Industry faces new costs after cuts

EDMONTON Canada’s energy producers say they remain committed to targeted cuts of a potent greenhouse gas, even after a study suggesting those reductions may have to be much larger than previously thought.

But Patrick McDonald of the Canadian Association of Petroleum Producers said additional cuts will come on top of costs already estimated in the billions of dollars and “flexibility” from federal and provincial governments will be needed.

“If the methane emissions are higher ... we’re supportive of a flexible approach to regulation that allows the adjustment of pieces in order to get to those goals,” he said.

On Tuesday, published research from Carleton University suggested that previous emissions of methane in Alberta’s oilpatch were underestimated by as much as 50 per cent. Researcher Matt Johnson said Alberta’s cuts may have to double to reach the 45 per cent reduction goal announced by the provincial and federal governments and supported by industry.

Industry says governments, currently preparing regulations to enforce those cuts, already underestimate their cost.

Environment Canada suggests they will cost about $3.3 billion over 18 years, offset by $1.6 billion in recovered and salable gas.

Documents from the fall of 2016 obtained by Greenpeace under Freedom of Information legislation suggest the Canadian Association of Petroleum Producers expects the costs of proposed federal regulations, using current methane estimates, to be closer to $4.1 billion over eight years.

“There is a little bit of a discrepancy there,” McDonald said. “If we’re looking at the cost implication, it is an area that merits further understanding.”

Government seems unwilling to bend on the target.

A federal spokeswoman suggested that if emissions are higher than previously thought, cuts will have to be correspondingly deeper.

“If the emissions are actually higher than current estimates suggest, then the regulations would have proportionately more impact,” said Isabel Lavictoire in an email Wednesday.

The Alberta government said it remains committed to the 45 per cent cut and expects to have new regulations by next spring.

“We’re taking a close look at this study and all relevant information available to us as we develop a made-in-Alberta solution to ensure we meet our methane reductions at the lowest possible cost,” said Alberta Energy spokesman Mike McKinnon in an email.

Industry looks at additional requirements with concern, said McDonald.

“We have seen, in terms of competitiveness, some challenges in the past couple of years. (Methane reduction) is a very significant economic impact. We want to ensure we have a healthy industry.”

The association documents suggest industry is looking at longer implementation times as well as credit for methane reduction already achieved as ways to reduce costs. It also wants enforcement targeted to sites most likely to be releasing methane, as well as emission surveys no more than annually.

McDonald also suggested the aerial sampling method Johnson’s study was relatively new and needed confirmation.

Johnson said Wednesday the method has been used in several peer-reviewed studies in the U.S. as well as in industryfunded research. He added his results are in line with a recent British Columbia study, which used ground-based measurement to similarly conclude actual methane emissions are much higher than industry estimates.

Methane is considered to about 30 times more potent as a greenhouse gas than carbon dioxide.