Move to Measurement: Emissions Leadership | Pandell Leadership Series

Move to Measurement: Emissions Leadership | Pandell Leadership Series

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>> ELIZA: Good afternoon, everybody. Welcome and I am pleased to have you join us for   this last leadership series webinar of 2021. Today we are talking about Move to Measurement: Emissions Leadership.

We are very lucky to  have Liz O'Connell here speaking with us. Liz is the President and Co-founder of  Arolytics, a software and consulting   company that leverages data and modeling to  optimize how the oil and gas sector measures,   mitigates, and discloses atmospheric emissions. Liz has worked as a research scientist to quantify, monitor, and reduce greenhouse gas emissions from energy developments across Canada.

She has a thorough understanding of the oil  and gas emissions landscape across the country   and the challenges faced by the industry  and we are absolutely delighted to have   her speak here today. So, welcome Liz. >> LIZ: Hi everyone. Thank you so much for joining me here today, I'm really excited for this next hour and I'm not sure if my presentation will take up all the time here, we'll definitely have time for questions as mentioned at the end. A bit of background, I tried to  make it, this presentation today, really applicable for a broad audience.

I know that Pandell has customers you know globally and really you know trying to make this relevant for  producers, but service companies and you know   Canadian, American based, wherever. So, I think  we'll start fairly high level and then really kind   of narrow in on more of the details towards the end. So, that's kind of my goal here. Really quick background on who we are as a company.

So, we formed back in 2018. We formed out of one of North America's largest  academic emissions lab. So, spent a lot of time researching and collaborating   with industry more on an academic level and really understanding their pain points around emissions, developing different technologies for emissions detection, and we spent a lot of time in the field doing different work and actually kind of directly measuring and understanding this. So, like many emissions tech companies we're growing, we've more than doubled in size this past year. Myself, and a bunch of us are headquartered and based in Calgary and we also have an office out in Halifax  too where a lot of our software developers are. And so, you know as mentioned we've since hung up  our hard hats, we're no longer in the field but   really passionate about oil and gas emissions, and  supporting the sector, and navigating these new   challenges that come with it.

And as mentioned you know we're a consulting and software-based company and our solution helps industry manage, track, and build emissions strategies in the most efficient way possible. So, enough about that let's move on to today and really what we're focused here on is providing first off, a bit of a background around oil and gas emissions. Setting some context to the  space, and then diving a little bit deeper into you know what this means for leadership in 2022.  And you know talking about strategies for methane,  

effective methane management, how data driven and  digitization kind of plays a role in this space.   And then also some emerging trends that we're  seeing around more of the voluntary initiatives   and framework space. So, that's really  what we're hoping to kind of cover today.   So, first off Methane in the Spotlight.  It has been a really big month.   Past few months really for methane. If anyone  has been following some of the headlines from   the COP26 [Conference of Parties] Conference in  Glasgow, there was a lot of large kind of targets   and frameworks announced there and it's really a  hot topic right now. So, industry and political   leaders they're viewing methane mitigation  as one of the most critical and short-term   actions to addressing climate change because  it's such a low-hanging fruit and we have the   solutions to address it today. So, this urgency  of this opportunity is really being reinforced by  

actions to set more stringent targets. And  so, I have a few shown on this slide here.   For example, at the COP Conference we had the  European Union, and the United States announced a   global methane pledge. There's over 100 companies  signed up and that's really aiming to lower global   methane emissions 30 percent by 2030. Really big  news lately, that was announced in November the   long-awaited EPA [Environmental Protection Agency]  level oil and gas rule in the US to manage and   mitigate methane emissions across the oil and gas  sector. And so that's something that that has been  

kind of announced or a long-awaited ever since  President Biden came into office and the, it's   open currently for public comment I believe that  closes January second or beginning of January.   And these regulations will be kind of finalized  over the coming year and that really expands the   scope of requirements for oil and gas. So,  companies will need to measure more of their   emissions directly, and repair them, and also  expands the scope of equipment change outs,   and actual implementing new technology to mitigate  kind of the vented sources of emissions as well.   And then finally, you know more Canada focused,  our Prime Minister also announced very recently   a new methane emission target in Canada for the  oil and gas sector. Currently our target is a   45 precent reduction by 2025 and he's announced  a more ambitious target around 75 percent.  

So, what that really looks like in terms of you  know building out the regulation to implement that   we're probably a year, two years plus away from  actually seeing those implemented in reality but   we know it's coming. And that's really  the theme here is that energy companies   are facing really growing pressures to  measure and mitigate their emissions   and this isn't going to stop anytime soon. However, at Arolytics we really see this as   an opportunity and we're really, fortunate to work  with some very proactive companies and finding out   how to navigate these new challenges  in the most efficient way possible.   And in North America you know in particular, I  think a lot of these companies have demonstrated   tremendous leadership in this space. And there's  actually a really good news story here to tell  

but it just needs to be communicated,  communicated correctly. And so, I look at   this absolutely as an opportunity for sure. One, step back you know why methane? Methane for those that aren't aware it you know it's a  really prompt greenhouse gas it has about 86 times greater greenhouse gas warming potential than  carbon dioxide over 20 years. And so, that's why   it's such a, you know that low-hanging fruit as I  mentioned, it really has impactful reductions on a   climate impact when we talk about mitigation.  It's a colorless and odorless gas which does   make it challenging of course to actually  manage effectively because we do have leaks   and sources that are unintended.

Approximately 3.6 trillion cubic feet of natural gas escapes into the atmosphere from global operations annually and that accounts for about 30 billion dollars in lost revenue. And so, when I talk about this as an opportunity you know that's another angle to look at this, you know methane is  really just what you're trying to actually sell.

You know it's a natural gas depends of course,  but you know it's upwards of 90 to 100 percent methane and so when we can actually conserve and  do a better job at keeping this in the pipe that actually has a direct correlation to how much  product you're selling. So, there's another kind of angle to look at this and see that as this opportunity. And when we look at our methane budget, fossil fuel use and production is about 20 percent of kind of that total source shown here. Now diving a little bit into you know  Canada's kind of breakdown of oil and gas emissions or different methane sources we do see the oil and gas sector account for about 44 percent, so just under half.

So, that's really why it is such an area of focus kind of at the federal and policy level as well. The exciting thing about this is that the technology solutions are available today. So, it's not like a lower TRL [Technology Readiness Level] space like carbon capture storage that that does require  tremendous capital you know very capital-intensive solutions for emissions mitigation. Oil  and gas primarily you know the solutions to   actually measure and mitigate exist. It's really a  deployment gap we need to just focus on you know,  

how do we do this effectively and efficiently? And  realizing that this isn't you know a new cost to   industry and trying to understand how best to  do this but that's the exciting thing. You know   this is a challenge we know we can address. So, you know on the background across North   America in response new regulations mean that  companies must now measure, reduce, and report   emissions. Usually from you know one to four times  generally, depends on the jurisdiction really   per year. And when I say first time ever in many  jurisdictions, in North America at least for sure,   companies have never had to actually do this and  it's new as of 2020. And so, this is kind of this   you know brand new kind of pain point and  requirement that companies are just really   figuring out to how to manage and there's a lot of  you know new considerations that come with that.  

Managing enterprise level emissions is  complex. It's a very multifaceted issue   and we talk to regulatory managers,  HSC [Health and Safety Committees],   ESG [Environment, Social & Governance] groups  within companies all the time and it's amazing the   amount of hats that they wear. And really kind of  when we look at the different factors at play here   there's you know maintaining ESG performance  expectations but deciding between multiple vendors   that have sensor or technology options, trying  to keep operating costs down, which is of course   a major driver here, and ensuring compliance  with local regulations. And of course, what do   you do with all the data that you're actually  collecting? How do you actually act on that   and use it to drive decisions? And so,  this is kind of some of the math and   the problems that companies are challenged  with in this new era of emissions management   So, producers lots on your plate. Again, we really  understand this is you know a lot of factor, a lot   of play here. So, just to kind of summarize on the  planning and implementation of these strategies,  

there's a lot of evaluation of different  technologies, there's a lot of funding programs,   navigating different opportunities  to have some of this work subsidized,   and then the actual implementation of it. So,  it's one thing to just you know build the plan   and figure it out but actually implementing it.  What are your KPIs for success and how are you   communicating actions between teams, the ops team,  and the regulatory team? And this doesn't even   cover the whole thing you know there's things  like carbon credits and offsets, and corporate   reporting, and all these other factors that fall  under this umbrella of emissions management.   So, really when we look at how can we do this  effectively? There's a few kinds of key themes   here. And so, I want to dive into the first  two. Which is measurement and mitigation.   So, the topic for this session today  was about the Move to Measurement   taking that leadership in 2022 . And the reason  why this is so important is for a few things. So,   you've likely seen these types of articles and  studies and press releases over the past few years   if you're paying attention to  them. And really the trend isn't  

just in one jurisdiction, this is something  we've seen across North America. This trend that   scientific studies are finding emissions  that are greater than what's being reported   by the industry themselves. And you know there's a  lot of reasons behind this. And really the reason   is actually looking at and diving into these  reporting frameworks and understanding what's   actually being or required to be reported, and  the dis-alignment between total site emissions   and how they're being detected in reality and  actually what's required to be reporting.   So, it's not like industry is intentionally under  reporting or anything like that. It's really just   a dis-alignment of these frameworks. And that's  causing obviously some thoughts around how we kind   of can get a better measurement-based baseline.  And another reason behind this discrepancy is  

because the current status quo and current way  of doing this, is through what we call emissions   factors. So, that's using engineering estimates  that are generic broadly across you know perhaps   a certain jurisdiction or certain you know could  be very broad as to where these emissions factors   are derived from and apply. And so often they're  not even company specific or anything like that.   And so, when you start to build your  corporate reporting and your emissions,   off these generic emissions factors that's  not going to be a very accurate depiction   of reality and what these you know maybe  satellites or flyover sensors are actually   detecting. And so, that's a lot of you know again  the reason behind some of these discrepancies.   Now a really good way to address this is to start  you know that move to measurement yourselves. And  

so, really understanding a measurement-based  baseline and trying to build your targets,   and your corporate reductions, off of that  measurement baseline. When we think about   emissions factors and reporting another  benefit too is, when you only report off   of these generic emissions factors it's very  difficult to show reductions over time because   these emission factors don't change if no actions  are really happening, they're static. And so,   in your corporate yesterday reports, etcetera  how can you actually demonstrate that leadership   and that downward trend around this when  you're continuing to use these estimates?   And so, we've actually been talking  to a handful of producers lately that   have even you know a bunch of well  sites. And they actually want to start   directly measuring their emissions across their  population of well sites, so they can get that   baseline and start demonstrating reductions. And  that's not even a requirement where they're based   in the regulations. Currently like in Alberta,  you know well sites you only need to do   what we call ABO screening and that's just you  know hearing, sniffing, smelling and that's your   well site screen. But actually, taking the  ownership around direct measurement to get  

that baseline and show those reductions is  an interesting trend we're starting to see   some companies want to follow and kind of take  that next step from emissions factors. So,   just yeah setting a bit of a context around  why emissions measurement is important.   Now as we think about measurements it's complex.  You know navigating the diverse array of options   is challenging and for those that are you  know in this space they know that there's   about 100 plus different vendors out there that  we're aware of. At Arolytics we have a technology   library of about 100 different companies in this  space that have measurement and sensor solutions.   And that ranges all the way from the handheld  OGI [Optical Gas Imaging] cameras on that top   left there. That's really the status quo. That's  what industry is kind of the best practice right  

now but we're seeing a lot of innovation around  fixed sensors, truck-based monitoring solutions,   there's drones, there's aerial sensing  technologies, and there's satellites.   And understanding how these kind of fit together  and interact to make an optimized measurement   program is challenging and it's really confusing  when you have you know 10, 20 plus different fixed   sensor options and knowing really what is the best  solution for your company. But again, taking a   step back and really understanding what are the  goal of these, you know different measurement   technologies is something that's useful. And so, there's really three main drivers   behind why companies might want to start  embracing some of these new technologies. So,  

first and foremost needing regulatory compliance.  That's kind of the basic the standard. Currently   as mentioned it's really that kind of OGI,  optical gas imaging camera that is used for this   but there's a lot of opportunity to implement what  we call these alternative technologies which is   essentially anything you see on the slide outside  of that camera. And there's huge efficiencies and   cost-saving benefits when you start deploying some  of these. For example, you know a plane can cover   200 sites a day instead of a handheld on boots on  the ground that might only go to five sites a day.   So, there's different trade-offs and  values of different technologies. So,   achieving compliance at the lowest cost possible  that's a great driver and a really important one.  

Next, we have corporate ESG objectives. And  so, this ranges some companies have a net zero   ambition, maybe there's a methane intensity  reduction target or a methane, it could be   just an actual kind of percent reduction, or it  really differs between the company how they're   approaching this. But ensuring you build a field  program that aligns with that objective from the   bottom up is a really important aspect of this.  And so, you know when we work with companies we  

always try and figure out what is your overarching  kind of corporate goal here. Is it just compliance   at the lowest cost, that's absolutely fine or is  there some kind of higher level more ambitious   target? And then how can we build that program  from the bottom up and get alignment with that.   And then finally, an emerging opportunity that  we'll touch on kind of towards the end here is   these voluntary initiatives such as certifications  and standards that can lead to securing   differentiated product pricing. So, differentiated  pricing for your natural gas for instance. So,   these initiatives include a somewhat prescriptive  framework for measurement-based monitoring.   Some requirements might entail top-down bottom-up  reconciliation of different technologies for   example. And so, that's another kind of area that  these technologies can help support in achieving   compliance with those voluntary initiatives. And  of course, there's different benefits like safety  

and you know when you move to remote sensing  and remote technologies there's other benefits   that come with that. So, a little bit of an  introduction to the landscape around the actual   measurements of all these technologies here. And to visualize this in a different way,   I've always found this helpful I'm a visual  learner myself, and so when we compare these   different technologies there's really no one so  silver bullet as mentioned. And so, we see that   you know that handheld camera going to a subset of  sites a day, whereas the aerial might do 100 plus.   A truck-based drive-by solution could perhaps go  to 20 to 50 sites a day. But at the same time,   you're not going to capture the same sensitivity  that a handheld camera that's five meters away   will get, as a plane that's you know several  hundred feet or certain meters off the ground   or a thousand. And so, really its kind of you know  there's that trade-off between value and cost and  

what you're getting from these technologies. And  I'll touch on one way that is possible to help   plan these programs in a few slides here and how  we can use modeling as a way to develop programs.   One other trend that is very prevalent in oil and  gas emissions and this is seen globally really is   that we have what we call super emitter profile.  Or you know the term super emitter it's a little   bit more specific now I kind of like that the  word heavy tail emissions profile I should have   updated this before. But really what that is  we're seeing that about 10 to 20 percent of sites   are responsible for 70 to 90 percent of  emissions very generally speaking. And so   why are we wasting our time on these really like  point decimal percent of you know the sites that   might have zero emissions, or they have  that really decimal point emission and why   are we sending boots to the ground to find those  sites just to find that there's nothing. And so  

really kind of triaging and figuring  out the most optimized program to   screen and then follow up and act on the sites  that really need it the most is another way to   manage your missions as effectively as possible. So, if you think about it, you know finding one of   those fixing the emissions from one of those  heavy tail sites often in those instances   there's actually like an equipment malfunction  that could be quite serious that would cause   an emission of that magnitude or a leak of that  magnitude. And so, fixing you know just one site   like that could have the same or more impactful  you know emissions impact of instead of fixing   the bottom you know several percent or hundreds of  sites. So, it's really kind of that focused effort  

in that idea that comes into play here. Wanted to give a few kinds of examples and   broad public case studies for companies that are  just starting to explore this and get into this.   There's some great ones listed on the Alberta  Energy Regulator website which is just a   snippet of a table shown here. So, this is all  public. Some companies that have implemented  

these alternative measurement programs are shown  here. And this is actually expected to get updated   at some time perhaps in the new year with more  and more programs that have been approved.   And so, we've seen companies uptake. Aerial  sensing has been very common or very popular I'd  

say in this space in Canada. We've seen companies  embrace truck-based solutions and fixed sensors   have been approved as well. An interesting thing  is we're also seeing companies embrace multiple   technologies. So, you know filling the gaps of  kind of where one technology fits where the next   comes in and then kind of subsequently increasing  your precision and your spatial scale to be   smaller and smaller as you go down. So, maybe you  know starting with the satellite imagery and then   kind of focusing your efforts from there. And  so, we've also seen companies take a different  

approach and embrace their sorry approach their  emissions management more on the site level   and not just target fugitive emissions or  the leaks but actually find out what are my   top emitting sites across my corporate assets?  And what's my strategic plan to address those   emissions regardless of an event or a fugitive? So, that's an interesting approach we've seen   by one of the companies here as well. And  that might include you know capital costs   to do equipment change outs or installing  VRU's [Vapor Recovery Unit] on your tanks   or things like that. But it's really taking  that that focused effort of you know show   me the greatest problems and the lowest hanging  fruit and let's fix that. So, there's a lot of,  

as mentioned, kind of resources out there to  learn about some of these pilots and case studies   Now another value in embracing direct emissions  measurement is being able to better understand   corporate wide the impact of your emissions.  And more frequent monitoring programs   can provide you know really good oversight  and assurance of where you're at. And this is   important with the emergence of remote monitoring  systems like we're seeing satellites come out by   NGOs [Non-Governmental Organization], we're  seeing regulators actually implementing their   own remote monitoring campaigns. We know that some  of the regulators have truck-based monitoring or   aerial that are actually just flying over dozens  of different operator sites. And so, you know kind   of being empowered to do this yourself and take  ownership of your emissions before someone else   you know like a regulator, or these NGOs are  finding them and have an understanding kind   of internally is becoming I find more and more  on people's minds and something that they're   wanting to take a bit more quicker action on. I have a slide here that's from a really,   really interesting report I just have it  referenced here I think it was released in   June. And it's taking public EPA reported data  for American companies and providing an analysis  

and benchmarking companies against each other.  And so, this is something we're starting to see   because it's a growing factor in capital market  decisions. We're seeing analysts use this public   data to actually start comparing performance and  really highlighting kind of the good actors and   you know the companies in that lower quartile. And  you know take from it what you will but there's a   lot more transparency around emissions data that  we're starting to see. And it is you know driving  

capital decisions and so, becoming a leader and  taking ownership over this is something that   has a lot of impacts kind of corporate wide. And so, there's if you look at this report   there's a lot of fascinating different charts and  graphs that show these different comparisons. They   look at production of the companies and how  their emissions are shown in that context.  

Emissions intensity is a really common metric  here when we when we talk about emissions and   that's putting your methane in the context of your  production. So, that helps standardize a little   bit when we actually look at you know of course  companies that have more production they're likely   going to have you know different considerations  around their methane emissions. And so,   kind of leveling it out and putting it in that  context is an important metric. So, that's  

just another resource to have a look at there. Now I mentioned the idea of emissions modeling   a few slides ago and just want to come and  touch base on that really quickly here. So,   it's clear now that we kind of introduced all  those different technologies for emissions   detection. And navigating those different  options is complex but thankfully there is   an opportunity to use emissions modeling as a  way to virtually evaluate technology without   committing significant capital in time to field  pilots. And so, producers we know they're being   inundated with sensor solutions and vendors and  how do they even know what is the best option   for their unique situation, their company's  corporate emissions profiles, etcetera?   And so, what we can do with emissions modeling  is actually simulate hundreds and hundreds of   different programs with different technologies.  We can simulate different work practices,   so you know what is the impact of flying  a plane twice per year versus six times   a year? How does that actually impact overall  estimated emission reductions over maybe   a two- or five-year time interval? Those are the  types of questions we can answer with modeling.  

And so, it's a terrific way to actually kind  of compare and contrast and understand how   different programs and technologies will  perform in a simulated environment. And we   can build models that are custom to the operator  as mentioned so really taking into consideration   their custom leak profiles, what are their leak  production rates, leak distributions that kind   of thing. And that enables us to understand how  these technologies will perform on their assets.   So, a great example of that is if you  don't have any sites with emissions over   500 cubic meters a day well a satellite with  a minimum detection limit over that will find   nothing. And so, things like that  are important considerations as you   build out your corporate emissions programs.  And modeling is really an important tool that  

can support with that. And at Arolytics this is an  area that we work in and there's a few other you   know modeling solutions out there in the world. I  know what the word modeling again is abstract, and   it sounds like a lot of perhaps kind of work  to get this set up. But it's really actually   an automated approach where you just spit in  some inputs that are kind of company specific,   any of your historic leak detection data,  and it helps provide that menu of options   for you to really kind of make that decision  of different programs in that virtual setting.   Now diving back to you know coming back to  effective methane management and the different   pillars and players here. So, we kind of  covered measurement and mitigation and  

those considerations I mean by any means, no  means, sorry, we're getting into really the   details around mitigation options and that's  a whole different webinar topic, I think.   But looking now on the data side after emissions  measurement data is collected what does that   mean? So, how do you know what does that mean in  terms of the understanding how do we act with it?   Reporting all those different considerations.  Again, that's a very loaded topic and I'm kind   of distilled into one kind of quick slide here. So, a trend that we are seeing here is really the   digitization of the space and the move to the  cloud. And there's a couple of reasons why this   is an important consideration. So, the first  one is the automation of these work practices.   Their emissions management involves very different  kind of siloed teams and groups across operations.  

We have you know the direct field people that are  responsible for making the repairs and the fixes.   We have the regulatory team that ultimately needs  to do you know the reporting and the compliance   oversight make sure that these emissions are  being repaired in the right time. We have the   ESG group. We have sometimes you know  the CFO is involved on the ESG side   and sometimes in smaller companies there's  one person that wears all these different   hats and so it really, really differs, but  the same thing is you know goes throughout.   There's a need to automate and streamline these  work practices and connect with the data from   these sensors as seen to how you actually act  on it. And Excel is not the best way to do that   because it's of course very manual and so we need  systems to you know automate these work orders,   automate the repair notifications. You're able  to grab all the data as you need it and roll it  

up in these different formats and etcetera.  So, I think there's a lot of opportunities   to improve efficiencies here for companies that  aren't doing this in a cloud-based solution.   Another kind of consideration here is providing  a verifiable platform. So, we talk a lot to audit   companies actually. So, you know the EYs and the  KPMGs of the world that audit of course financial   data. But what we're seeing is an emerging trend  that emissions data is going the way of financial   data. And it's, companies are already having  their ESG reports audited by these firms but  

there's not really set standards right now  for how this data is managed and reported.   But that's you know more consideration around this  is something we're certainly seeing and when we   get into some of these voluntary initiatives and  standards that does become a requirement. And so,   using these systems to provide that traceability,  the auditability of this data is an important   consideration for companies as we kind of move  into 2022. And same thing with QA/QC and it kind   of ties into the verifiability of these systems is  that you know of course Excel is human-prone. It's  

not a scalable solution, it's difficult to trace  the lifetime of these data points and understand   what actions has there been humanitarian  interference with this data, etcetera.   And so, just from a general QA/QC perspective,  cloud-based solutions and the digitization of this   process is another important consideration.  And ultimately the goal here is to take a   proactive not a reactive approach. And  so, when you're working with Excel often   you know you're doing that corporate roll up at  the end of the year or something, but emissions is   something that more and more companies are acting  on you know immediately and getting that real-time   insight to go in and act and make those repairs  as needed etcetera. And often there could be you   know an HSC [Health, Safety & Environmental] risk  correlated perhaps. And so, it's important to have   that proactive and understanding exactly where  we're at today on methane and that's something   that more digital solutions are able to provide. Now I think just the last thing here just a few  

slides to kind of closeup around the idea of  methane and involuntary initiatives because   when I think of leadership it's really you know  what is going above and beyond? It's one thing   to be regulatory compliant and check that box but  what is that next step? And this is a certainly   emerging trend that we're seeing in the industry.  I feel like I see press releases on this every   week of different companies signing on to new  frameworks. And I wanted to just provide a really,   high-level oversight as to what this looks like. So, first a bit of context here over the past year   the Canadian government has committed over a  billion dollars in funding programs to support   emission reductions in the oil and gas industry.  And so, there's a lot of money, and subsidies,  

and loans being thrown at this right now and  that's really helping industry and supporting   them on their actions. And I can dive into that  in the next slide a little bit more. But what   we're seeing here is that despite the difficult  operating environment that we found the industry   in over the past couple of years, one thing  that has not actually you know taken a slug is   really the leadership on emissions. I'm speaking  broadly here, of course every company is in their   different space, a different part of their journey  around kind of building these corporate targets   and goals. But we've seen a lot of companies  voluntarily step up and say you know we have   an ambition for net zero, or we have this methane  intensity reduction target, or a reduction target.  

A bunch of them are shown on this slide here. And so, that's been a really neat thing to see   that almost regardless of the price of oil and  gas, companies are still acting on this and taking   that. Because it is a, you know positive feedback  loop ultimately action on this will affect your   bottom line and your access to capital. And so,  I think the companies that are becoming leaders   in the space are realizing that linkage and  wanting to make strong and firm actions in this.   Ongoing funding opportunities I just touched  on that that one billion opportunity there. So,  

piecing this a little bit apart I apologize for  those that that this might not be relevant to,   so this is a little bit more Canadian  focused here. But there has been 750 million   thrown at the federal level to support industry  and some of their emission reduction actions here   that's more of a loan-based problem program. And more on the Alberta scale these three programs   here at the bottom are actually ongoing. And  they support companies to adopt equipment and   mitigation options, and also collect equipment  inventories, and help them actually collect   some of their measurement data too. And then the last one here the 17 million,   this is actually hot off the press. It got  announced a couple months ago and this is   to support companies in those alternative  measurement programs that I introduced at the   beginning of the talk with all those different  technologies. And so, this is a subsidy to  

help companies deploy these new strategies and  diversify how they're measuring their emissions   and expect more news on that. There's a website I believe it is. And there'll be more kind   of RFPs and notes for that in the new year. So,  this is a very evolving space and again you know   there the money is out there for a lot of this  work and it's just an opportunity to actually get   out there and apply for some of these programs. Now on the voluntary initiative space.   So, there's a lot of you know this is a  broad umbrella there's certifications,   there's commitments, there's frameworks,  there's guidelines, and there's I've seen about   over 20 for sure. So, it's as mentioned  you know a very evolving space right now.   And involuntary initiatives help companies  demonstrate better practices and they get rewarded   for that leadership. And certification programs  specifically, so this these are kind of the four   examples that we have on the slide. So, Equitable Origins, MiQ these are designed  

to reward producers that meet specific standards  and employ best practices in methane reduction   with the possibility of securing preferred pricing  as an outcome. And so, a couple of press releases   as examples here. The one on the right from Seven  Generations I believe was the first in Canada of   its kind, now Arc Resources. But they actually  found a buyer in Quebec, nergir, to pay a premium   on their natural gas because it had proven ESG,  and different data metrics, and was third-party   audited, and they were able to get a certification  for that kind of preferred pricing deal. And so,   that was really kind of a landmark  agreement here and set the stage.  

There's been a couple other in Canada now to date  I know Vermilion has one as well. And in the US,   we're starting to see this pop up as mentioned you  know with a lot of momentum. So, we're seeing some   very major producers some of the multinationals  are definitely jumping on this bandwagon. But   we've also seen some of the smaller even private  companies pursue this as well. And so, it doesn't   need to be something that is just you know left  for the massive multinationals by any means.  

And so, as we see these voluntary standards and  initiatives take place, they require operators   to collect and many times actual empirical data  around emissions, so you know real measurement   data, and that's what makes ESG data reporting  verifiable. And so, all of these you know   the common theme around all these different  certification processes is that they require   that third-party independent auditor to actually  again approve that that this product is really   meeting either the methane intensity objectives or  the ESG data objectives of these certifications.   So, this is something you know navigating this  landscape helping with implementation is an area   that we're involved in. And again, it's a, it's  a very exciting thing because there hasn't really  

been you know one winner in the certification  stage there's a couple of different ways to really   purchase in a few different certification  bodies that are that are very relevant.   And then just on the last slide here around this  topic there's other voluntary initiatives such   as commitments and guidelines like the one shown  here. So, these are non-binding, but they require   the company to align with a set reporting  framework and demonstrate a standardization   across the member companies. So, commitments  they might often involve progress towards an  

overarching goal. So you know our member companies  have a 25 percent methane intensity reduction   target or something like that. And they also  might help you know with the actual education   of best practices etcetera to get there. I'll use OGMP as an example, this is a UN driven   initiative. Has over, I think last time I checked,  over 65 companies internationally have signed on.   And that has a reporting framework with five  different stages. And the first stage is  

very entry level it's you know give me a number,  let's put something on a page. You know what's an   emission estimate for your company. And  then as you kind of get to that level five   it gets more and more granular. And over  years this is something that takes time.   Over several years your company starts to  form a better strategy around okay now how we   how can we move from you know corporate Y,  kind of generic emissions estimate, to maybe   making company specific emissions factors? And  now how can we move to instead of just kind of   you know generic emissions factors or  company specific factors how can we   build those factors off of real measurement data?  And then how can we employ different technologies   to actually, you know top down, bottom up find  that discrepancy and emissions and get to that   kind of gold standard of reporting which is level  five? And so, it's really neat to see how these   different frameworks have approached this problem  but there often is you know the common theme some   kind of standardization around how you report that  data out or what emissions factors are something   that you would use for that reporting. And so, this is another area we're seeing   some of the, some companies have actually  signed on to several. Like we've seen  

companies you know they might be part of five  initiatives like this or something. There's   not really you know they're certainly not a  winner and each one has kind of brings its own   value proposition to the table. And so, really  when we think about cloud-based platforms   and data for these frameworks that's where we  think about you know this data getting audited and   verified under these frameworks and that's a big  fit for them to support in that area as well.   So, just you know finishing up here like some  of the takeaways being proactive, pro-active   emissions management is an opportunity. There is  a great presentation I saw a couple months ago   by it was a case study by an operator in the US,  that turned their kind of compliance or emissions   team into a profit center. Because they deployed  emissions technology and they found their leaks  

and as a natural gas company they were able  to actually get a pretty good ROI in terms of   the cost for actually finding the leaks versus  the value they got from fixing them. And so,   it's just about mindset and company culture  and how can we see this as an opportunity? How   can we leverage these funding programs that are  available and act on this and make a good story?   And because I think as mentioned at the very  beginning like this is a story we need to tell,   and we've talked to a lot of smaller companies  that are just doing their first ever ESG reports   this year. And you know the industry is moving  and this is the direction it's heading and   it's very exciting to see these actions. So,  you know embracing that move to measurement,  

moving away from these emissions factors that's  going to take time, it's going to have you know   need regulation to support it in many cases  for some companies and but that's you know   the general trend and trajectory we're seeing. Adopting digital tools and modeling solutions   to support and finding practices and  efficiencies for this whole workflow,   that's another big area of opportunity. You know  you can you know there's a lot of opportunity to   automate, and to streamline, and to find best  strategies through those digital solutions.   Emissions data is going away financial  data that was another thing here. So,  

understanding that this may need to get you  know under certain certifications or standards   may need to get audited and what are your  frameworks and structures to enable that?   And then finally, you know looking at  these voluntary initiatives and realizing   that there is perhaps a financial incentive here  too, like when we think about the certifications   and the preferred pricing. So, you know tying that  all back to the first point and this is truly an   opportunity if you look at it the right way. A couple of resources here for anyone interested   in diving in a bit deeper. I really appreciate  this, it's actually a YouTube channel and they   have every so often this group, it's actually run  out of Stanford, it's a, it's a group of kind of   leading emissions experts in the space, there's  some industry, some technology, some academic   that come together. And their sessions are often  recorded and different topics. There's a great one  

over reviewing the EPA regulations for example.  And so, if you're wanting to kind of stay up on   the top hottest trends in the methane space that's  a great resource. And then a couple months ago,   the EPA put on a tremendous workshop, and this  is relevant for Canadian companies as well,   there's a lot of case studies from  industry around how they're addressing   these new issues and that's a really good resource  there. And then just a couple other websites   of industry groups and organizations  that could support you and your education   as companies adopt this new path and  journey of emissions management.   That's all, if they're I'm always open to and love  just chatting with companies about these so if   there's any kind of more specific questions, I'd  love to just grab a coffee or have a call about   this. So, feel free to reach out and my contact  info there but also, I think we have a bit of time   if there is any questions more immediately.

>> ELIZA: Thank you, Liz. That was a lot of really useful and exciting information. You described remote sensing in detail to  what extent do you rely on   direct metering and engineering estimates? >> LIZ: There's no one said answer to that because you know satellites are great for getting that  really high-level picture but ultimately, it's   not going to tell you how you act on the ground.  There always needs to be that linkage so that's   where we get more of that metering, that OGI  camera, that more detailed look. There's always   going to be a need for that for the most part  but it's really just how can we more effectively   connect that satellite data to that boots on  the ground more metering and direct measurement   so we can avoid wasting our time at sites that  might not need that attention as much so.  

>> ELIZA: Do you know if there is  a list of emissions by Canadian   operator available to everyone? >> LIZ: Great question again. So, as you saw this data is publicly available  for the EPA. On the Canadian front not   exactly so there's something called Petronex,  that is publicly available that has reported.  

It's more of a production accounting system for  those familiar so that has you know reported flair   fuel vent, that side of things but doesn't have  fugitives, other aspects of emissions. And so,   that is a gap and I know on the Alberta Energy  Regulator [AER] and the Canadian Regulator side   that is an area that they're looking to make  this this data publicly available down the road.   How they'll do that, will they anonymize it? Not  sure, so that's a little bit to be determined.   >> ELIZA: Various producers have announced  the reduction goals that you've listed,   to what extent is the achievement of these  goals dependent on receiving some of that   government funding that was announced? >> LIZ: You know what I would love to be at that very Executive VP level and get into the minds of there's various companies that support in the development of those really, kind of corporate high-level net zero strategies. I would assume they're not relying on  subsidies to actually achieve those targets and   use those more of a nice to have, not a need  to have. At least with the clients we work with  

they're always looking at these as you know great,  I wasn't expecting this let's try and pursue this   because why not. And they always want to try and  lower their budgets of course in their capital   spends. So, from what we've seen it's more of  a nice to have, not a need to have at least.   >> ELIZA: Speaking of incentive programs,  in this case when you talk about incentive   programs are they a refund of taxes paid by  companies to incentivize focusing on measurement   and control, or some other sort of subsidy? >> LIZ: When I talk about incentives in the context today, it was really what like  that certification process of actually certifying that your the product you were selling to the  downstream market has an emission intensity or ESG data that that downstream market will  purchase at a premium. So, that's kind of what I'm referring to in that context is providing you know  it's really kind of case by case what actually that premium is that's something that is you know  an agreement between the buyer and the seller but that's really the mode of theirs. >> ELIZA: How are the initiatives related to the EO100 certification [Equitable Origin]? Is EO the industry standard for ESG requirements? >> LIZ: So, it's definitely not. There's  not really an industry standard for like industry ESG reporting is a little  bit different so there's frameworks like TCFD [Task Force on Climate-Related Financial  Disclosures], SASB [Sustainability Accounting   Standards Board]. There's like a bajillion ESG  reporting frameworks and then those certifications  

are a little bit different because that's more  of the process of again like auditing and selling   your preferred pricing product. So, that's a  little bit not directly correlated with ESG   reporting although there is you know metrics like  you know emissions intensity that's important for   certification and as well for emissions reporting.  So, there definitely is some connection between   the two but they would be generally in a company  that would be acted upon differently and treated   as independents. And there's really not a standard  right now on the certification front. I had kind   of that those four different certification bodies  up there one hasn't claimed stake or anything   like that so it's certainly emerging space. >> ELIZA: Cenovus is targeting to go zero emissions by 2050.

What are the programs  that enable them to reach that target? >> LIZ: Yeah good question. So, I can only speak  to the ones that I am aware of or that we work with and because there's a lot of you know net  zero is a really complex issue. Like there's it's not just about methane when you think about  net zero there's a lot of other factors and   actually looking at you know the carbon capture  storage and other processes to mitigate emissions.  

And so, on the direct methane management aspect  Cenovus has taken really proactive actions   to deploy these different technologies. They're  doing aerial screens they just released an ESG   report actually. And so, that's capturing that  really site level top-down emission, they have   kind of a solution key of exactly where  the missions are at each of their sites   and they're able to act on those top emitting  sites. And so, they're a great example of one   of these companies that has embraced and are kind  of piloting some of these different technologies   to diversify and meet that net zero standard.

>> ELIZA: Can you tell us what cloud technologies are you using and just go into more detail about Arolytics and what the problems your systems help to solve? >> LIZ: Sure, absolutely. So, we're company we're technology agnostic to start so we're never going to promote   one drone or one vendor or one solution. Really  what we work with, when we work at the company,   we figure out what is our corporate objective?  Is it like that ESG target that compliance,   target at the lowest cost, and how can we  build a program that aligns with that?   So, we have a product called  AROfemp, it's an emissions model   that helps design these programs and get them  approved. And often there's significant cost  

savings tied with that so some of our  clients have seen about 40 percent or   so of cost savings when they build these kind  of optimized emissions management programs.   And on the SaaS software side our solution there  is called AROviz and that helps aggregate all the   data, the real measurement data and helps  connect the workflow, the repair tracking,   the disclosure, the analytics, and really kind  of provides that end to end solution of the   overall emissions management for companies. So, those are our two products that we offer   in the space. And then just general consulting and  support to adopt these frameworks and navigate the  

different landscape of all these certifications. >> ELIZA: Can you please tell me when we're measuring to various scales and when we've got various uncertainties both equipment and weather related will Arolytics have to resort  to statistical statements of emissions? >> LIZ: When you're talk about spatial  scales and weather considerations, I think that's maybe relevant for the modeling.  And so, absolutely when we do our modeling   and kind of build these programs and figure  out what technologies to use those types of   parameters like how the technologies operate under  different conditions, what scale they detect at,   that's all in a consideration on the input.  And so, that really kind of comes into the   development and design of these programs. For example, one of the most prominent aerial   technologies doesn't, can't really fly in  winter it, can't really fly when there's   snow on the ground. So, considerations like  that are certainly top of mind and as needed  

we would pull in more of that statistical  emission factor data to supplement in the   modeling but generally, we try and build  our model and our assumptions off of real   historic measurement data that's been collected. >> ELIZA: Okay, great thanks Liz. All right those were some fantastic questions and I thank you so much for your time today, Liz that was really a great presentation. So, thank you very much, everyone enjoyed it greatly. I hope everyone who is online has a wonderful holiday and we will be back doing these leadership webinars in 2022 so we hope you can join us then.

Liz thank you again and have a wonderful afternoon. >> LIZ: Thanks so much Eliza. Thanks everyone for listening and feel free to reach out if there's any other questions. Cheers. >> ELIZA: Sounds good, take care.

2022-02-06 19:29

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