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On April 24, 2018, the Alberta Energy Regulator (AER) published draft Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting, and Directive 017: Measurement Requirements for Oil and Gas Operations, focusing on upcoming changes to methane emissions requirements in Alberta’s oil and gas sector. The draft Alberta regulations propose to introduce tightened methane emissions requirements which are in alignment with but not necessarily equivalent to the Government of Canada (GOC) final "Regulations Respecting Reduction in the Release of Volatile Organic Compounds (Upstream Oil and Gas Sector)" published April 26, 2018. Our team has created a summary document of the new regulations with key take-aways for the Alberta oil and gas industry. We also compare the proposed regulations with the announced regulations. If you have any questions about any of the material presented, please don't hesitate to contact us. 
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In this newsletter 1) Carbon-related news, 2) First Ever Compliance-Grade Pneumatics Offset Project, 3) Offset Projects from Renewable Energy, 4) Funding Programs, 5) Other Cap-Op News As part of Canada’s commitment to climate change mitigation and emission reductions, both the Provincial and Federal Governments have announced numerous funding programs for projects that aim to achieve these goals. Funding exists for research and development of innovative technologies and as well as commercial-ready projects. Below, we have summarized the major funding programs that are relevant to the resource, mining, and energy sectors. If you have any questions about the programs or would like support in drafting an application, please contact us at info@capopenergy.com or by phone at (403) 457 - 1029. Cap-Op Energy has a track record of helping organizations acquire millions of dollars through various funding programs.
1. Natural Resources Canada $155M Clean Growth Program (https://www.nrcan.gc.ca/cleangrowth/20254)
2. PTAC’s $10M Alberta Upstream Petroleum Research Fund (http://auprf.ptac.org/call-for-funding-applications/)
3. Sustainable Technology Development Canada’s $965M fund (https://www.sdtc.ca/en/apply/funds)
4. Government of Alberta’s $63M Bioenergy Producer Program (BPP) (http://aep.alberta.ca/climate-change/programs-and-services/bioenergy-producer-program.aspx)
5. Energy Efficiency Alberta’s Business, Non-Profit and Institutional Energy Savings Program (https://www.efficiencyalberta.ca/business-non-profit-and-institutional/)
The Canadian Government has just released the regulatory framework for Canada's proposed Clean Fuel Standard Regulation under the Canadian Environmental Protection Act of 1999. A Clean Fuel Standard is a market-based approach to reduce GHG emissions from fuels and incentive a transition towards renewable and low-carbon intensive energy for transportation and heating purposes.
Some more details have been released on Canada's proposed clean fuel standard intended to reduce 30 Mt of GHG emissions yearly by 2030. Some high level notes:
More information can be found here: https://www.canada.ca/en/environment-climate-change/services/canadian-environmental-protection-act-registry/publications/clean-fuel-standard-regulatory-framework.html The Government of Alberta has extended the Bioenergy Producer Program until March 31, 2020 to support liquid biofuel production and stand-alone bio-power production. The $62 Million program will provide funding for facilities that produce electricity or liquid biofuels from organic feedstock. Examples of the level of support for qualifying production includes:
- Electricity from combustion of biogas ($60/Mwh) - First Generation ethanol ($0.1/L) - Renewable Diesel, biodiesel, pyrolysis oil ($0.13/L) Contact us today to learn more about the program, and the application process so you can get funding for your new potential bioenergy facility Linked Article Here: https://energynow.ca/2017/12/innovators-reducing-carbon-footprint-profitably-presented-gridstone/ When the Alberta Government introduced a new carbon offset protocol aimed at providing an incentive to reduce methane venting from pneumatic equipment earlier this year, Cap-Op Energy was poised to take advantage of the new rules. Headquartered in Calgary, Cap-Op is an offset and carbon consultant that started operations in 2012. Early on, Cap-Op saw the large amount of data and long-term record keeping required to capture offsets as a challenge that needed to be overcome. “Some producers that invested in energy efficiency when commodity prices were high, left a lot of offset money on the table by not properly documenting their projects and keeping better records. We knew we had to build better systems.” said Kevin Heal, Director of Business Development at Cap-Op. Seeing the need for a robust system to aggregate large data, Cap-Op decided to adopt best practices from the data management and software industry to streamline the offset world. With the increasingly tighter restrictions on methane emissions, Cap-Op has developed a suite of solutions that companies can leverage as part of their emission reduction program. The first software program Cap-Op developed was a platform that calculates emission reductions from compressor engines using improved technology to reduce methane emissions. This program, called the Distributed Energy Efficiency Project Platform (DEEPP), and the software’s advanced algorithms were a major advancement. DEEPP received a “PTAC Commercializing of SME Technology Award,” and it has been used to generate over 250,000 credits for Cap-Op’s oil and gas clients. Two years after DEEPP was launched, Cap-Op began developing additional software tools to meet the methane challenge presented by other sources. One of those tools, called the Methane Abatement Project Platform (MAPP), is a smart tablet application that allows field technicians to input inventory data about vent gas equipment at production facilities. Besides satisfying the inventory requirements of the upcoming methane regulations, MAPP enables companies to make informed decisions about their emissions. Kevin commented “What we didn’t fully appreciate until we rolled it out and our clients actually started using MAPP this summer was how much time they were going to save during the installation phase of the project.” With the MAPP tool and offsets, operators can often obtain a quick return with 6-18 month expected payouts on many pneumatic conversion projects. Over the summer, Repsol Oil & Gas Canada, launched a methane abatement campaign to replace almost 1,000 pneumatic devices in Alberta. Repsol is utilizing MAPP to reduce project risk and DEEPP to generate the carbon credits which mitigates the cost of the early action equipment retrofits. This conversion campaign with offsets is a key component of Repsol’s sustainability strategy to reduce its carbon footprint in Alberta and comply with tougher regulations on vent gas emissions. According to Cheryl Stiles, Repsol’s GHG Project Manager based in Edson, “Cap-Op probably saved us $30,000 in my own, as well as the contractor’s time, before we hit the field. We can run a 1,000 controller campaign quite easily using Cap-Op’s tools. Our maintenance foreman was initially concerned about introducing a new data management system. He now has realized his team can easily collect data and save time using modern methods with tablets and the internet.” Cap-Op Energy – The “Ask” Kevin Heal, Director of Business Development, comments “We are seeing increasing interest and adoption from industry over the past year. Every operator needs to be aware they have the ability to reduce methane regulatory risk and make a profit while doing so.” To further support this initiative, Cap-Op has developed an offset rebate program that provides up to 100% financing for eligible methane abatement projects, alleviating operators from investing their own capital. This means virtually no risk to the operator and would provide Cap-Op with the rights to the offset credits. Whether an operator chooses to fund a carbon offset program internally or take advantage of carbon-backed financing, Cap-Op is creating innovative tools and services for producers who take early action as part of their environmental sustainability strategy to profitably pay for energy efficiency and become compliant with coming methane regulations.  DEEPP software platform now quantifying offsets from reduced pneumatic equipment methane emissions Cap-Op Energy Inc. quantified an additional 47,000 tCO2e of carbon offset credits in 2017 using our award-winning software, the Distributed Energy Efficiency Project Platform (DEEPP). Since 2012, our team has helped upstream oil and gas clients in Alberta generate over 260,000 tCO2e of credits from methane abatement and energy efficiency projects. The credits are verified and serialized under the Alberta Offset System and represent a potential $7.8M of value, at a current carbon price on large emitters of $30/tCO2e. Carbon offsets are designed to spur investment in emission reduction projects, and Cap-Op has designed a low cost, low risk approach to guide organizations in quantifying their emission reductions and generating credits.
There is a tremendous opportunity for upstream oil and gas producers to profitably reduce the methane emissions from their operations. Given regulatory changes at both the Provincial and Federal levels, and an increasing price on carbon, there will be an increasing demand for emission reduction credits. Organizations can use Cap-Op’s groundbreaking software programs to identify and execute methane abatement projects and quantify the methane emissions reductions under approved protocols such as Engine Fuel Management and Vent Gas Capture, Conversion of High-Bleed Pneumatics, Solution Gas Conservation. Stephen Boles of AET Group Inc. was hired by the Alberta Environment and Parks to lead a government audit this year of one of Cap-Op’s DEEPP aggregated offset projects. According to Boles, “After spending a significant amount of time investigating and reviewing this Project and its data infrastructure, AET has been thoroughly impressed with Cap-Op Energy’s data management system which is intuitive, transparent, and accurate.” “Our software preserves the records and documentation that support emission reductions claims” says Cap-Op Technical Manager Brian Sloof. “It is designed to work with the asset lifecycle data management systems that operators already use to store many types of inventory and operating records.” Cap-Op is now validating a new source of offset credit projects that can be achieved through the retrofit of gas-driven pneumatic equipment. These devices have been widely used for decades to operate pumps and instrumentation at remote well locations where access to electricity is limited, but they release significant methane into the atmosphere. As such, new regulations that target methane emissions are being introduced and require a complete phase-out of high-bleed pneumatic instrumentation by 2023. Until then, producers in Alberta have an opportunity to take early action in converting their gas-driven pneumatic devices and generating carbon offsets from the emission reductions. With the added revenues from offsets, the equipment and installation costs will essentially pay for themselves. Contact us to learn how to take advantage of this opportunity. Under BC's Renewable and Low Carbon Fuel Requirement Regulation (RLCFRR), the Part 3 Agreement provides a mechanism for Part 3 fuel suppliers to generate bio-fuel credits for intended projects that will increase the supply of low carbon fuels into British Columbia. Suppliers must submit a compliance report, which is approved by a Director and credits are awarded over a one year or multiple year contracts.
There are at least 15,000 credits available under the 2017 Program and 100,000 under the 2018 Program (last year, credits traded at $171/credit - representing the highest value of GHG credits globally). The application deadline is October 6, 2017 (2017 program) and June 1, 2018 (2018 program). If you are biofuel company that supplies renewable fuel to BC, contact us today to learn how you can generate credits as a Part 3 Supplier! More detail here: http://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/electricity-alternative-energy/transportation/renewable-low-carbon-fuels/part_3_agreements_2017-18.pdf Yesterday, at our annual Stampede lunch, we officially launched the Methane Abatement Project Platform (MAPP). The MAPP is a business decision support tool that allows companies to identify and execute the lowest cost methane abatement projects and document their progress in real time. MAPP helps organizations find the $5/t CO2e abatement projects. To learn more, please visit us at http://www.capopenergy.com/methane-abatement-campaign-tool.html.  On May 27, 2017 the Government of Canada (GOC) published proposed “Regulations Respecting Reduction in the Release of Methane and Certain Volatile Organic Compounds” targeting oil and gas industry operations. The Regulations will introduce tightened facility and equipment level standards to reduce fugitive and venting emissions. Sector activities covered under the Regulation include natural gas production and processing, conventional oil production, transmission, and most oil sands emissions. The GOC also promulgated proposed "Regulations Respecting Reduction in the Release of Volatile Organic Compounds" which will impact downstream refining and natural gas distribution sectors. The provinces of Alberta and British Columbia already have regulations in place on flaring, venting and fugitive emissions from upstream facilities. CEPA allows for flexibility via equivalency and other collaborative agreements to be negotiated with individual provinces and territories, if the requirements of CEPA are met. As such, Alberta is currently developing tightened regulatory standards that will meet or exceed the federal Regulations and enable them to continue their front-line regulatory roles. The Alberta Energy Regulator (AER) is expected to issue its draft methane regulations for public comment in September 2017. The proposed Regulations would impose requirements on all facilities producing and receiving at least 60 000 m3 (approx. 2,100 mcf) of methane in a year and focus on four key areas1: Leak Detection and Repair (LDAR), Venting, Pneumatic Devices, and Compressors. The attached tables summarize the details of the proposed requirements. ECCC are accepting comments on the proposal for 60 days. Download the brief below for a quick summary of the proposed regulations. Please contact us if you have any questions. |
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