Celebrating 125 Years of Public Service NARUC Methane Emissions in Transmission and Distribution: What Can be Done? The Honorable Susan Rabon North Carolina

Celebrating 125 Years of Public Service

NARUC

Methane Emissions in Transmission and Distribution:

What Can be Done?

The Honorable Susan Rabon North Carolina Utilities Commission

Proposed Gas STAR Gold PartnershipRoger Fernandez

Natural Gas STAR Program

U.S. EPA

NARUC Summer Committee Meeting

July 14, 2014

Dallas, TX

Gas STAR Gold Considerations

► Methane is a potent greenhouse gas and a clean energy source► Reducing methane emissions has important cross-cutting benefits including reducing climate impacts,

Volatile Organic Compounds (VOCs) and hazardous air pollutants (HAPs) and thereby improving local air quality, improving industrial efficiency/safety, increasing domestic energy supply, and generating revenue.

► Oil and gas sector is a key focus of the President’s 2013 Climate Action Plan and the Strategy to Reduce Methane Emissions (March 2014)

► Interagency methane strategy recognizes oil and gas as a key sector and highlights the opportunity to bolster the Natural Gas STAR Program

► Significant and diverse stakeholder interest in oil and gas-sector methane emissions

► Opportunity to leverage existing frameworks► EPA NSPS and State regulations have established control technologies and practices that could be used in a

voluntary context to address sources at existing facilities. ► Greenhouse Gas Reporting Program facility-level data is available for verification/tracking purposes.

► Mature program► Gas STAR Program began in 1993 and has never been significantly updated. Program enhancement can

provide new opportunities for partners and EPA.

3

Opportunities for Future Action► While progress has been made, opportunity remains to further reduce methane

emissions.► Viable low-cost technologies and practices exist today. Remaining low-cost

abatement potential estimated at over 60 million metric tons of CO2e. ► Opportunity for greater participation beyond current Program flexible framework.

4

82 MMTCO2e

19 MMTCO2e

29 MMTCO2e

45 MMTCO2e

Projected US Methane Emissions from Oil and Gas Industries in 2015*[Total Emissions: 175 MMTCO2e]

Oil and Gas Production : 47%

Processing: 11%

Distribution: 17%

Transmission: 26%

Source: Global Non-CO2 Mitigation Report and Global Non-CO2 emissions and projections report* Post 2012 New Source Performance Standards

Gas STAR Gold Program Objectives

► The existing Gas STAR Program will remain in place with a primary focus on technology transfer.

► The proposed Gas STAR Gold Program creates a framework under which facilities will be recognized by EPA for implementing, at the facility level, methane reduction activities for all major methane emission sources. Major goals include:

► Showcase the achievements of U.S. oil and gas operations at the facility-level by offering a standard set of best protocols to be implemented at the facility-level.

► Achieve greater methane emissions reductions across the entire value chain (production through distribution) by encouraging additional facilities to achieve Gold- level performance.

► Create a verifiable and transparent mechanism to demonstrate achievements and acknowledge high performers.

► Complement existing regulatory requirements - such as applying control techniques required for new sources under NSPS Subpart OOOO to existing facilities.

► Publically recognize participating companies’ emission reduction.

5

Gas STAR Gold Program Overview

► Under the proposed Gas STAR Gold Program, companies can achieve Gold status at a facility by implementing all specified reduction protocols for all applicable methane sources at the facility level.

► To achieve Gold status, companies would: ► Submit a Letter of Intent outlining list of proposed facilities working toward Gold status. ► Develop an Implementation Plan for each facility seeking Gold status. ► Implement all applicable Gold protocols at a minimum of one facility.► Submit an Annual Report for each Gold status facility demonstrating achievement of all

protocols and plans for maintaining facility-level Gold status. ► Continue the process of implementing the Gold status protocols at least one new facility

each year.

► To achieve Platinum status, companies would: ► Achieve Gas STAR Gold status for a high percentage (to be specified) of their facilities. For

example, when a company attains Gold status for 90% of its facilities, they would achieve Platinum recognition at the corporate level.

6

Benefits to the Oil and Gas Industry

► EPA recognition of clear, comparable, verifiable and transparent data on a facility’s methane emissions performance. ► Facility emission data transparency through public disclosure of all relevant data to verify

Gold status.

► EPA recognition of facility performance.► EPA will publicize facility progress on our website and through workshops. ► EPA will give facilities permission to use the EPA Gas STAR Gold logo. ► EPA will publicly track company progress by listing Gold facilities and indicate percentage of

operations that these facilities represent.

► Facility revenue generation through the sale of reduced methane emissions.

► Reduced VOC and HAPs emissions in upstream oil and gas sector.

► Increased safety at the facility level.

► Better local and state relationships. 7

Proposed Gold STAR Protocols

8

Protocol Emission Source Off P On P GB Pc T S LNG S LNG I&E D1 Associated Gas Y Y Y 2 Casinghead Gas Y

3 Centrifugal Compressors - Wet and Dry Seals Y Y Y Y Y Y Y Y Y

4 Compressor Blowdowns Y Y Y Y Y Y Y Y Y

5 Compressor Starts Y Y Y Y Y Y Y Y Y6 Equipment Fugitives above Ground Y Y Y Y Y Y Y Y Y

7 Flares Y Y Y Y Y Y Y Y Y 8 Gas-driven Pneumatic Devices Y Y Y Y Y Y Y Y Y

9 Glycol Dehydrators Y Y Y Y Y Y Y Y

10 Hydrocarbon Storage Tanks Y Y Y Y Y

11 Liquids Unloading Y

12 Pipeline Venting and Blowdowns Y Y Y Y Y Y Y Y

13 Pipeline Inspection and Repair (including low pressure distribution and gathering lines and high pressure pipelines)

Y Y Y Y Y Y

14 Pressure Relief Valves - System Upsets Y Y Y Y Y Y Y Y Y

15 Reciprocating Compressors Rod Packing Y Y Y Y Y Y Y Y Y

16 Vessel Blowdowns Y Y Y Y Y Y Y Y Y

17 Cast Iron Distribution Pipeline and Unprotected Steel Pipeline

Y

Gold Protocol 6: Equipment Fugitives Above Ground

► Definition of Fugitive or “Leak”

9

► Approved Instrument Monitoring Method Infra-red Camera and Audio/Visual/Olfactory (AVO) monitoring

Sectors Existing Facility New Facility New and Existing Facilities

Off P, Pc, T, S, LNG S, LNG I & E, D

any concentration of hydrocarbon above 2,000 parts per million (ppm) not associated with normal equipment operation

any concentration of hydrocarbon above 500 ppm not associated with normal equipment operation a leak is any detectable emissions not

associated with normal equipment operation

On P, GB any concentration of hydrocarbon above 500 parts per million (ppm) not associated with normal equipment operation

► Description and Location of Emissions► Can occur through many types of connection points (e.g. flanges, seals, threaded fittings) or through moving

parts of valves, pumps, compressors, and other types of process equipment.

► Due to the high number of equipment components, fugitive leak emissions can become a significant source of emissions.

► Sector Eligibility: On/Off P GB Pc T S LNG S LNG I&E D


► Leak Detection Protocol:► Conduct comprehensive leak detection according to the tables below:

► Leak Repair Protocol:► Repair Leak within 5 working days for all identified leaks unless a good cause, or shutdown is required for which

leak must be repaired within 15 days of resolving issue or at next shutdown. 10

Table A: Production and Gathering and Boosting Inspection Frequency ChartPotential Fugitive Natural Gas Emissions (Tonnes per Year of Natural Gas)

Approved Instrument Monitoring Method Inspection Frequency

AVO Inspection Frequency

Time First Inspection Should be Completed after Submission of Implementation Plan for New Facilities

Time First Inspection Should be Completed after Submission of Implementation Plan for Existing Facilities

>0 and ≤ 400 Annually Monthly No sooner than 15 days and no later than 30 days after facility commences operation

Within 90 days

> 400 Bi-Annually Monthly

Table B: Offshore Production, Processing, Transmission, Underground Storage, LNG Storage, LNG Export and Import, and Distribution Inspection Frequency Chart2

Potential Fugitive Natural Gas Emissions (Tonnes per Year Natural Gas)


Time First Inspection Should be Completed for New Facilities

Time First Inspection Should be Completed for Existing Facilities

>0 and ≤ 12 Annually Within 30 days of commencing operation

Within 30 days from submission of implementation plan> 12 and ≤ 50 Quarterly

> 50 Monthly

Gold Protocol 13: Pipeline Inspection and Repair

• Definition of pipeline − Pipeline consists of above and below ground pipe and associated connectors.− Used to form infrastructure to transport natural gas within a facility boundaries.

• Description and Location of Emissions− Leaks are considered to be any source, such as small openings, gaps, and cracks in a pipeline and/or associated

component connectors, allowing an unintentional natural gas release.

• Sector Eligibility: On P GB Pc T S LNG S LNG I&E D

• Gold Protocol 1) Conduct comprehensive leak detection annually and retain records; and

2) Perform leak repair for leaks ≥ 60 grams/hour

Gold Protocol 17: Cast Iron Distribution Pipeline and Unprotected Steel Pipeline

► Definition of Cast Iron Distribution Pipeline► Iron that is heated to melting point and poured into molds.► Applies to gray cast iron, which is a ferrous material.► Cannot be welded or screwed.► Also includes wrought iron.

► Definition of Unprotected Steel Pipeline► Steel pipeline with no form of corrosion protection.

► Description and Location of Emissions► Manufacturer defects, improper design/installation, and internal/exterior protective coating damage can all

lead to natural gas pipeline leaks.

► Common leakage points in these materials are joints and stress cracking in cast iron pipes and corrosion holes in unprotected steel piping.

► Sector Eligibility: D

Gold Protocol 17: Cast Iron Distribution and Unprotected Steel Pipelines

► All cast iron or unprotected steel pipe being replaced:

► It is proposed that operators replace, line, or otherwise seal joints in 10% of existing cast iron pipeline, wrought iron pipeline and unprotected steel pipeline per year.

► Additionally it is proposed that operators perform an annual leak survey as per requirements in this protocol pertaining to pipeline inspection and repair.

► If 400 feet or more of pipe is being replaced:► It is proposed that operators conduct a pressure

drop survey on the replaced main line to measure the leakage immediately after all service connections have been transferred over to the new main, and the ends of the replaced pipeline are sealed before the pipeline is abandoned or removed.

13Image Source: McWane Cast Iron Pipe Co., http://www.mcwanepipe.com/

Gas STAR Gold Program – Request for Feedback

EPA seeks feedback from stakeholders regarding all aspects of this proposed program, including:

► For the local distribution sector (LDC), please provide feedback on performance goals for specific sources, such as cast iron pipe replacement and suggestions for how to increase methane emissions reductions from LDCs with limited or no cast iron or exposed steel pipe?

► For LDCs, are there any specific incentive programs that PUCs or States leverage in order to promote further methane emissions reductions in this sector?

► How can EPA best engage PUCs to further methane emissions mitigation in LDCs?

► How, and how frequently, should protocols or other program elements be updated to reflect evolving state of the art?

► Are appropriate emissions sources targeted in these protocols? Should EPA consider any additional emissions sources and/or associated protocols?

► Are appropriate best management practices, technologies and/or emission mitigation targets used in the protocols?

14

Contact us!

We look forward to working with you and hope that you will consider joining the Gas STAR Gold Program!

For more information about Gas STAR Gold:www.epa.gov/gasstar/gold/index.html

We welcome your feedback!www.epa.gov/gasstar/contactus.html

Roger [email protected]

(202) 343-9386 15

Detailed Protocol Appendix

16

Gold Protocol 1: Associated Gas

► Definition of Associated Gas ► Natural gas produced during the production of crude oil or condensate from an oil well.

► Does not include natural gas produced during completion flow-back or emitted from equipment leaks. These sources are captured under another protocol.

► Description and Location of Emissions► Associated gas venting or flaring to the atmosphere after gas-liquid separation phase.

► Facilities without existing infrastructure to transport produced gas to useful outlet.

► Does not include emissions produced from wildcat/delineation wells or as a result of system failures/emergencies.

► Sector Eligibility: On/Off P GB

► It is proposed that operators recover all associated gas for beneficial use at a facility► Beneficial use does not include flaring. ► Potential options for use of any recovered gas include natural gas reinjection, electricity generation, natural gas

liquefaction, and gas capture for sale.

Gold Protocol 2: Casinghead Gas

► Definition of Casinghead gas► Gas that collects in the annular space between the casing and tubing in oil and gas wells.

► Description and Location of Emissions► Casinghead gas is usually vented to the atmosphere at or near the wellhead.

► Sector Eligibility: On P

Gold Protocol 2: Casinghead Gas

Protocol Hierarchy

19

1. Facilities with gas capture system.

2. Facilities without gas capture system.

3. Facilities with no flare.

Route emissions to recovery system for beneficial use. Beneficial use does not include flaring.

Install gas capture system if possible from an engineering standpoint.

Install flare if CO2 equivalent combustion emissions from flare pilot gas ≤ CO2 equivalent casinghead gas venting emissions.

Gold Protocol 3: Centrifugal Compressors – Wet and Dry Seals

► Definition of Centrifugal Compressor► Raises the pressure of natural gas by means of mechanical rotating vanes or impellers.

► Uses wet or dry sealing system to prevent compressed gas escape to the atmosphere.

► Does not include rotary screw, rotary vane, or scroll compressors.

► Description and Location of Emissions► Dry seals utilize a thin gap of high pressure gas between the rings through which little gas can leak. Gas is released to the atmosphere where the compressor shaft exits the compressor case.

► Wet seals use oil under pressure to prevent gas from escaping along a compressor shaft. Seal oil is degassed to the atmosphere.


► Dry Seal Systems: It is proposed that operators maintain venting emissions from dry seals within 10% of the initial design vent rate.

► Obtain initial design vent rate from the seal manufacturer or measure initial design vent rate when the compressor commences operation.

► Wet Seal Systems: It is proposed that operators achieve 95% recovery of uncontrolled methane emissions for all compressors, without using flaring.

21

OPTIONS

Vapor Recovery Unit (VRU)

Boiler

Low Pressure Fuel Gas

Compressorturbine fuel

Seal oil circulation pump

Fuel pressure seal oil degassing drum and demister (“seal oil trap”)

Less gas vented to atmosphere

Atmospheric seal oil degassing drum

Compressor Suction/Recycle

Gold Protocol 3: Centrifugal Compressors – Wet and Dry Seals

Gold Protocol 4: Compressor Blowdowns

► Definition of Compressor Blowdown► When a compressor is taken offline, the high pressure gas within the compressor is vented to the atmosphere.

► Description and Location of Emissions► Emptying gas from compressor and connected piping and vessels between closed isolation valves and venting

it to the atmosphere.


Gold Protocol 4: Compressor Blowdowns

► Protocol application hierarchy for a reciprocating compressor are displayed below.

23

PROTOCOL HIERARCHY

Vapor Recovery Unit (VRU)

Low Pressure Fuel Gas or Parallel Operating Compressor

Retain blowdown gas in compressor

Route to Flare

» Relevant only to reciprocating compressors with positive rod packing sealing systems.

» If both systems are present, route emissions to lower pressure system of the two, to max engineering potential.

» Recover gas for beneficial use. Beneficial use does not include flaring.

» Viable option if facility is not eligible for other reduction opportunities.

1st

2nd

3rd

4th

Gold Protocol 5: Compressor Starts

► Definition of Compressor Start ► Compressors driven by internal combustion engines are often equipped with gas expansion starters. ► Pressurized gas expands across the starter turbine that initiates engine startup.

► Description and Location of Emissions► The pressurized starter gas used to drive the turbine motor starter is vented to the atmosphere.


Gold Protocol 5: Compressor Starts

► Protocol hierarchy is outlined in the gas starter schematic below.

25

1st - Replace gas starters.

»Replacement options include instrument air, electric, or nitrogen

EPA/GRI Methane Emissions from the Natural Gas Industry Volume 7: Blow and Purge

2nd - Route vent gas to gas capture system for beneficial use.

» Beneficial use does not include flaring.

3rd - Route starter vent gas to flare.

»Applicable to sites with existing flares or flares being installed for another protocol.

Protocol Hierarchy


► Definition of Fugitive or “Leak”

26

► Approved Instrument Monitoring Method Infra-red Camera and Audio/Visual/Olfactory (AVO) monitoring

Sectors Existing Facility New Facility New and Existing Facilities

Off P, Pc, T, S, LNG S, LNG I & E, D

any concentration of hydrocarbon above 2,000 parts per million (ppm) not associated with normal equipment operation

any concentration of hydrocarbon above 500 ppm not associated with normal equipment operation a leak is any detectable emissions not

associated with normal equipment operation

On P, GB any concentration of hydrocarbon above 500 parts per million (ppm) not associated with normal equipment operation

► Description and Location of Emissions► Can occur through many types of connection points (e.g. flanges, seals, threaded fittings) or through moving

parts of valves, pumps, compressors, and other types of process equipment.

► Due to the high number of equipment components, fugitive leak emissions can become a significant source of emissions.



► Leak Detection Protocol:► Conduct comprehensive leak detection according to the tables below:

► Leak Repair Protocol:► Repair Leak within 5 working days for all identified leaks unless a good cause, or shutdown is required for which

leak must be repaired within 15 days of resolving issue or at next shutdown. 27

Table A: Production and Gathering and Boosting Inspection Frequency ChartPotential Fugitive Natural Gas Emissions (Tonnes per Year of Natural Gas)


AVO Inspection Frequency

Time First Inspection Should be Completed after Submission of Implementation Plan for New Facilities

Time First Inspection Should be Completed after Submission of Implementation Plan for Existing Facilities

>0 and ≤ 400 Annually Monthly No sooner than 15 days and no later than 30 days after facility commences operation

Within 90 days

> 400 Bi-Annually Monthly

Table B: Offshore Production, Processing, Transmission, Underground Storage, LNG Storage, LNG Export and Import, and Distribution Inspection Frequency Chart2

Potential Fugitive Natural Gas Emissions (Tonnes per Year Natural Gas)


Time First Inspection Should be Completed for New Facilities

Time First Inspection Should be Completed for Existing Facilities

>0 and ≤ 12 Annually Within 30 days of commencing operation

Within 30 days from submission of implementation plan> 12 and ≤ 50 Quarterly

> 50 Monthly

Gold Protocol 7: Flares

► Definition of a Flare ► Combustion device that uses an open flame to burn combustible gas.

► Description and Location of Emissions► Direct emissions from gas combusted in pilot flame.

► Combination of low flowing lesser BTU gas with a high cross wind (flare out).


► It is proposed that operators install reliable and continuous ignition systems for all flaring existing within or adjacent to the facility.

Gold Protocol 8: Gas-Driven Pneumatics

► Definition of Pneumatic Device ► Automated or manual instruments and pumps used for flow regulation to maintain a process condition.

► Pressurized natural gas is used as the source of power.

► Description and Location of Emissions► Devices are designed to vent gas as part of normal operation.

► Three basic configurations: – Continuous-bleed – Intermittent bleed – Self-contained devices


Gold Protocol 8: Gas-Driven Pneumatic Devices

30

Protocol Hierarchy

1st - Instrument Air, Nitrogen, or Electricity

2nd - Leak Rate Reduction

» For devices used in processing facilities, reduce leak rate to zero

» Where electricity is available, replace pneumatic pumps with electric pumps

» Where instrument air or nitrogen are available, install devices powered by these.

» For devices used outside of processing facilities, reduce leak rate below 6 standard cubic feet per hour (scfh).

Gold Protocol 9: Glycol Dehydrators

► Definition of a Glycol Dehydrator ► Device in which a liquid absorbent (glycol, diethylene glycol, or triethylene glycol) directly contacts a natural

gas stream to absorb water vapor.

► Description and Location of Emissions► Liquid absorbent (e.g. glycol) removes water as well as methane, VOCs, and HAPs from natural gas.

► Saturated or “rich” absorbent is routed to a reboiler where these compounds evaporate along with water, resulting in emissions.

► Methane emissions are directly proportional to a dehydrator’s glycol circulation rate.

► Sector Eligibility: On/Off P GB Pc T S LNG S LNG I&E

► Emission Reduction Options:

1. Route Emissions to Gas Capture2. Route Emissions to Low Pressure Gas System3. Route Emissions to Flare 4. Glycol Circulation Rate Optimization

Requirement 1, 2, 3 apply to dehydrators with emissions ≥ 7,080 g/hr and annual avg. daily throughput ≥ 0.4 MMSCFD

Requirement 4 applies to dehydrators with emissions ≥ 7,080 g/hr and annual avg. daily throughput < 0.4 MMSCFD

Gold Protocol 9: Glycol Dehydrators

► Protocol hierarchy for an example device is displayed below.

32

PROTOCOL HIERARCHY

2nd - Low Pressure Gas System

3rd - Route to Flare

» Viable opportunity only once gas capture and low pressure gas system recovery have been considered.

» For dehydrator equipped with flash tank separators

1st - Gas Capture System

» Recover gas from dehydrator vents for beneficial use. Beneficial use does not include flaring.

Optimize Glycol Circulation Rate

» Viable opportunity when separator vent gas volume is greater than or equal to on-site fuel requirements

» Glycol circulation rate maintained at or below 110% of the optimal circulation rate based on current production

HIERARCHY 1

HIERARCHY 2

HIERARCHY 3

Gold Protocol 10: Storage Tanks

► Definition of a Storage Tank► Vessel designed to contain an accumulation of crude oil, condensate, intermediate hydrocarbon liquids, or

produced water that is constructed of non-earthen materials.

► Description and Location of Emissions► Sources of emissions include tank vents, designed tank openings, and any tank defects .

► Increased flashing emissions due to leaking or stuck open gas/oil separator liquid level control valves as well as vortexing when separator liquid level is low (and no vortex breaker is installed).

► Sector Eligibility: On/Off P GB Pc T

► Emission Reduction Hierarchy:

1. Route Emissions to Gas Capture2. Route Emissions to Flare

Tanks with average annual hydrocarbon emissions ≥ 60 g/h of natural gas are eligible for reduction opportunities.

Gold Protocol 10: Storage Tanks

34

PROTOCOL HIERARCHY

2nd - Route to Flare » Viable opportunity for sites w/o gathering or sales line(s) in place or existing gas capture system(s)

1st - Vapor Recovery Unit (VRU)

» Recover gas from storage tanks for beneficial use. Beneficial use does not include flaring.

Gold Protocol 11: Liquids Unloading

► Definition of Liquids Unloading► Removal of fluids required to maintain production in mature wells when accumulated liquids slow or halt gas

production (liquids loading).

► Description and Location of Emissions► Liquids unloading can be performed through manual or automated techniques.

► Atmospheric emissions from liquids unloading can occur from direct gas venting or flaring.

► Sector Eligibility: Onshore Production

Gold Protocol 11: Liquids Unloading

► It is proposed that operators maintain a closed loop liquids unloading system that eliminates all methane emissions.

► Control of emissions during system failures or emergency situations is not proposed.

► Emission reduction options for liquids unloading while maintaining a closed loop system are described below (image shows a well installed with a plunger lift).

36

Velocity Tubing

Foaming Agents

» Soaps or surfactants which aid in phase separation and reduce critical velocity required to lift/remove fluids from a well.

» Smaller diameter production tubing which increases gas production velocity without venting emissions.

Plunger Lift Systems

» Equipment which uses well’s gas pressure to drive accumulated liquids to the surface.

» Well gas should be directed to a separator that routes to a sales line or other beneficial use (not including flaring) during plunger lift cycling.

Downhole Reciprocating or Rotating Pumps

» Pumps used to propel accumulated well liquids to the surface.

REDUCTION OPTIONS

Gold Protocol 12: Pipeline Venting and Blowdowns

• Definition of pipeline venting− Planned or unplanned release of gas to the atmosphere from pipelines to reduce line pressure.

• Description and Location of Emissions− Vented sections of pipe to ensure safe working conditions during planned repairs and maintenance,

installation of new parallel pipe, or an emergency repair.

− Done by blocking the smallest possible linear section of the pipeline and depressurizing it through venting natural gas to the atmosphere.


Gold Protocol 12: Pipeline Venting and Blowdowns

► An image of portable compression to reduce pipeline blowdown emissions is shown below.

38

1st - Use inline compression to max engineering potential

2nd - Use portable compression

» Breakeven or higher value of gas should be recovered in comparison to cost of using portable compression.

»Applicable if facility has ownership or operatorship of the compressor downstream from pipeline venting and blowdown operations.

» Recover gas amount comparable or higher to fuel used during inline compression (CO2 eq. basis).

REDUCTION HIERARCHY

Gold Protocol 13: Pipeline Inspection and Repair

• Definition of pipeline − Pipeline consists of above and below ground pipe and associated connectors.− Used to form infrastructure to transport natural gas within a facility boundaries.

• Description and Location of Emissions− Leaks are considered to be any source, such as small openings, gaps, and cracks in a pipeline and/or associated

component connectors, allowing an unintentional natural gas release.


• Gold Protocol 1) Conduct comprehensive leak detection annually and retain records; and

2) Perform leak repair for leaks ≥ 60 grams/hour

Gold Protocol 14: Pressure Relief Valves (PRVs) – System Upsets

► Definition of pressure relief valves► Self-regulating safety devices used to ensure normal equipment/pipeline operating pressure and prevent any

pressure increases above the maximum allowable working pressure of process equipment.

► Description and Location of Emissions► During system upsets, PRVs vent process gas to maintain a set pressure value.


Gold Protocol 14: Pressure Relief Valves (PRVs) – System Upsets

► It is proposed that operators install rupture disks on all gas pressure relief valves (PRVs) ► One–time use calibrated metal membranes which break at excessive gar pressures, allowing

system stabilization.► Does not apply to PRVs in closed systems connected to flare headers

41

Pressure Relief Valve

Rupture Disk Installation

Gold Protocol 15: Reciprocating Compressor Rod Packing

► Definition of Reciprocating Compressor Rod Packing► A series of flexible rings in machined metal cups that fit around the reciprocating compressor piston rod.

► The rings create a seal, limiting the amount of compressed natural gas that escapes to the atmosphere.

► Description and Location of Emissions► Emissions from packing systems originate from mainly four components; the nose gasket, between the packing

cups, around the rings and between the rings and the shaft.

► A set of two to three flexible, segmented rings in a packing cup are pressed against the rod to and oscillate back and forth in the cup with the rod’s reciprocal movement, sealing against the cup faces to present leakage round the rings, but a little gas slips around the rings with each stroke.

► Rod packing emits a small amount of gas into the distance piece and/or through a vent line connected to the packing box.

► Emission Reduction Hierarchy1) Gas Capture2) Economical Rod Packing Replacement3) Route rod packing emissions to flare


Gold Protocol 16: Vessel Blowdowns

► Definition of Vessel Blowdown► The act of emptying or depressurizing a vessel of natural gas.

► Description and Location of Emissions► Intentional vents usually from elevated vent stacks controlled by a manual or pneumatic actuated valve

connected to the vessel. ► Blowdowns can be from planned maintenance, operational needs, or due to an emergency.


► Emission Reduction Hierarchy:

1. Route Emissions to Gas Capture2. Route Emissions to Low Pressure Gas System3. Route Emissions to Flare

Gold Protocol 17: Cast Iron Distribution Pipeline and Unprotected Steel Pipeline

► Definition of Cast Iron Distribution Pipeline► Iron that is heated to melting point and poured into molds.► Applies to gray cast iron, which is a ferrous material.► Cannot be welded or screwed.► Also includes wrought iron.

► Definition of Unprotected Steel Pipeline► Steel pipeline with no form of corrosion protection.

► Description and Location of Emissions► Manufacturer defects, improper design/installation, and internal/exterior protective coating damage can all

lead to natural gas pipeline leaks.

► Common leakage points in these materials are joints and stress cracking in cast iron pipes and corrosion holes in unprotected steel piping.

► Sector Eligibility: D

Gold Protocol 17: Cast Iron Distribution and Unprotected Steel Pipelines

► All cast iron or unprotected steel pipe being replaced:

► It is proposed that operators replace, line, or otherwise seal joints in 10% of existing cast iron pipeline, wrought iron pipeline and unprotected steel pipeline per year.

► Additionally it is proposed that operators perform an annual leak survey as per requirements in this protocol pertaining to pipeline inspection and repair.

► If 400 feet or more of pipe is being replaced:► It is proposed that operators conduct a pressure

drop survey on the replaced main line to measure the leakage immediately after all service connections have been transferred over to the new main, and the ends of the replaced pipeline are sealed before the pipeline is abandoned or removed.

45Image Source: McWane Cast Iron Pipe Co., http://www.mcwanepipe.com/


NARUC


What Can be Done?


ANADARKO PETROLEUM CORPORAT ION

www.anadarko.com | NYSE: APC ANADARKO PETROLEUM CORPORATION

July 14, 2014

Methane Emissions in Transmission and Distribution: What Can be Done?

Example of Methane Management for Oil and Gas

A N A D A R K O

www.anadarko.com NYSE: APC

48www.anadarko.com | NYSE: APC

Cautionary Language

Regarding Forward-Looking Statements and Other Matters

This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given

that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations

expressed in this presentation, including court approval of the settlement agreement related to the Tronox Adversary Proceeding, issuance of the injunction and dismissal with prejudice of the claims

asserted in the Tronox Adversary Proceeding, as well as Anadarko’s ability meet financial and operating guidance, achieve its production targets, consummate the transactions described in this

presentation, successfully manage its capital expenditures, timely complete and commercially operate the projects and drilling prospects identified in this presentation, achieve production and

budget expectations on its mega projects, and successfully plan, secure necessary government approvals, finance, build, and operate the necessary infrastructure and LNG park. See “Risk

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Please also see our website at www.anadarko.com under “Investor Relations” for reconciliations of the differences between any non-GAAP measure used in this presentation and the most directly comparable GAAP financial measures. Also on our website at www.anadarko.com is a glossary of terms.

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that meet the SEC’s definitions for such terms. We may use terms in this presentation, such as “resources,” “net resources,” “net discovered resources,” “gross resource,” “gross recoverable resources,” “gross resource opportunity,” “estimated net resources,” “recoverable natural gas,”

“net opportunity,” and similar terms that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the oil and gas disclosures in our

Form 10-K for the year ended December 31, 2013, File No. 001-08968, available from us at www.anadarko.com or by writing us at: Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380 Attn: Investor Relations. You can also obtain this form from the SEC by

calling 1-800-SEC-0330.

http://www.anadarko.com/

A N A D A R K O



ANGA Members – Driving Demand for Natural Gas

A N A D A R K O



Anadarko is …

Production

Exploration

Among the World’s Largest Independent Oil and Natural Gas E&P Companies

Included in the S&P 100 Index with ~6,000 Employees Worldwide

Headquartered in The Woodlands, TX with Operations in 15+ Countries

Producing Enough Energy to Meet Daily Demands of ~25 Million Avg. American Homes.

A N A D A R K O



Anadarko’s Mission and Values

51

Anadarko’s mission is to provide a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare.

Integrity and Trust Servant Leadership People and Passion Commercial Focus Open Communication

A N A D A R K O



2009

U.S. Onshore: Our Mission

Deliver Short-Cycle, Capital-Efficient Liquids Growth Build Enabling Infrastructure Increase Efficiencies and EURs Explore for and Accelerate the Next Resource Play Maintain Natural Gas Option Value

Key Growth Contributors

2009 2010 2011 2012 2013 2014E0

200,000

400,000

Zero to 375,000 BOE/d Horizontal Sales-Volume Growth in 5 Years

BO

E/d

Marcellus

Eagleford

Delaware Basin

E TX / N LA

Wattenberg HZ

U.S. Onshore

Reported Net Sales Volumes (MBOE/d)

2009 2010 2011 2012 2013 1Q14

Total Sales Volumes 353 391 442 519 583 621

Liquids (MBbl/d) 81 104 129 154 185 218

A N A D A R K O



Horizontal Drilling + Hydraulic Fracturing = Energy Reboot

Horizontal Drilling

Multiple layers of

Protective steel &

cement

Hydraulic Fracturing

A N A D A R K O



Anadarko is Committed to Reducing Emissions

Anadarko is awarded a 2013 Environmental Protection Award by the COGCC for the third consecutive year.

Anadarko, EDF, Governor John Hickenlooper and 2 Other Operators Collaborate on New Air-Quality Rules in

Colorado.

Reducing ImpactsCollaborative Air-Quality Rules in Colorado with Governor, Regulators and EDFExpanding Infrastructure to Reduce Truck TrafficWater Pipeline and Management

Leading Industry InitiativesFracFocus.orgUniversity of Texas Emissions StudyExpanding CNG Fleet and Infrastructure

Actively Engaging Stakeholders Recognized for Best Practices

A N A D A R K O



U.S. Methane Emissions By Source

Source: US EPA GHG Inventory http://epa.gov/climatechange/ghgemissions/gases/ch4.html

A N A D A R K O



U.S. Methane Emissions From Natural Gas Systems (Tg CO2 Eq.)

1990 2005 2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

Methane Emissions from Natural Gas Field ProductionTotal Methane Emissions from Natural Gas Systems

Source: US EPA GHG Inventory

A N A D A R K O



Long Term Methane Management

What motivates a company to design and implement a comprehensive voluntary

methane program to minimize methane emissions with transparency?

Evaluate risk, cost and liability to determine level of priority

Methane emissions are a priority for upstream natural gas industry

Methane program benefits include: reducing methane and VOC emissions, preparing for potential regulatory changes and increasing the benefit of fuel switchingFocus on leak detection and repair for existing operationsLeverage with VOC emission related goals

Public attention on life-cycle emissions of natural gas

A N A D A R K O



White House: Strategy to Reduce Methane Emissions (3/14)

Attributes 28% of methane emissions to oil and gas sector31% emissions from production15% emissions from processing34% emissions from transmission and storage20% emissions from distribution

Upstream Oil and GasAssess potential sources of methane and other emissions – White PapersEvaluate regulatory programs – permitting, control regulations, reportingExpand voluntary efforts - National GasSTAR (Gold Star Certification)Department of Interior: Bureau of Land Management Leak and Flaring

Measurement and Monitoring New measurement technologiesAddress uncertainty with bottom-up inventoriesEnhance top-down modeling and monitoring

58

A N A D A R K O



White House: Strategy to Reduce Methane Emissions (3/14)

Department of Energy Methane Roundtables for “downstream” opportunities

Accelerate best practicesPromote common understanding of methane emissionsDevelop cost-effective strategies to reduce methane emissionsUse voluntary programs to catalyze action

Existing downstream efforts specifically recognizedSafety is a top priority for distribution38 states have an accelerated infrastructure replacement cost recovery programNatural Gas Downstream Initiative Environmental Defense Fund and 13 American Gas Association project

Recognizes the value of state regulatory effortsColorado exampleCalifornia and Northeast trading programs

A N A D A R K O



Industry Upstream Methane Strategies: Next Steps

The oil and gas industry may consider the following moving forward: Gather and evaluate data

What gets measured gets managedDecide type of measurements: direct, estimates, leak detectionDevelop accurate carbon emission inventoryUnderstand accuracy of emission factorsAssess data for priority sources

Develop strategies that:Meet regulatory requirementsLeverage with VOC emission reductionsReduce emissions from tanks, pneumatics, completions, equipment leaksDevelop technologies to reduce potential of emissions: tankless operations, centralizing facilities, vapor recovery units

Measure results and develop next strategiesContinue to measure and reassess prioritiesThe emissions per unit type changes over time

A N A D A R K O



Industry Upstream Methane Strategies: Next Steps

Methane reduction strategies are usually developed considering:

Largest emission sourcesCost effectivenessAbility to capture productStrategies to obtain the greatest methane reductionsRegulatory requirementsDesign and construction new locationsCommunity prioritiesEquipment effectivenessReliability of control equipment

Purposes of voluntary GHG reporting program are often to:Enhance business valueReduce risk and costFind opportunities to improve operationsStrengthen stakeholder relationshipsEnhance reputation, trust and credibility

A N A D A R K O



Industry Upstream Methane Strategies: Lessons Learned

Lessons learned by the upstream industry: Flexibility is key

Priorities may vary by locale and new versus existing operationsOverly prescriptive regulations can stifle innovation and reductionsLeveraging with other priorities is key to a successful strategyLeak detection and repair strategies have greater short term versus long term benefits

Voluntary strategies can obtain greater reductionsSharing best practices across the industry is valuableField and engineering staff are key to any environmental strategy –seeking more efficient ways to do businessValue in linking a methane program to continually finding strategies to reduce risk, costs, and liabilities

Understanding data is importantStrong knowledge of data is important – including data gapsMeasuring continuous improvement can be challenging

A N A D A R K O



Natural Gas Distribution Sector

Natural gas distribution segment reduced methane emissions by over 20% since 1990 through implementation of industry best practices and pipeline replacement activities

Many utilities participated in EPA’s Gas STAR program Approximately 38 states have various programs or enabling

regulatory structures in place today to accelerate LDC pipeline replacement and modernization efforts

Natural gas local distribution companies (LDCs) and the American Gas Association (AGA) are collaborating with EDF to quantify methane emissions from distribution networks and update emission factors

Leadership and collaboration across federal, state, and local government is necessary to further accelerate infrastructure replacement and modernization,

Source: MJ Bradley and Downstream Natural Gas Initiative

A N A D A R K O



Evaluate Priority to LDCs

LDCs may have different risk-based prioritiesMethane may not be the priority driverSafety may be a greater priority Co-benefit of replacing pipelines for safety, is the reduction of methane emissionsOnce safety issues addressed, re-evaluate remaining emissions for further action

Gather and evaluate dataVarious methodologies can be usedEvaluate value of improving reliability of data set

Develop strategiesLeverage with safety goalsConsider lower price of gas and lower interest ratesTiming may be just right to invest maximum funds possible to replace systems

Measure results and develop next strategiesContinue to measure and reassess prioritiesEmissions per unit type changes over time

A N A D A R K O



Downstream Natural Gas Initiative (DNGI)

Five natural gas utilities and MJ Bradley formed the Downstream Natural Gas Initiative to address key technical, regulatory, and workforce challenges affecting methane emission reductions

Focus on opportunities to substantially reduce methane emissions and support safe, reliable, and cost-effective service

Members are 13% of total installed distribution main mileage and deliver ~20% of total natural gas

Consolidated Edison Company of New York, Inc.National GridPacific Gas & ElectricPublic Service Electric & GasXcel Energy


A N A D A R K O



Downstream Natural Gas Initiative (DNGI)

Downstream Natural Gas Initiative states that:Pipeline replacement and modernization programs offer the most meaningful opportunities to reduce methane emissions from the distribution segmentMaintain focus on safety and effectively managing resourcesNatural gas utilities are working with state PUCs to put in place accelerated pipeline replacement and modernization programs Leadership and collaboration across federal, state, and local government will be necessary to further accelerate infrastructure replacement and modernization

Annual and total program investment will be dictated by the acceptable level of customer rate impacts

The impact of pipeline replacement projects on customer rates is largely a function of the scale and speed of replacement programs


A N A D A R K O



How Can State Regulators Help?

Regulatory Considerations Can the state work to develop a predicable regulatory

framework to enable and guide utility investments? Can the state support pipe replacement programs? Do existing programs provide for timely cost recovery? Are there clear objectives for utilities? Do regulations support the use of new technologies and

processes to increase efficiencies, reduce risk and costs, and improve safety?

A N A D A R K O



Thank You


NARUC


What Can be Done?


A N A D A R K O



Celebrating 125 Years of Public ServiceNARUC

Mark Brownstein

Associate Vice President and Chief Counsel of the U.S. Climate and Energy Program


NARUC


What Can be Done?


NW Natural’s Approach to Raising the Bar on Pipeline Safety

Improving Natural Gas Safety and Reducing Emissions

Presented to the National Association of Regulatory Utility CommissionersSummer Committee MeetingsDallas, TexasJuly 13-16, 2014 Bruce Paskett

Principal Compliance EngineerNW Natural

Agenda

• NW Natural Company Background• NWN’s Enhanced Pipeline Safety Programs• Lost and Unaccounted For Gas- Not a Valid Measure

of Emissions• Rate Treatment Mechanisms• Added Benefit of Reduced Natural Gas Emissions• State Excavation Damage Prevention Laws• Summary

NW Natural Company Background

• Company founded in 1859

• Operate in Oregon and SW Washington

• Serve approximately 698,000 residential, commercial and industrial customers

• Designed, constructed, own and operate 643 miles of transmission main, 13,400 miles of distribution main and 680,000 services

NW Natural Commitment to PL Safety

• Company is committed to the safe, reliable and cost-effective delivery of natural gas in a manner that recognizes impacts to utility ratepayers

• Since the early 1980’s, company has worked closely w/ OPUC Safety Staff to implement enhanced pipeline safety programs that have significantly improved safety

NW Natural Transmission and Distribution Piping Characteristics

As a direct benefit of NW Natural’s Enhanced Pipeline Safety Programs, nearly 100% of NW Natural’s underground infrastructure is constructed of modern day materials (coated, cathodically protected steel and state-of-art polyethylene plastic)

NW Natural’s Enhanced Pipeline Safety Programs

Key Driver was Improving Pipeline SafetyAdded Benefit: Reduced Natural Gas Emissions

NW Natural Raising the Bar on Pipeline Safety

NW Natural’s Enhanced PL Safety Programs

• Distribution Integrity Management Program (DIMP)-1983

• Accelerated Cast Iron (CI) Repl. Program- 1983 to 2000

• Accelerated Bare Steel Repl. Program- 2001 to 2015

• Natural Forces (Geo-Hazard) Program- 2001

• Transmission Integrity Management Program (TIMP)- 2002

• System Integrity Program (SIP- Bare Steel Replacement,

TIMP & DIMP)- 2009

• Formal DIMP Program- 2009

• Risk-based analysis of piping infrastructure

• Smart modernization- Focus replacement efforts on

highest risk pipe

• Maximize efficiency, benefits and completion by

focusing resources on accelerated infrastructure

replacement vs. repairs of insignificant emissions

NW Natural Raising the Bar on Pipeline Safety-

Fundamental Principals of Programs

NW Natural initiated “model” DIMP Program in 1983• Worked with Oregon PUC Staff, using DIMP risk-based

principles, to initiate CI Replacement Program• Program included rate treatment mechanism in early years• Annual update meetings with OPUC Staff• Program Performance Metrics showed significant

improvement in safety with additional benefit of reduced emissions

• CI Replacement Program completed in 2000


CI Performance Metrics- Grade B Emissions, Portland District


0

200

400

600

800

1000

1200

1400

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

LUAF is comparison between gas measured coming into system and gas going out of system- Not a measure of gas emissions• There are many factors that affect a company’s LUAF;

• Gate station metering accuracy • Customer metering accuracy• Timing of meter reading / billing cycle• Time of year- winter (cold) / summer (warm) • Major temperature variations within time period (month)• Line pack• Storage injection/ withdrawals• Theft & system emissions

Lost and Unaccounted For Gas (LUAF)-Not a Valid Measure of Natural Gas Emissions

NW Natural’s Enhanced Pipeline Safety Program• Developed in concert with OPUC Safety Staff• Approved in 2001• Key Elements

• Accelerated Bare Steel Replacement Program• Natural Forces (Geo-Hazard) Program

• Rate Treatment Mechanism rolled in capital costs with Purchased Gas Adjustment (PGA) each year


NW Natural’s Enhanced Pipeline Safety Program

Accelerated Bare Steel Replacement Program:• Accelerated the replacement of bare steel mains

and services from 40 years to 20 years • Completion date accelerated from 2041 to 2021


NW Natural’s Enhanced Pipeline Safety Program

Natural Forces (Geo-hazard Program):• Identification, assessment, monitoring and

mitigation of threats from landslides, earthquakes and washouts at river and stream crossings




NW Natural’s System Integrity Program (SIP) - March 1, 2009

• Consolidated key Enhanced Pipeline Safety Programs

under a single umbrella. Key Elements;

• Accelerated Bare Steel Replacement Program

• TIMP

• DIMP

• Rate Treatment Mechanism rolls in capital costs with

PGA each year

SIP Capital Cost Rate Treatment Mechanism-

• Threshold of $ 3.25 million on steel replace. costs/ fiscal year

• $12 million “soft cap/ fiscal year• Project costs included in rates when

completed each year• “Tracker year” November 1- October 31

States with Accelerated Infrastructure Replacement Programs

Bare Steel Miles of Main- Oregon

NW Natural Raising the Bar on Pipeline Safety- Benefits

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

180

Grade B Emissions- System

NW Natural Raising the Bar on Pipeline Safety- Benefits

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

50

100

150

200

250

NW Natural Raising the Bar on PL Safety- Reducing Natural Gas Emissions

• Excavation damage presents the single greatest threat to PL safety

• Many States do not have effective damage prevention laws so normalized excavation damage rate (damages/1000 locate requests) is much higher than States w/ effective programs

• Reducing excavation damages improves PL safety w/ added benefit of reducing natural gas emissions

State Excavation Damage Prevention Laws-Another Tool to Improve PL Safety

State Excavation Damage Prevention Laws- PHMSA Serious Incident Data 1994-2013

• NW Natural worked with OPUC to develop risk-based Programs that significantly improved PL safety. Key elements-Accelerated replacement of CI and Bare Steel

• System will be 100% modern materials by end of 2015• Key driver was PL Safety. Reduction in emissions is added

benefit. LUAF NOT valid measure of gas emissions• Early entry allowed NWN to spread costs over time, eliminating

“rate shock” for ratepayers. Minimal rate impact• Rate treatment mechanisms that provide timely recovery of PL

Safety Program costs facilitate operator action• Current low commodity costs- excellent time to accelerate

infrastructure replacement programs• Effective State Excavation Damage Prevention Laws improve

PL safety w/ added benefit of reduced emissions

Summary

Thank You!

Bruce PaskettPrincipal Compliance Engineer

[email protected]

Documents

Celebrating 125 Years of Public Service NARUC Methane Emissions in Transmission and Distribution: What Can be Done? The Honorable Susan Rabon North Carolina