Coal Seam Gas: Enhanced Estimation and Reporting of Fugitive Greenhouse Gas Emissions under the National Greenhouse

and Energy Reporting (Measurement) Determination

Technical Discussion Paper, April 2013

 Commonwealth of Australia 2013. Published by the The Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education: http://www.climatechange.gov.au/emissions ISBN: 978-1-925006-17-9 (online) 978-1-925006-16-2 (print) Copyright notice: Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia.

Disclaimer: While reasonable efforts have been made to ensure that the contents of this publication are factually correct, the Commonwealth does not accept responsibility for the accuracy or completeness of the content, and shall not be liable for any loss or damage that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this publication. DIICCSRTE has released this Discussion Paper to gather feedback from stakeholders on the National Greenhouse and Energy Reporting Measurement Determination 2008. It does not necessarily reflect the views of the Government, or indicate a commitment to a particular course of action. This document is available on the Internet at the following address: www.climatechange.gov.au/ Submissions on the contents of this document should be sent to: nationalgreenhouseaccounts@climatechange.gov.au April 2013

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

CONTENTS
Abbreviations 2 1. Introduction 2. Coal Seam Gas Production 3. Estimation and Reporting of Fugitive Emissions for Coal Seam Gas Outcomes from Consultation 4. Proposals for Enhancing CSG Estimation Methods Refinement of Methods for the Direct Measurement of Vented Fugitive Emissions Associated with CSG Well Completions and Workovers Mandating Use of Direct Measurement for Vented Fugitive Emissions from CSG Well Completions and Workovers with Fracking Transition to the New Measurement Approaches 5. Instruction for Submission of Comments 6. Annexes 7. References 3 6 7 9 10 10 12 13 14 15 17

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

Abbreviations
API CSG CSIRO DIICCSRTE EF IPCC LNG MRR NGER SEWPaC UNFCCC US EPA American Petroleum Institute Coal seam gas Commonwealth Scientific and Industrial Research Organisation Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education Emission factor Intergovernmental Panel on Climate Change Liquefied natural gas Mandatory Reporting Rule National Greenhouse and Energy Reporting Department of Sustainability, Environment, Water, Population and Communities United Nations Framework Convention on Climate Change United States Environmental Protection Agency

Gases
CH4 CO2 CO2-e Methane Carbon dioxide Carbon dioxide equivalent

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

1. INTRODUCTION
This Discussion Paper presents proposals for the enhancement of methods used by companies for the estimation of greenhouse gas emissions during the exploration and production of coal seam gas. These proposals will have implications for the estimation of greenhouse gas emissions reported by companies under the National Greenhouse and Energy Reporting (NGER) Act 2007 (the NGER Act) as well as the determination of their potential liabilities under carbon pricing arrangements. Rules for the estimation of emissions by companies are specified in the NGER (Measurement) Determination 2008 (the NGER (Measurement) Determination). The proposals in this Discussion Paper effectively represent proposals to amend this Determination. Data collected under the proposed enhancements to the estimation methods of the NGER (Measurement) Determination will flow through to estimates prepared for the National Greenhouse Accounts as NGER is a major source of data for the national accounts. Consequently, the new proposals are also designed to enhance the transparency, efficiency and effectiveness of national reporting of fugitive emissions from CSG exploration, production and processing. Currently the NGER (Measurement) Determination does not differentiate between the methods used for the estimation of emissions from conventional gas and methods used for coal seam gas (CSG) production. Nonetheless, in practice, there are significant operational differences between conventional natural gas and CSG; most notably CSG production generally involves a higher density of well heads within a well field and CSG production may also involve the subterranean hydraulic fracturing process known as fracking. This latter aspect is important as there is overseas evidence to suggest that use of fracking techniques may generate more emissions than when conventional CSG extraction techniques are used. The new proposals will seek to address the implications of the differences between conventional gas and CSG and to elaborate CSG-specific proposals for the estimation of fugitive emissions for the first time.

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

Regulation of CSG for non-greenhouse gas purposes

In addition to regulatory requirements for emissions estimation and reporting through NGER, the extraction and processing of CSG is subject to a range of Commonwealth, state and local government regulation. State and territory governments are primarily responsible for land use and natural resource management issues. Issues concerning land access by mining operations are primarily a matter for state and local governments and are considered at the project approval stage. State governments also have primary responsibility for licensing CSG extraction during exploration and production. Licensing applications are, in general, regulated under a combination of the relevant state water, environment, mining and petroleum legislation. State government policies or guidelines relating to the regulation of CSG are in place in Queensland, New South Wales, Western Australia, Victoria and South Australia. The Australian Government Minister for the Environment, through the Department of Sustainability, Environment, Water, Population and Communities (SEWPaC), is responsible for assessing and making decisions on CSG proposals if those proposals are likely to impact on matters protected under national environment law the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act). In making decisions under national environment law, the Minister may take other matters into account, including impacts on water, agricultural land, and economic and social matters. However, the regulation of these matters is a state responsibility. SEWPaC has established a dedicated enforcement and compliance unit to ensure Commonwealth conditions are implemented. In addition to its regulatory role, the SEWPaC is introducing a new science-based framework to provide certainty for regional communities on CSG and large coal mining developments, jobs and investment, as well as better protection for water resources. In December 2011, Commonwealth and state energy and resources Ministers agreed to develop a national harmonised framework for state regulation of the CSG industry, and announced a work program to deliver this framework. The work program will address community concern around water management and monitoring, well integrity and aquifer protection, hydraulic fracturing and chemical use. The work program and public consultation information has been publicly released and is available on the Standing Council on Energy and Resources website: http://www.scer.gov.au/meetings/. On 12th March 2013, the Government announced that amendments to the EPBC Act will be introduced to parliament. These proposed amendments require federal assessment and approval of CSG and large coal mining developments which have a significant impact on a water resource.

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

Purpose
This Discussion Paper is part of an ongoing consultation process that is aimed at improving measurement and estimation of fugitive emissions those greenhouse gas emissions which concern the release of greenhouse gases through venting, leakages and flaring during the preproduction, production and processing and transmission and distribution, of CSG (see Figure 1). The first round of public consultation on CSG emissions estimation methods was held between April and October 2012. Seventeen submissions were received which can be found at: www.climatechange.gov.au/government/submissions/closedconsultations/coal-seam-gas For this second round of consultations, the proposals contained in this paper concern: 1. Refinements to the direct measurement methodology for the estimation of vented fugitive emissions from CSG wells that vent gas during a well workover or well completion1; and 2. Proposals to make the use of direct measurement methods for the estimation of these vented emissions mandatory when fracking techniques have been used.

In addition, in response to feedback received during the first round of the consultation process, the paper also: 3. reports on a DIICCSRTE/CSIRO collaborative project to collect empirical data from Australian CSG wells to underpin the development of Australian-specific emission factors for fugitive leakages from well casings and for general leaks from production and processing facilities; and 4. identifies fugitive emissions from decommissioned wells as a source for which methods will be developed over the next twelve months. Other emission sub-sources in the production chain of CSG are not subject to new proposals. This includes the estimation of fugitive emissions that result from the pipeline transmission and distribution of CSG; the emissions that arise from combustion of CSG as a fuel and the liquefaction of CSG in LNG production. In these instances there are no CSG-specific attributes to the emission source that would warrant a method differentiated from methods applied to emissions from conventional natural gas. The Department is seeking the views of stakeholders on the enhancements proposed in this Discussion Paper. It should be noted that proposals contained in this paper do not necessarily reflect the views of the Government or the Department, or indicate a commitment to a particular course of action.

Figure 1:
Potential sources of emissions from CSG activities (Red box filled with cross hatching denotes fugitive emission sources within scope of Discussion Paper)

Sources of emissions from coal seam gas activities

Preproduction Production and Processing
Processing (including LNG liquefaction)

Postproduction

Transmission and Distribution

High pressure gas pipeline transmission

End use

Exploration

Production

Decommissioned wells and legacy emissions

Low pressure gas distribution

Final consumption

Fuel combustion emissions Fugitive emissions

Fuel combustion emissions Fugitive emissions

Fugitive emissions

Fuel combustion emissions Fugitive emissions

Fuel combustion emissions

Definitions of well completions and workovers are provided in Annex A.

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

2. COAL SEAM GAS PRODUCTION

Coal seam gas
CSG refers to methane that is trapped within pores and fractures in underground coal deposits. Due to high underground pressures, the gas is usually found in a semiliquid state, lining the inside surfaces of the coal matrix. CSG is chemically similar to conventional natural gas methane is the main component of both. Other common names for CSG include coal seam methane, coal bed gas and coal bed methane. Methane gas can also be released from coal deposits by coal mining activity, which is known as coal mine waste gas. CSG is extracted through wells drilled directly into coal seams. This became possible on a commercial scale since about the 1990s as a result of advances in drilling technology. Following extraction, CSG can be provided to residential and industrial customers through natural gas pipelines or exported via LNG terminals.

Emissions from CSG

Fugitive emissions occur at several stages during the pre-production, production, supply and use of CSG. Preproduction fugitive emissions include methane released from exploration drilling, production testing and well completion. CSG production activities that result in fugitive emissions include processing, venting and flaring. Methane is a potent greenhouse gas, with a global warming potential more than 20 times that of carbon dioxide. In 2010-11, fugitive emissions from the Australian natural gas sector, which includes CSG as well as conventional gas, were estimated to be 10.5 million tonnes of CO2-e, or around 1.9% of Australias National Greenhouse Gas Accounts.

Recent developments in the United States

In 2011, the US Environmental Protection Agency (US EPA) concluded a review of the reporting rule methodologies for natural gas systems in the US Mandatory Greenhouse Gas Reporting Program. This led to the introduction of new methods for the estimation of fugitive emissions from gas extraction, including requirements for additional direct sampling and measurement from wells where hydraulic fracturing is used. The US national inventory also included new emission factors for exploration and production gas well activities relating to shale gas for the first time in 2011. Additionally, several assessments of fugitive emissions from shale gas production have been published recently in the peer-reviewed literature, with a range of findings2.

Fracking
Hydraulic fracturing, or fracking, is a technique used to boost the flow of gas from a new well. Fracking can be used for CSG. Large quantities of water and sand, together with certain chemicals, are pumped into a newly drilled well at high pressure, to create fractures in the underground rock layers. Gas can then migrate through the fractures, reaching the well much faster than it would otherwise. There is some overseas evidence to suggest that fracking may generate more emissions (with different emissions profiles) than those from conventional CSG extraction and production due to the high pressure applied during the fracking process.

More information can be found in DCCEE (2012) and Day et al. (2012).

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

3. ESTIMATION AND REPORTING OF FUGITIVE EMISSIONS FOR COAL SEAM GAS

Operators of CSG wells are required to estimate various individual sub-sources of fugitive greenhouse gas emissions specified in the NGER (Measurement) Determination and as set out in Table 1. These individual sub-sources are designed to be consistent with the sources identified by the 2006 Intergovernmental Panel on Climate Change (IPCC) Guidelines3 for the preparation of national inventories. The principle types of fugitive emissions relate to vented emissions, gas leakages and flaring of gas. The Determination provides a range of possible methods for use to estimate emissions depending on the sub-source and reflecting the current state of knowledge, measurement costs and the feasibility of estimation methods. In the case of vented fugitive emissions, CSG reporters may choose to use either a specified Method 1 or Method 4 where: l Method 1 refers to an emission factor approach based on factors applied for the national inventory; and l Method 4 refers to the generic direct measurement approach specified in Part 1.3 of the Determination.

Table 1:
Current NGER (Measurement) Determination activity categories for fugitive emissions for flares, leaks and vents.
Venting Sub-category Method 1 Well drilling Well testing Well completions Production and Processing Production and Processing Gas well heads to tie-in points on gas transmission systems, including: Gas processing plants Well servicing Gas gathering Gas processing and associated waste water disposal and acid gas disposal activities Transportation Natural Gas Transmission Natural Gas Distribution Method 4 Method 1 Method 2 Method 3 Method 1 Method 2 Flaring Leakage

Operation phase Pre-production

Source category Exploration

Section 3.46

Part 1.3

Section 3.44

Section 3.45

Section 3.46

Section 3.84

Part 1.3

Section 3.85

Section 3.86

Section 3.87

Section 3.72

Section 3.72

Outside scope of Discussion Paper

The IPCC is the recognised world authority for setting international reporting and accounting rules for greenhouse gas emissions. NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

For the estimation of emissions from gas leaks the Determination provides Methods 1 and 2, where Method 1 is as above and Method 2 provides equipment-specific emission factors for use when more detailed equipment inventories are available for a facility. For the estimation of emissions from flaring, there are three methods available for the estimation of emissions where the various methods reflect varying amounts of information on the mix of elements in the gas that has been flared. Techniques and methods for the estimation of fugitive emissions have been evolving internationally underpinning continuous improvement in the methods used in the NGER (Measurement) Determination. In particular, the NGER Measurement Determinations treatment of fugitive emissions was amended in June 2012 to update references to the American Petroleum Institute (API) Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Gas Industry to the 2009 edition.

This update improved methods and emission factors, including: l updated emission factors for gas well completions and workovers for both onshore and offshore wells; and l the introduction of emission factors for estimating emissions from drilling mud degassing. The amendments of July 2012 made available for the first time the option for the use of a generic Method 4 for vented emissions from coal seam gas exploration. The proposals in this paper build on the July 2012 update.

Figure 2:
Layout of specific methods in the NGER (Measurement) Determination for flaring, leakage and venting, with linkages to sections of API (2009).

Pre-production
Exploration

Fugitive emissions from CSG

Production/processing
Production & processing
Vents Leakage

Vents

Method 1 Reference to the following sections of API (2009) Gas treatment processes Section 5.1 Cold process vents Section 5.3 Natural gas blanketed tank emissions Section 5.4.4 Other venting sources gas driven pneumatic devices Section 5.6.1 Other venting sources gas driven chemical injection pump Section 5.6.2 Other venting sources Coal seam exploratory drilling, well testing and mud degassing Section 5.6.3 and 5.6.6 Non-routine activities production related non-routine emissions Sections 5.7.1 or 5.7.2 Non-routine activities gas processing related nonroutine emissions Sections 5.7.1 or 5.7.3 Method 4 Direct emission measurement under Part 1.3 of the Determination Continuous emission monitoring Division 1.3.2 Periodic emissions monitoring Division 1.3.3
Method 1 Uses default emission factors

Method 1 A default EF of 1.2 x 10-3 tonnes CO2-e per tonne of natural gas production throughput Method 2 Reference to the following sections of API (2009) Crude flashing losses - 5.4.1 Tanks Working/standing losses - 5.4.2 Produced water tank emissions - 5.4.3 Heavy oil & bitumen casing gas vents 5.6.4 Low-pressure gas well casing vents - 5.6.5 Equipment leaks - 6.1.2

Method 2 Uses facility CO2 emission factor Flaring

Method 3 Uses facility CO2 emission factor using relevant standards

Flaring

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

Table 2:
Breakdown of the Vent emission source under Method 1 for the exploration and production and processing phases (as currently included in the NGER (Measurement) Determination).
Emission Source Gas treatment processes Activity Type Glycol dehydrator emissions Glycol pumps Desiccant dehydrators Other glycol dehydrator alternatives Acid gas removal/sulf recovery units CO2 venting from sour gas processing 2009 API Compendium Section 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.5 5.3 5.4.4 Covers large range of equipment EFs Covers large range of equipment EFs Gas entrained and vented from drilling mud while drilling Gas used in drilling operations. Material balance method only Maintenance and turnaround activities, e.g. blowdowns, compressor starts, well completions and workovers. Pressure relief valve releases, mishaps, blowouts, offshore emergency shutdowns 5.6.1 5.6.2 5.6.3 5.6.6 5.7.1, 5.7.2 and 5.7.3

Cold process vents Natural gas blanketed tank Gas driven pneumatic devices Gas driven chemical injection pumps Mud degassing Coal seam exploratory drilling and well testing Non-routine activities, production or gas processing related

Outcomes from consultation

The first round of public consultation on emission estimation methods for CSG production was held between April and October 2012. Common themes to emerge from the public submissions are: l the need for improved reporting of CSG fugitive emissions; l l l the need to develop Australian specific methods and emission factors based on measurement approaches (Method 4) rather than using international or US based emission factor approaches (Method 1); the need to ensure that the NGER (Measurement) Determination is comprehensive with respect to all steps in the CSG production process (including post-production, i.e. well decommissioning); the desirability of baseline studies in CSG production precincts in order to identify emissions associated with CSG activity separately from emissions from other sources; and

This review was commissioned in response to recent developments in the US that prompted debate on appropriate fugitive emission estimation methods for Australias CSG production. The reports key message was the need for enhanced fugitive emission measurement data for Australian CSG production. The report noted that strong in-principle arguments can be advanced for why Australian conditions and practices are different to the United States and why this might lead to lower emissions compared to the United States. The report further noted that actual observations and measurements are required to test this proposition. To address one aspect of the issues raised through the public consultation, the Department is collaborating with CSIRO Division of Energy Technology (Advanced Coal Technology) on a joint project to provide data based on field measurements, and modelling of methane emissions from a sample of CSG production facilities in Queensland and New South Wales. Research findings are expected to be available by December 2013. The primary aims of the project are to: l make measurements at selected CSG operations to quantify fugitive emission fluxes from various parts of the production process (e.g. wells, surface infrastructure), including: measurements using flux chambers around well heads to determine leakage arising from gas migration around the outside of a well casing or through a well casing; and

l interest in a research program involving long term monitoring. To help inform the public consultation process, the Department engaged consulting firm Pitt and Sherry Pty Ltd to examine international best practice for estimating greenhouse gas emissions from CSG production in May 2012.

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

measurements using flux chambers around well heads to determine leakage arising from gas migration around the outside of a well casing or through a well casing; and

- measurement of emission rates from equipment components at CSG production facilities; and l develop wide-field atmospheric methodology as a top- down method for monitoring and quantifying methane fluxes from CSG production facilities. The Department/CSIRO joint collaborative project will sample around 30 wells. The wells will be sampled multiple times during the project. Wells will be selected to encompass the range of factors potentially influencing the variance of well head emissions. In addition to the production locality (basin) and well type (i.e. vertical or horizontal), other factors to be considered include: l extraction technology - whether or not the well has been fracked; l age of the well; l gas production rate; and l type of surface equipment installed at the well.

The field data collected during this project will inform development of Australian-specific emission factors for use in Method 1 estimation of CSG fugitive emissions arising from well casing and general infrastructure leaks. This information will be used to supplement and update existing general factors sourced from the national inventory. The public consultation process also highlighted several issues requiring longer-term research and development (R&D). The Department intends to facilitate development of a longer-term CSG fugitive emissions R&D agenda, which will include consideration of baseline data and appropriate sampling methodologies. Due to the blue sky nature of these R&D areas, investing in this R&D agenda now will lead to the development of more advanced and effective methodologies in the future. As a first step, the Department plans to let a tender for a scoping study to inform the development of field methodologies for estimating diffuse emissions. Fugitive emissions from the post-production phase i.e. CSG well decommissioning - are not currently included within the NGER (Measurement) Determination. The Department plans to examine the NGER (Measurement) Determination Method 1 for estimation of fugitive emissions from underground coal mining and consider whether this Method can be suitably adapted to decommissioned CSG wells.

4. PROPOSALS FOR ENHANCING CSG ESTIMATION METHODS

Two enhancements to emissions estimation methods described in the NGER Measurement Determination are being proposed in this Discussion paper: 1. Refinement of methods for the direct measurement of vented fugitive emissions associated with CSG well completions and workovers; and 2. Mandating the use of direct measurement for vented fugitive emissions from CSG well completions and workovers where fracking technologies have been used. Currently, the NGER Measurement Determination does not contain an industry-specific method for estimating vented emissions from well completions and workovers from CSG but rather relies on the general provisions of Part 1.3 of the Determination. It is proposed to refine the Method 4 methodology drawing on the experience of the United States where the US EPA Mandatory Reporting Rule (MRR) provides a direct measurement method for fugitive emissions arising from well completions and workovers (US EPA Mandatory Greenhouse Reporting Rule Part 98 Subpart W Petroleum and Natural Gas Systems - http://www.epa.gov/ ghgreporting/reporters/subpart/w.html). The specific paragraph of the US EPA MRR, paragraph 98.233 (g) Gas well venting during completions and workovers from hydraulic fracturing, has two components. The various elements of this approach are illustrated in Figure 3.

Refinement of methods for the direct measurement of vented fugitive emissions associated with CSG well completions and workovers
The first proposed enhancement is the refinement of the Method 4 methodology to apply to vented fugitive emissions from well completions and workovers.

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NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

Figure 3:
DIICCSRTE summary of US EPA MRR 98.233 (g) Gas well venting during completions and workovers from hydraulic fracturing of specific methods, with associated requirements for measurement instrumentation and calibration in Part 98.234 (b).

Is flowback vent or flare volume measured

No

Equation W10A Emission equal the sum of volumes derived from measured flow rate volumes minus injected and captured volumes

Yes
Equation W10B Emission equal the sum of measured volumes minus injected volumes Method 2 Flow rate estimated from pressure measurement Equation 11A Method for sub- sonic flow Equation 11B Method for sonic flow

Flow rate measured

Sampling rules on number of wells measured, by well type and sub basin Must operate and calibrate flowmeters, composition analysers and pressure gauges according to: Calibration requirements Accuracy & frequency: Use manufacturer recommended procedures Appropriate industry standard Accuracy specs calibration error calculations

May use appropriate standard method by a standard org, or Industry practice

1. Flow measurement: this refers to the continuous measurement of flowback volume using recording flow meters on the vent line. Requirements for measurement instrumentation and calibration are set out in Part 98.234 (b) of the US EPA MRR. Recording flow meters or pressure meters (digital or analog) must be operated according to appropriate standards or industry practice. Calibration for accuracy and frequency likewise require use of an appropriate industry standard or use of manufacturers recommended procedures. The NGER approach to flow measurement is consistent with the US EPA MRR 98.233 as it provides for the measurement of quantities of gas under Division 2.3.6 of the NGER Measurement Determination where a criterion AAA (using appropriate international standards) or criterion BBB (using industry practice) is set out. This level of consistency provides confidence that the existing NGER Measurement Determination framework for measurement and calibration is suitable for cost effective, accurate measurement of flowback associated with well completions and workovers.

2. Well Sampling: this refers to the US EPA MRR requirement for measurements from a sample of wells for a specified period of time to determine a basin-wide default backflow rate as a proportion of the production rate to be applied to all wells in the basin. The US sampling approach consists of requirements for: l the number of wells to be measured per sub basin and by well type (vertical or horizontal); - one sample for less than or equal to 25 well completions or workovers; - two samples for 26 to 50 completions or workovers; - three samples for 51 to 100 completions or workovers; - four samples for 101 to 250 completions or workovers; - five samples for greater than 250 completions or workovers; and

l a period of time a measurement is taken; and l the number of years the measurement can be used to estimate emissions before new samples are required.

NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

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Submissions are sought from industry, technical experts and other stakeholders on the applicability of US EPA MRR 98.233 (g) for Australias measurement circumstances for a refined Method 4 (Direct measurement of fugitive emissions associated with well completions and workovers.
Sampling approach
The US EPA MRR uses a well sampling approach detailed in Section 4.1.2. Comments are sought on the applicability of the sampling regime associated with US MRR 98.233 (g) for the specific characteristics of the Australian gas industry and how the sampling regime could be improved to suit Australias circumstances.

Measurement and calibration requirements

Comments are sought on the utility of the existing NGER Measurement Determination measurement and calibration requirements for application to measurement methods for well completions/workovers.

A deduction term is provided to account for where flowback gas is captured and recovered. If the estimated flowback volume was sent to a flare, then a flare methodology would subsequently apply. If the volume of gas was vented, then it would be estimated as a vent emission. The US sampling requirements have been designed for the circumstances of the US gas extraction industry and there may be aspects which are not well suited to Australian conditions.

underground coal mines and perfluorocarbon emissions from aluminium smelting. The Governments decision to mandate the use of higher order methods for these activities was made after considering the benefits delivered by higher order methods (e.g. increased accuracy of emission estimates) against the costs, such as the potential increased costs to industry associated with implementing the method. It is recognised that mandatory reporting may give rise to costs to the industry due to the additional sampling costs associated with direct measurement (e.g. instrumentation and labour). Nonetheless, given the relatively early stage of development of fracking techniques in CSG production, and the wide variation in geological circumstances and history across well fields, there is a high likelihood of wide variations in emissions from specific CSG extraction facilities such that increased measurement accuracy would deliver relatively larger improvements in efficiency. Consequently, there is a strong case for mandating a higher-order method to foster: l accuracy in emissions reporting for these CSG extraction activities; l the development of appropriate emissions mitigation incentives for CSG extraction activities; and l reduced potential future compliance and transition costs, by mandating a method at an early stage in the sectors development. Accordingly, it is proposed to make it a requirement in the NGER Measurement Determination that reporters use the direct measurement of emissions methodology (i.e, Method 4) for the estimation of vented fugitive emissions from well completions and workovers for CSG extraction where fracking techniques have been used.

Mandating use of direct measurement for vented fugitive emissions from CSG well completions and workovers with fracking
The second proposed enhancement is to introduce a mandatory requirement for the use of the Method 4 direct measurement approach for vented emissions from well workovers and completions where fracking has been used. This approach would mirror the US EPA provisions where a direct measurement approach is mandated for fugitive emissions from CSG extraction activities but only where fracking technologies are used. The Governments policy approach to the measurement of emissions is to deliver enhanced accuracy of emission estimates over time. Greater accuracy enhances the efficiency of the arrangements by ensuring that each facility faces a carbon liability that most accurately reflects its emissions profile. The specification of minimum standard methodologies for certain sources will be applied where the benefits to the efficiency of the system outweigh the compliance costs of implementing more accurate monitoring methods. At present, in other sectors, higher order methods have been required in NGER for three discrete activities: certain fuels combusted for power generation, fugitive emissions from

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NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

Transition to the new measurement approaches

The Department proposes that the refinements to the direct measurement methods specified under Method 4 for the current update of the NGER Measurement Determination will apply from 1 July 2013 on a voluntary basis. Making the refined Method 4 available on a voluntary basis allows for it to be practically validated in Australian conditions, while providing a potential pathway to mandatory reporting after a suitable period. However it is possible that the actual uptake of Method 4 may be low if the use of the method is voluntary. There is a need to provide sufficient notice prior to the implementation of additional reporting requirements. A notice period would provide affected stakeholders with sufficient time to understand the measurement requirements and take the necessary steps to ensure that equipment and business processes are adequate to meet the requirements set out in the methods.

A notice period would also allow time for affected stakeholders to understand the potential impacts of the revised methods on liabilities under the carbon price. It is proposed that there would be a two year notice period for the introduction of the requirement for mandatory use of the direct measurement Method 4 - in which case, the requirement for reporters to use the revised direct measurement method would apply from 1 July 2015. This date aligns the introduction of the requirement with the commencement of the flexible price period under the carbon pricing arrangements. For similar reasons, it is planned to also adopt the revised Method 1 Australia-specific emission factors discussed in section 3 from 1 July 2015, following consultation on the outcomes of the CSIRO study.

Stakeholder consultation will be conducted on any proposed changes to measurement methods in relation to both of these issues during 2014.

Table 3:
Proposed transition periods

Specific Proposals for NGER (Measurement) Determination amendments: Refined Method 4 to apply to vented fugitive emissions from CSG well completions/workovers. Mandating the use of Method 4 for vented fugitive emissions from CSG well completions/workovers where fracking technologies have been used. Development of Method 1 Australian specific emission factors for leakage from well casings from CSG extraction; and for leakage from CSG production and processing facilities.

Proposed to take effect from: 1 July, 2013 1 July, 2015

1 July, 2015

Submissions are sought from industry, technical experts and other stakeholders on the proposed transition period for the introduction of mandatory use of Method 4.

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5. INSTRUCTION FOR SUBMISSION OF COMMENTS

Where possible, submissions should be lodged electronically in a text based format (such as PDF, Word doc) via email: nationalgreenhouseaccounts@climatechange.gov.au Submissions may alternatively be sent to the postal address below to arrive by the due date. Submissions will not be treated as confidential unless this is specifically requested, and may be made publicly available. If a submission (or extracts of a submission) is to be kept confidential, please indicate this in the submission. Interested parties may make submissions by 8 May, 2013. The Department reserves the right not to consider late submissions. Postal address Assistant Secretary National Inventory Systems and International Reporting Branch Land Division DIICCSRTE GPO Box 854 ACT 2601

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NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

6. ANNEXES
Annex A
Definitions
Fugitive emissions Fugitive emission means the release of emissions (non-fuel combustion) that occur during the extraction, processing and delivery of fossil fuels. Flares, leaks and vents For the purposes of NGER reporting, fugitive emissions in the oil and gas sector, including CSG, are classified as being a flare, leak or vent. For leaks and vents, the NGER Measurement Determination makes use of definitions and methods adapted from the American Petroleum Institute Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry (API, 2004 and 2009): l Flare: the combustion of a gas or liquid for a non-energy purpose; l Leak: unintentional emissions from equipment valves, flanges, pump seals, compressor seals, relief valves, sampling connections, process drains, open-ended lines, casing, tanks, casing leaks and other leakage sources from pressurised equipment not defined as a vent; and The NGER Measurement Determination is designed to facilitate the integration of corporate and facility level data provided under the Act with international data standards on greenhouse emissions. The scope of the NGER Measurement Determination is given by the following categories of emission sources: The emission sources are: l Fuel combustion: emissions from the combustion of fuel for energy (see Chapter 2 of the NGER Measurement Determination); l Fugitive emissions from the extraction, production, flaring, processing and distribution of fossil fuels (see Chapter 3 of the NGER Measurement Determination); l Industrial process emissions where a mineral, chemical or metal product is formed using a chemical reaction that generates greenhouse gases as a by-product (see Chapter 4 of the NGER Measurement Determination); and l Waste emissions from waste disposal either in landfill, as management of wastewater or from waste incineration (see Chapter 5 of the NGER Measurement Determination). The NGER Measurement Determination provides methods that allow for both direct emissions monitoring and more typically the estimation of emissions through the tracking of observable, closely-related variables. This framework reflects the approaches of the international guidelines governing the estimation of national greenhouse gas inventories such as those developed by the Intergovernmental Panel on Climate Change (IPCC). At its simplest, emissions may be estimated by reference to reportable data such as fossil fuel consumption, evidenced by invoices, and the use of specified emission factors provided in the NGER Measurement Determination. For emissions from fuel combustion, for example, data on fuel consumption would be multiplied by a specific emission factor for that fuel to generate an emissions estimate. A similar approach has been used for over a decade in the voluntary reporting program Greenhouse Challenge Plus and before that, Greenhouse Challenge. Greater levels of complexity and measurement effort may in some circumstances produce better estimates of emissions at facility level. This may result from, for example, sampling and analysis of a fuel consumed for its carbon content and other qualities that will affect actual emissions generated by its combustion at a facility.

l Vent: emissions that are the result of process or equipment design or operational practices. Well completions and workovers The Department interprets the terms Gas well completion and Gas well workover to mean the following: l Gas well completion: activities and methods of preparing a well for the production of gas. l Gas well workover: remedial operations performed on a producing well to try to increase production. time to understand the measurement requirements and take the necessary steps to ensure that equipment and business processes are adequate to meet the requirements set out in the methods. NGER emission estimation framework The NGER Act 2007 makes reporting mandatory for corporations whose energy production, energy use, or greenhouse gas emissions meet certain specified thresholds.

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Direct monitoring of emissions is also potentially an important approach to emissions estimation. While not common, such direct monitoring already occurs in some form in some instances such as in the coal industry, where state legislation requires the monitoring of methane levels for health and safety reasons. NGER Measurement Determination methods The NGER Measurement Determination has four methods for reporting: Method 1: the National Greenhouse Accounts default method Method 1 provides a class of estimation procedures derived directly from the methodologies used by the Department of Climate Change and Energy Efficiency for the preparation of the Australias National Greenhouse Gas Accounts. The use of methodologies from the Australias National Greenhouse Gas Accounts anchors Method 1 within the international guidelines adopted by the UN Framework Convention on Climate Change for the estimation of greenhouse emissions. Method 1 specifies the use of designated emission factors in the estimation of emissions. These emission factors are national average factors determined by the Department of Climate Change and Energy Efficiency using the Australian Greenhouse Emissions Information System (AGEIS). Method 1 is likely to be most useful for emission sources where the source is relatively homogeneous, such as from the combustion of standard liquid fossil fuels, where the emissions resulting from combustion will be very similar across most facilities. Method 2: a facility-specific method using industry sampling and Australian or international standards listed in the NGER Measurement Determination or equivalent for analysis of fuels and raw materials to provide more accurate estimates of emissions at facility level. Method 2 enables corporations to undertake additional measurements for example, the qualities of fuels consumed at a particular facility in order to gain more accurate estimates for emissions for that particular facility.

Method 2 draws on the large body of Australian and international documentary standards prepared by standards organisations to provide the benchmarks for procedures for the analysis of, typically, the critical chemical properties of the fuels being combusted. Method 2 is likely to be most useful for fuels which exhibit some variability in key qualities, such as carbon content, from source to source. This is the case for coal in Australia. Method 2 for fugitive leakage emissions for natural gas exploration, production and processing utilises API (2009). Method 3: a facility-specific method using Australian or international standards listed in the NGER Measurement Determination or equivalent standards for both sampling and analysis of fuels and raw materials Method 3 is very similar to Method 2, except that it requires, additionally, Reporters to comply with Australian or equivalent documentary standards for sampling (of fuels or raw materials) as well as documentary standards for the analysis of fuels. Method 4: direct monitoring of emission systems, either on a continuous or periodic basis Method 4 provides for a different approach to the estimation of emissions. Rather than analysing the chemical properties of inputs (or in some case, products), Method 4 aims to directly monitor greenhouse emissions arising from an activity. This approach can provide a higher level of accuracy in certain circumstances, depending on the type of emission process, however, it is likely to be more data intensive than other approaches. Such monitoring already occurs, for example, in underground coal mines reflecting the nature of the emission process and the importance of relatively accurate data to support health and safety objectives.

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NATIONAL GREENHOUSE AND ENERGY REPORTING (MEASUREMENT) DETERMINATION Coal Seam Gas: Technical Discussion Paper

7. REFERENCES
API (American Petroleum Institute). l 2004, Compendium of greenhouse gas emissions methodologies for the Oil and Gas Industry, Washington. l 2009, Compendium of Greenhouse Gas Emissions Methodologies for the Oil and Natural Gas Industry. URS Corporation, Texas, USA. http://www.api.org/ehs/climate/new/upload/2009_ghg_compendium.pdf

CSIRO (2012). CSIRO Background Paper for Dec 2012 Meeting, Engineering Energy: Unconventional Gas Production Call for Input: The Australian Council of Learned Academies Securing Australias Future Research Program.

Day, S., Connell, L., Etheridge, D., Norgate, T., Sherwood, N. (2012). Fugitive greenhouse gas emissions from coal seam gas production in Australia. CSIRO, Australia.

DCCEE (2012). Coal Seam Gas: Estimation and Reporting of Greenhouse Gas Emissions. Fact Sheet: Australian National Greenhouse Accounts. http://www.climatechange.gov.au/climate-change/emissions/~/media/climate-change/emissions/factsheets/NGA- FactSheet-7-CoalSeamGas-20120430-PDF.pdf

Erno and Schmitz (1996). Measurements of Soil Gas Migration Around Oil And Gas Wells In the Lloydminster Area, Journal of Canadian Petroleum Technology, Volume 35, Number 7.

Saddler, H. (2012). Review of literature on international best practice for estimating greenhouse gas emissions from CSG, Pitt and Sherry 2012.

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