David Fickling: How a simple valve can cut fossil fuel emissions but won’t
Summary
To plug methane leaks that hurt the climate more per tonne than carbon dioxide emissions, the hydrocarbon industry needs to replace leaky pressure valves in its pipelines with electric ones. Alas, a global switch must overcome gas market dynamics.
A world that’s serious about cutting a quarter of the world’s emissions that come from methane should be expecting a boom in electric valve actuators. If your response is “a what?" you’re not alone. But this humdrum piece of equipment is one of the lowest-hanging fruit if we want to rein in methane leaks, which warms the atmosphere 72 times as rapidly as carbon dioxide.
At the 2021 Glasgow climate conference, global leaders unveiled the Global Methane Pledge, a promise to cut emissions of this gas 30% by 2030. Nearly four years on, progress isn’t just falling short, it’s non-existent. Our failure to replace millions of devices that routinely vent methane (CH4) into the atmosphere is a sign of how lacklustre efforts have been.
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Actuators are ubiquitous throughout the oil and gas industry, which uses them as automated taps to control pressure and flow in the millions of miles of pipes connecting petroleum fields to refineries and processing plants. Traditionally, they’re powered not by electricity, but by the pressure of the gas itself. The side effect of that method is that they’re constantly leaking small amounts into the atmosphere.
Across more than 6 million such devices in the US alone, this pollution adds up: More than half of CH4 leaks result from such pressure-powered controllers. A single one can seep 260 million cubic feet of gas a year, equivalent in emission terms to burning 33 barrels of oil.
There’s a better way of doing things. Electric actuators cost $3,500 and, hooked up to a solar panel, can be set up anywhere. They avoid the routine venting caused by traditional controllers while also sending useful data back to operators. The initial cost is higher, but they pay for themselves in a few years, thanks to lower maintenance costs and revenues from all the gas that stays in the pipe.
How is that business doing? Not so great. Rotork, a British manufacturer with about half the North American market for wellhead electric actuators, is currently trading around its lowest valuations in nearly a decade. The odds of a quick retrofit at the millions of operating sites seem remote. Despite the US Environmental Protection Agency finally mandating low-emission controllers on new wells last May after three years of wrangling, Rotork isn’t expecting more than 40% to go electric until 2040.
The idea behind the Global Methane Pledge was that fossil-fuel producers were leaving money on the table by wasting gas via leaks and oilfield flares. With US gas priced at $5.54 per million British thermal units at the time and global consumption forecast to increase 21% by 2040, the economics of installing new equipment to turn the waste into revenue seemed compelling.
Things look different now. Gas prices are a third lower, while demand is not expected to ever increase more than about 5% from current levels. Optimists about voluntary promises have had a brutal lesson in the efficient markets hypothesis. If there was really a financial advantage in replacing gas-leaking actuators with less polluting ones, the industry would have done it already. That’s a small, but telling, symptom of a wider failure.
The latest estimates of methane emissions by the International Energy Agency (IEA) show no sign of change. Almost halfway to the pledge’s target date, pollution by the fossil-fuel sector is still roughly the level it was at the start of the decade. If the US under former President Joe Biden was unable to get the industry to make the most basic of plumbing upgrades to cut its carbon footprint, what hope is there that the likes of Russia and Iran will do the same?
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To the extent we’ve made any climate progress on methane in recent years, it’s come not from the earnest do-gooders in Glasgow, but the worst actors on the global stage. Vladimir Putin’s 2022 invasion of Ukraine was intended to make the world even more dependent on the biggest gas exporter, Russia. Instead, it caused consumers to switch from cheap piped methane to costlier but more energy-secure shipped LNG.
That has driven up average long-term prices and weakened the prospects for demand growth. The IEA has cut its estimates for gas consumption in 2030 by about 250 million tonnes relative to where they were at the time of the Glasgow conference. In 2050, it reckons we’ll be 735 million tonnes shorter. In climate terms, that reduction in demand makes almost as much difference as all our efforts to clean up the industry’s waste.
The Global Methane Pledge may have failed, but our efforts to rein in emissions have not. The best prospect was always to count not on the fossil-fuel industry’s altruism or self-interest, but its ability to sabotage itself. ©Bloomberg
The author is a Bloomberg Opinion columnist covering climate change and energy.
