’s surface every single day, this paradigm offers the possibility of providing oil and gas companies the ability to detect and measure their methane emissions on a daily basis for less than what they currently pay for annual surveys.
The Methane Detection Space Race
Given the industry’s desperate need for better methane data and the enormous promise of the “Space 2.0” paradigm to deliver a scalable, cost-effective solution, it’s no surprise that there are several initiatives underway in this area. The Canadian startup GHGSat became the first company to launch a small satellite for greenhouse emissions detection in 2016, and in recent months the non-profit Environmental Defense Fund and the state of California have each introduced their own proposals for satellite monitoring initiatives. And our company, Bluefield Technologies, is in the process of demonstrating our own sensor with oil and gas companies, with an expected launch next year.
While time will tell which specific approach(es) find long-term commercial success, the advent of the “Space 2.0” era makes this type of solution virtually inevitable. And, considering the fact that these solutions are emerging concurrently with the eras of oil and gas digitalization and climate risk-sensitive financing, it seems as if they are arriving at the perfect time. By detecting methane leaks anywhere in the world on a daily basis, at a lower cost than companies pay for annual surveys, satellites promise to unlock the future of natural gas by preserving its long-term role at the center of the global energy transition.
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