Move to Measurement: Emissions Leadership | Pandell Leadership Series
>> 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 amep.ca 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.