The landmark Inflation Reduction Act (IRA) introduced by the Biden Administration in August 2022 has put methane emissions firmly at the top of the energy industry’s agenda.
The IRA carries implications for the O&G sector — particularly how it will improve monitoring technology to accelerate the reduction of methane and other GHG emissions.
The current concentration of methane in the atmosphere is around two-and-ahalf times greater than pre-industrial levels and is increasing steadily, a rise that has a serious impact on the environment and air quality. Aiming to reduce U.S. GHG emissions by 40% by 2030, the IRA places heavy penalties on O&G-producing assets with methane leaks.
Facing a once-in-a-generation challenge
Around the world, we’re seeing governments introduce policy and regulations to incentivize industry to curb emissions and decarbonize assets. The U.S. is leading the way with the IRA, which has immediate repercussions for the operators of O&G facilities — they face strict fines and penalties for fugitive emissions. In real terms, the current tax imposes $900 per ton of methane, but by 2026, that could increase to $1,500 per ton — and may rise further exponentially.
The U.S. energy sector now faces the balancing act of continuing to safely produce the domestic energy the nation needs — while also doing so as cleanly as possible. This offers a challenge that requires a fast, practical approach to the decarbonization of infrastructure.
But along with the challenge comes an opportunity across the energy supply chain for companies like Wood. Wood is already deploying technology in the U.S. and Canada to detect, quantify and visualize methane anomalies, down to the flange level, to ensure compliance with regulatory requirements.
Reducing emissions at pace
Speed, scale and smart solutions are all required to deliver a net-zero future. In the next five years, digital solutions will take decarbonization off the page and into practice, enabling operators to get the most from their investment, navigate global policy changes and deliver an impactful low-carbon strategy.
"The U.S. energy sector now faces the balancing act of continuing to safely produce the domestic energy the nation needs — while also doing so as cleanly as possible"
The way we monitor fugitive leaks is changing, thanks to advances in technology and equipment. For remote, hazardous environments, we can now fully autonomize this process by using robots, drones or hand-held kits to scan assets and provide 3D modeling and mapping. The overall goal is streamlining methane inspections and potentially saving millions of dollars in IRA penalties.
In several pilot studies, Wood was able to test new technology by scanning over 4,000 wells at a U.S. site and on a Canadian floating production storage and offloading vessel. The studies detected previously unseen, low-velocity leaks which were analyzed from field to office in only 10 minutes. By utilizing resource-light technology and applications, we can expedite repairs quickly and speed up maintenance programs, identifying up to 25% more leaks than existing processes.
Future-proofing energy assets
The U.S. energy sector and its supply chain has worked to future-proof energy infrastructure for decades — designing, building, operating and maintaining assets, often undertaking complex engineering in harsh environments in milestone, "worldfirst" projects.
In this next phase of the sector, operators and service providers will need to lead the way in integrating smart digital solutions such as methane mapping into operational schedules. This will ensure that penalties are kept at a minimum, emissions are reduced and domestic energy production is secured.
For more information, visit woodplc.com, call Stephen Kelman at (337) 205-1711 or email stephen.kelman2@woodplc.com.
