Saskatchewan equivalency with federal methane regulations: emissions reduction estimation

As part of the Pan-Canadian Framework on Clean Growth and Climate Change, the Government of Canada reaffirmed its commitment to reduce methane (CH4) emissions from the oil and gas sector by 40% to 45% from 2012 levels by 2025.Footnote 1  Methane is a potent greenhouse gas (GHG) that is at least 25 times more powerful than carbon dioxide (CO2) over a 100-year period, and methane emissions constitute approximately 15% of Canada’s total GHG emissions. The oil and gas sector is the largest contributor to methane emissions in Canada.

In April 2018, Environment and Climate Change Canada (ECCC) published federal methane regulations to deliver on this commitment. The Regulatory Impact Analysis Statement (RIAS) assessed the impacts of the regulations, including GHG emissions reduction estimates.Footnote 2  This analysis used emissions projections as reported in Canada’s 2016 Greenhouse Gas Emissions Reference Case. ECCC has since updated its estimates of GHG emissions reductions to reflect departmental projections, as reported in Canada’s GHG and Air Pollutant Projections: 2018.Footnote 3  A summary of the emissions estimation methodology and the resulting emission reduction estimates follows below.

Emissions estimation methodology - federal regulations

The analysis estimated methane emission reductions by first developing detailed engineering emissions estimates for the baseline and regulatory scenarios, and then scaling these to ECCC’s overall emission estimates for the oil and gas sector in order to ensure that the estimates are consistent.

To calculate venting and fugitive gas reductions, baseline and regulatory emission factors for the various standards and product types were multiplied by the total number of devices or facilities for the respective standard. This procedure calculates the total amount of gas that will be emitted with and without the Regulations. The difference between the emissions in the baseline scenario and the regulatory scenario were used to estimate the incremental reductions.

The sources for the emission factors differ for each standard:

To determine emissions of the various pollutants contained in emitted gases, estimates of gas composition were obtained from a 2014 Clearstone Engineering report,Footnote 7  with the exception of gas from facility production venting and flaring, as these composition ratios were obtained from a combination of reports from provinces.Footnote 8  To obtain the amounts of CO2, CH4 or volatile organic compounds (VOCs) reduced, the natural gas reductions were multiplied by the composition ratios for each production type.

The engineering emission estimates were then scaled to align with the departmental baseline emissions forecasts. Departmental baseline emission projections for the oil and gas sector were determined using the production forecast of oil and gas from the Canada Energy Regulator, in combination with the national inventory report. These departmental projections were developed in the Energy, Emissions and Economy Model for Canada (E3MC), one of ECCC’s models for estimating GHG emission trends and regulatory impacts in Canada.

The engineering estimates were used to derive a baseline for all fugitive and venting emissions, which was calculated for 4 sectors: natural gas production, natural gas processing, and light and heavy oil mining. These baseline estimates were then compared to the departmental baseline emissions forecast for sectors to obtain a set of ratios, or scaling factors, as follows:

Scaling Factorsector.province = E3MC Baseline Emissionssector.province / Engineering Baseline Emissionssector.province

These scaling factors were then applied to the engineering reduction estimates for each pollutant and for estimates of conserved gas to derive final incremental estimates for the regulations.

Emissions estimation methodology - Saskatchewan regulations and directives

The Oil and Gas Emissions Management Regulations (the Saskatchewan regulations) apply company-level GHG emissions intensity limits to venting emissions from oil facilities. Emissions intensity limits vary depending on year, geography and production class (for example, heavy vs. non-heavy). The allowed emissions intensity declines from 2020 to 2025, after which it remains constant until 2030.Footnote 9

In addition to the Saskatchewan regulations, in December 2019, the Government of Saskatchewan published the Directive PNG036: Venting and Flaring Requirements (the directive PNG036) to provide venting and flaring limits on oil and gas facilities, as well as restrictions on temporary flaring during well completions.Footnote 10  On April 9, 2020, the directive was revised to add LDAR provisions, which requires companies to implement an LDAR program for gas facilities. Applicable facilities include gas batteries, gas plants, and gas gathering systems. In December 2019, the Government of Saskatchewan also published a third version of the Directive PNG017: Measurement Requirements for Oil and Gas Operations (the directive PNG017) to consolidate, clarify, and update requirements on oil and gas facilities with respect to how fuel gas, vent gas and flare gas volumes are measured for accounting and reporting purposes.Footnote 11  Directive PNG017 was further amended to require enhanced quantification of associated gas at heavy oil facilities on April 9, 2020.

To estimate methane emissions reductions attributable to the Saskatchewan regulations and directives, GHG emissions in carbon dioxide-equivalent (CO2e) from venting and flaring at the facility-level were estimated after compliance with the Saskatchewan directives. Total company-level GHG emissions were then compared to their respective emissions limit for each year, calculated as the sum of potential total emissions (PTE) multiplied by the prescribed emissions intensity limit (as stated in the Saskatchewan regulations) across all facilities:

PTEfacility = Produced Gasfacility X Emissions Factor for Vented Gasproduction class

Emissions Limitcompany = Σ(PTEfacility X Emissions Intensity Limitproduction class)

Companies with total emissions above their emissions limit are estimated to reduce emissions by the amount in which they exceed this limit. These emission reductions are then aligned to the departmental baseline in a manner similar to the federal regulations, as described above.

Emission reductions estimates

In order to demonstrate the equivalency of outcomes between the Saskatchewan regulations and directives, and the federal regulations, ECCC has modelled the federal regulations using the departmental reference case as published in Canada’s GHG and Air Pollutant Projections: 2018 and has modelled the Saskatchewan regulations and directives using the same methodology and data.

ECCC estimated the methane emission levels that would occur under both the federal regulations and Saskatchewan regulations and directives. Table 1 shows the methane emission reduction estimates attributed to both the federal regulations, and the Saskatchewan regulations and directives. Over the 5-year assessment period, this analysis determined that cumulative emission reductions for the Saskatchewan regulations and directives are similar to the federal regulations (11.61 Mt of CO2e for the Saskatchewan regulations and directives compared to 11.48 Mt of CO2e for the federal regulations).

Table 1. Five-Year Comparison of Cumulative Methane Emission Reductions (Mt CO2e) (January 1, 2020 – December 31, 2024)
Emission sources Saskatchewan
(regulations and directives)
Federal regulations Difference
Compressors n/a 0.28 -0.28
Fugitives 0.32 1.96 -1.64
General venting 10.63 8.02 2.61
Pneumatic devices n/a 0.57 -0.57
Well completions 0.65 0.65 0
Total 11.61 11.48 0.12

Note: numbers may not add up due to rounding.

As illustrated in table 2, for the longer-term period of 10 years (January 1, 2020 to December 31, 2029), the federal regulations achieve higher methane emission reductions (29.21 Mt of CO2e for the Saskatchewan regulations and directives compared to 37.87 Mt of CO2e for the federal regulations). This means that the Saskatchewan regulations and directives will not be equivalent to the federal regulations. As the equivalency agreement between the Government of Canada and the Government of Saskatchewan terminates at the end of 2024, the Government of Saskatchewan will have to put in place additional regulatory measures in order for a new equivalency agreement to be concluded beyond 2024.

Table 2. Annual Methane Baseline Emissions and Regulatory Reductions (Mt CO2e)
Year Baseline emissions: ECCC's 2018 reference case without methane regulations Regulatory reductions: Saskatchewan regulations and directives Regulatory reductions: Federal regulations Difference
2020 11.54 1.61 0.45 1.16
2021 11.60 2.12 0.54 1.58
2022 11.67 2.16 0.57 1.60
2023 11.81 2.73 4.91 -2.18
2024 11.97 2.98 5.00 -2.02
2025 12.15 3.36 5.10 -1.74
2026 12.34 3.44 5.19 -1.75
2027 12.54 3.53 5.29 -1.76
2028 12.71 3.60 5.37 -1.77
2029 12.87 3.67 5.44 -1.77
Total 121.21 29.21 37.87 -8.66

Note: numbers may not add up due to rounding.

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