A combination of oil oversupply and storage shortage may create a glimpse of legacy emissions for the oil and gas industry in a post-fossil fuel world
-Charlotte Marston, Ira Leifer
As the COVID-19 crisis blossomed, stay-at-home orders were issued across the country causing a near halt of economic activity – unemployment levels last seen during the Great Depression – destroying petroleum demand. And the COVID-19 crisis occurred during a period of extreme stress in the oil markets with a price/production war between Russia, Saudi Arabia, and the US, eventually leading to a global glut in oil storage. Logistical problems in Cushing, caused the spot price of Wyoming oil to temporarily fall negative! Even after well-publicized production cuts by these three producing countries, current supply outmatches demand by ~20 million barrels per day [Washington Post: “Oil doesn’t mean much when no one is going anywhere”], leaving the industry with around a billion barrels of excess oil. As the first CoVid wave resumes spreading like a blight across the US, slowly reclosing the economy, strong recovery in economic activity and hence oil demand is appearing less and less certain – driving terrific economic turmoil in the oil and gas industry. This economic wreckage is destroying local economies dependent on the industry while leaving state coffers emptier.
Eventually, COVID-19 will be in the rear view mirror, the economy will recover, and demand will increase along with the production to meet these needs. For now, though, the shutdown of less economic wells and even entire oil fields has decreased emissions – in common with emissions reductions from most other industries and also traffic. These have contributed to a noted pandemic side-effect – a welcome improvement in air pollution.
The trifecta of CoVid, economic downturn, and storage glut creates a massive problem for the industry as storage rises towards max capacity. Even before reaching max capacity, bottlenecks will temporarily block transport, leading to widespread oil well shut-ins (first higher cost wells) and even whole fields as producers declare bankruptcy. [Fortune: “Oil sector running out of storage for its unprecedented surplus”] Many reservoirs may be damaged due to the shut-in, leading to a preference for production even at a loss. In fact, some companies may end up paying buyers to take oil off of their hands – if they have storage. In April, prices of oil dropped into negative dollar territory! [The Guardian: “Oil prices sink to 20 year low”]
The current crisis, though, provides a unique opportunity to glimpse the future. For reasons ranging from fighting climate change to economics to lowering renewable energy prices, the world eventually will shift from fossil fuel energy (though some production will continue as feedstock to plastics, fertilizers, and other chemical industries). Yet, methane and other trace gas emissions will not completely cease with the transition – the legacy – despite the drastic decrease in production. BRI and NASA are using the current emissions reduction as a window onto this legacy, providing a guide for decision makers, resource planners, industry, and society to plan appropriately.
Legacy emissions continue because for many wells, particularly in tectonically active areas like California, earthquake motions and stresses prevent permanent and complete abandonment. And proper abandonment is not necessarily assured under some economic scenarios where many oil and gas producers are no longer economically viable.
These legacy emissions include both migration that flows along the well pipes and casings, and also through permeable fractures and faults that intersect the well. “Legacy” emissions also occur along natural migration pathways, a process termed seepage. Although seepage is natural not anthropogenic, seepage and production often are co-located. In fact, seepage has long been used by prospectors to find oil. As production takes advantage of these petroleum reservoirs, seepage decreases (“migrating” through well pipes). Thus, emissions from oil and gas production and from the natural seepage that predated production on the site are mixed – in other words natural seepage is misallocated as industrial emissions in field assessments.
“The connectivity between seepage and production leads to the hypothesis that production decreases will lead to an increases in seepage.”
Discriminating between these generally co-located emissions can be extremely challenging, particularly as seep emissions and production fugitive emissions arise from the same reservoir with nearly the same composition. The only difference is whether the gases escape through fractures in rock or through well pipes.
In the new BRI study, we will assess these emissions to test the hypothesis that production and seepage are inversely related. We will conduct repeat mobile air quality surveys using a unique BRI asset – SISTER (Standard Instrumentation Suite – Truck Enabled for Response) in a 4WD pickup truck – TMOG (Truck MObile trace Gas) Surveyor. SISTER measures 14 trace gases and high quality meteorology at up to highway speeds, mostly at sub part per billion accuracy.
BRI has developed and demonstrated a number of novel approaches to assessing emissions and locating sources from oil and gas production and for other sources (see additional reading below). These methods will be applied to derive emissions and source locations of methane and other trace gas emissions while oil and gas production remain shut-in to compare with surveys during the recovery period when oil and gas production resumes. This comparison will be used to detangle natural seepage from fugitive emissions.
The BRI team is excited to get a glimpse into this aspect of the future, providing society with guideposts in the present.
Additional News Readings:
4/3/2020 [Marketplace: “Why are oil prices so low?”]
4/1/2020 [USA Today: “Oil industry near collapse”]
3/20/2020 [NPR: “Barreling toward an epic glut of oil”]
Further Technical Readings on BRI’s Platforms and Analysis Tools:
Leifer, I., Melton, C., Manish, G., & Leen, B. (2014). Mobile monitoring of methane leakage. Gases and Instrumentation, Gases and Instrumentation International, Wellesley Hills, MA, USA.
Leifer, I., Melton, C., Frash, J., Fischer, M. L., Cui, X., Murray, J. J., & Green, D. S. (2016). Fusion of mobile in situ and satellite remote sensing observations of chemical release emissions to improve disaster response. Frontiers in Environmental Science, 4, 59.
Leifer, I., Melton, C., Tratt, D. M., Buckland, K. N., Clarisse, L., Coheur, P., … & Van Damme, M. (2017). Remote sensing and in situ measurements of methane and ammonia emissions from a megacity dairy complex: Chino, CA. Environmental pollution, 221, 37-51.
Leifer, I., Melton, C., Tratt, D. M., Buckland, K. N., Chang, C. S., Frash, J., … & Lundquist, T. (2018). Validation of mobile in situ measurements of dairy husbandry emissions by fusion of airborne/surface remote sensing with seasonal context from the Chino Dairy Complex. Environmental pollution, 242, 2111-2134.
Leifer, I., Melton, C., Fischer, M. L., Fladeland, M., Frash, J., Gore, W., … & Yates, E. L. (2018). Atmospheric characterization through fused mobile airborne and surface in situ surveys: methane emissions quantification from a producing oil field. Atmospheric Measurement Techniques, 11(3), 1689.