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Other topics Developing a consistent approach to estimating greenhouse gas emissions for the petroleum industry Susann Nordrum, Lead Environmental Engineer, ChevronTexaco Research and Technology Company, 100 Chevron Way, PO Box 1627, Richmond, California 84802 USA (sbnordrum@chevrontexaco.com) Christopher P. Loreti, Battelle, One Cranberry Hill, Lexington, Massachusetts 02421, USA (loretic@battelle.org) Mike McMahon, Senior Advisor – Climate Change, BP, Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN, UK (mcmahom@bp.com) Karin Ritter, American Petroleum Institute, 1220 L Street, NW, Washington, DC 20005, USA (ritterk@api.org) Summary To achieve meaningful greenhouse gas inventories, it is important for methodologies and the definitions of what will be included in the inventory to be consistent. Guidance for calculating and reporting GHG emissions has been developed by the International Petroleum Industry Environmental Conservation Association (IPIECA), the International Association of Oil and Gas Producers (OGP) and the American Petroleum Institute (API). The IPIECA’s Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions focus on petroleum industry accounting and reporting. API’s Compendium of Greenhouse Gas Emissions Estimation Methodologies for the Oil and Gas Industry was developed to provide consistent emission estimation methodologies. A tool for estimating emissions, the SANGEA Energy and Emissions Estimating System, is available through API. Résumé Pour pouvoir dresser un inventaire sérieux des gaz à effet de serre, il est important qu’il existe des définitions cohérentes de ce qui doit figurer dans cet inventaire et d’employer des méthodes harmonisées. L’IPIECA, l’OGP et l’API ont réalisé un guide pour évaluer et déclarer les émissions de gaz à effet de serre. Cet ouvrage, Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions, est axé sur la comptabilisation et la diffusion d’informations sur les gaz à effet de serre par l’industrie pétrolière. L’API a par ailleurs produit un recueil, Compendium of Greenhouse Gas Emissions Estimation Methodologies for the Oil and Gas Industry, qui présente des méthodes harmonisées d’estimation des émissions. Enfin, l’API propose également un outil d’évaluation des émissions, le système SANGEA (Energy and Emissions Estimating System). Resumen Para contar con un inventario importante de gases de efecto invernadero, es necesario tener definiciones consistentes del contenido del inventario y recurrir a metodologías congruentes. IPIECA, OGP y API han elaborado guías para el cálculo y la presentación de informes sobre emisiones de gases de efecto invernadero. La publicación Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions (“Directrices de la industria petrolera para la presentación de informes sobre emisiones de gases de efecto invernadero”) aborda la contabilidad y presentación de informes en la industria petrolera. API publicó el Compendium of Greenhouse Gas Emissions Estimation Methodologies for the Oil and Gas Industry (“Compendio de metodologías para calcular la emisión de gases de efecto invernadero en la industria del gas y del petróleo”) con el objetivo de proporcionar metodologías consistentes para el cálculo de emisiones. Asimismo, API ha preparado una herramienta para el cálculo de emisiones, conocida como SANGEA (Sistema para el Cálculo de Energía y Emisiones). 72 ◆ UNEP Industry and Environment April – September 2004 Worldwide, petroleum companies are responding to concerns about climate change. An important first step to address the climate change issue is to understand the magnitude of greenhouse gas emissions from petroleum industry operations by creating an emissions inventory. In order to quantify emission sources, emissions estimating methodologies are needed, and the boundaries of the inventory must be defined. At present, several standards/protocols/guidelines are available to define the boundaries and provide methodologies for estimating emissions of greenhouse gases. These standards are broadly applicable to many industries where ownership arrangements are not complex and the majority of greenhouse gas emissions arise from the combustion of commercial fuels and/or the use of electricity. However, the petroleum industry has unique processes and emission sources, as well as unique ownership and operating arrangements, which have driven the development of industryspecific accounting and reporting guidelines and estimating methodologies. Many companies in the petroleum industry have voluntarily undertaken significant efforts to improve consistency in estimating emissions from their operations. To provide an up-to-date and comprehensive set of methodologies for the industry, the American Petroleum Institute (API) developed the Compendium of Greenhouse Gas Emissions Estimation Methodologies for the Oil and Gas Industry. Soon after publication of the API Compendium, a second project was initiated to develop consistent guidelines for accounting and reporting greenhouse gas emissions from petroleum industry. The International Petroleum Industry Environmental Conservation Association (IPIECA), in concert with API and the International Association of Oil and Gas Producers (OGP), led the development of the Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions. In support of these initiatives, an estimating and reporting tool, the SANGEA Energy and Emissions Estimating System, has been made available free of charge to enable companies to develop an inventory that is consistent with the Guidelines and utilizes methodologies from the Compendium. Guidelines for reporting The International Petroleum Industry Environmental Conservation Association, the International Association of Oil and Gas Producers (OGP) and the American Petroleum Institute have taken the lead in developing petroleum industry guidelines focused specifically on the accounting and reporting of GHG emissions at the facility through the corporate level. The Petroleum Industry Guidelines for Reporting Greenhouse Gas Emissions (the Guidelines) were issued in December 2003. They are divided into seven chapters that describe: 1. Petroleum Industry GHG Accounting and Reporting Principles; 2. Setting the Boundaries for GHG Emissions Reporting; 3. Designing an Inventory to Monitor Performance;
Other topics 4. Identification of Industry GHG Emissions; 5. Evaluation of Industry GHG Emissions; 6. GHG Emissions Reporting; 7. Inventory Assurance Processes. The petroleum industry-specific guidelines took as a starting point the Greenhouse Gas Protocol developed by the World Resources Institute (WRI) in conjunction with the World Business Council on Sustainable Development (WBCSD). The Guidelines complement other existing protocols for estimating and reporting greenhouse gas emissions by providing information to address the unique situations in the petroleum industry. For example, they provide: 1. industry-specific definitions and examples for determining “operated” and “equity share” emissions; 2. specific guidance on which methodologies from the API Compendium are most appropriate for various groups of emission sources and desired levels of accuracy; 3. guidance on data aggregation within the petroleum industry subsectors; 4. guidance on inclusion of indirect emission sources; 5. options for allocating emissions from combined heat and power plants. The Guidelines were developed by a focused team of petroleum industry representatives from BP, ChevronTexaco, ExxonMobil and Shell with support from Battelle. Oversight for the team was provided by petroleum companies as well as the sponsoring industry organizations (IPIECA, API and OGP). The first draft of the Guidelines was distributed to members of the petroleum industry, who then participated in a workshop to discuss and incorporate their input. Finally, a consultation draft was broadly distributed to obtain feedback from government agencies and other interested parties. Figure 1 An approach to consistent emissions estimating Accounting and reporting guidelines Available emission estimation approaches GHG emissions inventory Guidelines Definition of reporting tiers SANGEA Compendium or other Emission software* estimation methods * Emission calculations made following guidelines accounting and reporting procedures and Compendium emission estimation methods Compendium of methodologies To assist its members, and as a reference for other interested parties, the American Petroleum Institute first published the Compendium of Greenhouse Gas Emissions Estimation Methodologies for the Oil and Gas Industry in April 2001. Publicly available and internal company GHG emission estimation protocols were reviewed for use in developing the Compendium. The resulting document represents a compilation of recognized methodologies for consistent estimation of GHG emissions specific to oil and natural gas industry operations. The initial API development effort focused on emission estimation methods for carbon dioxide (CO 2 ) and methane (CH 4 ), as they represent the vast majority of GHG emissions for petroleum industry operations. The Compendium presents and illustrates the use of preferred and alternative calculation approaches for CH 4 and CO 2 for all common emission sources, including combustion, process, fugitive and indirect sources. In February 2004 API released an updated version of the Compendium, which includes emission factors for nitrous oxide (N 2 O), System International (SI) units and additional information received during the comment period. The API Compendium has been reorganized to provide clearer information, and to be consistent with the recently released Guidelines discussed above. The SANGEA System The task of developing a greenhouse gas emissions inventory for an integrated petroleum company, or for any company with both equity and operated facilities, can be somewhat complex, particularly if the inventory is to allow the company to report based on both equity share and operated emissions and to account for both direct and indirect emissions. To facilitate this task, Chevron- Texaco hired a consulting team led by Arthur D. Little, Inc., with software program code development provided by EnVINTA Corporation and auditing expertise provided by Pricewaterhouse- Coopers. Working closely with ChevronTexaco staff, the team developed an Excel-based tool called the SANGEA Energy and Emissions Estimating System. As shown in Figure 1, the SANGEA System uses methodologies from the API Compendium and enables users to develop an inventory that is consistent with the Guidelines. ChevronTexaco has made the SANGEA software available to API, and it can be obtained free of charge. Developing an inventory: application of the guidelines Many petroleum companies have been estimating emissions of greenhouse gases for several years using company-specific methodologies and protocols. Now that industry guidance exists as a preliminary step, it is important to understand the distinction between accounting for and reporting of emissions. Greenhouse gas accounting concerns the recognition and consolidation of greenhouse gas emissions from operations in which a parent company holds an interest, and linking of the data to specific operations, sites, geographic locations, business processes and owners. Greenhouse gas reporting concerns the presentation of greenhouse gas data in formats tailored to various reporting uses. Many companies have multiple objectives for greenhouse gas reporting, so that the greenhouse gas accounting system must be capable of meeting a range of reporting requirements. Ensuring that data are collected and recorded at a sufficiently disaggregated level, and capable of being consolidated in various forms, will provide companies with maximum flexibility in reporting. An important consideration companies face in developing an inventory is the decision whether to report: ◆ all the emissions from facilities over which they have operational control (and none from facilities they do not control); ◆ emissions based on their share of equity in the facilities; or ◆ using some other accounting method. The Guidelines recommend that companies select either the operational control or equity share approach, and that they clearly state which method they use. The Guidelines suggest that companies should consider the purpose of the inventory in deciding whether to report based on operational control or equity share. Because companies often need to provide information for more than one purpose, the Guidelines encourage reporters to develop an inventory that can be used to report both emissions from facilities over which the company has operational control and the company’s equity share of emissions. According to the Guidelines, a company is deemed to have operational control of a facility when the company has authority to introduce and implement its operational and environmental, health, and safety(EHS) policies at the joint venture. The Guidelines also provide specific examples of how a company’s equity share of emissions should be calculated. Greenhouse gas emissions are apportioned according to the economic interest or benefit derived from a joint venture. In general, the benefit derived from a joint venture is proportional to the working interest or investment share of each partner, and GHG emissions are allocated to the partners according to their interest or investment share. The next key decision is how to characterize direct and indirect emissions from a facility. Direct emissions are defined as those from sources that are owned or controlled by the reporting company, such as emissions from exhaust stacks or process vents. Indirect emissions are generally considered to be emissions that are a consequence of the activities of the reporting company, but occur from sources owned or controlled by another party. For UNEP Industry and Environment April – September 2004 ◆ 73
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