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Oil and gas fugitives

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15 February 2017
Is the oil and gas fugitives method suitable for your business?
  • Is your facility an oil and gas facility?
  • Are you looking at conducting an activity to flare emissions that would have otherwise been vented or leaked to the atmosphere?

If you have answered yes to both of these questions, the oil and gas fugitives method may be suitable for your business. Read on for eligibility and compliance details.

The oil and gas fugitives method covers projects that reduce fugitive leak and venting emissions at oil and natural gas extraction, production, transport and processing facilities. Emissions are reduced by installing and operating equipment to capture emissions that would otherwise have been vented or leaked to the atmosphere. These gases are then re-routed and combusted in a flare device. The combustion converts the gas, which is primarily methane, into carbon dioxide which has a lower global warming potential.

Method variations

Section 114 of the Carbon Credits (Carbon Farming Ini​tiative) Act 2011 (the Act)​ ​allows for methods to be revised and varied. This is to ensure methods continue to operate as originally intended. Variations to methods are developed and drafted by the Department of the Environment and Energy. Information on draft methods and method variations is available on the Department of the Environment and Energy’s website.

The Clean Energy Regulator recommends making yourself familiar with proposed method variations relevant to your project should they arise, and how any changes between the original method and the varied method may affect your project plan.

Legislative requirements

You must read and understand the method and other legislative requirements to conduct an oil and gas fugitives project and earn Australian Carbon Credit Units (ACCUs) for abatement of greenhouse gases. This includes:

Tools and Resources

Quick reference guide to the oil and gas fugitives method

Contents:

Crediting period

Seven years the crediting period is the period of time a project undertakes activities which generate eligible abatement.

Relevant section of the Act:


Eligibility requirements

General eligibility requirements of the Act which include:

In addition, the Method requires that:

  • Oil and gas facilities included in a project must undertake one or more of the activities listed in Section 6 of the Method.
  • Offset projects must install and operate gas capture equipment to capture, reroute and flare emissions that would otherwise be released into the atmosphere.

Relevant section of the Act:

Relevant section of the Method:


Exclusions

ERF applicants should be aware of types of projects and emissions that are excluded by the Method. They include:

  • Fugitive leak emissions that are the result of coal mining activities and oil or gas exploration well drilling activities. Process venting emissions from equipment that is used in the production process where that equipment has been installed after the declaration day.
  • Process venting emissions from equipment that is used in the production process where that equipment has been installed after the declaration day.

Relevant section of the Method:


How is abatement calculated?

The Method credits projects for improvements in the level of emissions by comparing the emissions resulting from flaring the re-routed gas with the emissions that would have resulted from the gas being released if the project had not been carried out.

This is then adjusted by a discount factor for the sampling uncertainty associated with the component gas measurement and any significant ancillary emissions associated with the project. Note that as uncertainty increases beyond the permitted 5%, the amount of abatement decreases proportionally.

Please see the method for further information about the equations that are to be used in calculating the abatement.

Relevant section of the Method:

Monitoring requirements

In addition to the general monitoring requirements of the Act, projects must meet specific monitoring requirements in Part 5 of the Method. These include:

  • Gas quantity, quantity of ancillary electricity and fuel consumed by the project and the molar fraction of all component gases (Section 31).
  • The operation of the flare device at minimum intervals. (Section 32).

Section 35 outlines the consequences for not meeting the monitoring requirements. This includes reducing abatement to zero for the relevant reporting period.

Relevant section of the Act:

Relevant section of the Method:

Relevant section of the Method:

Record keeping requirements

In addition to the general record keeping requirements of the Act, Division 2 of the Method sets out specific record keeping requirements for:

  • Decisions about the fugitive leak measurement period and the use of historical sampling data for gas measurement.
  • The assessment of whether ancillary emissions would be more than 5% of net abatement.

Relevant section of the Act:

Relevant section of the Rule:

Relevant section of the Method:

Reporting requirements

In addition to the general reporting and notification requirements of the Act and the Rule, the Method sets out specific reporting requirements where emissions being reported under the project(s) is also likely to be reported in an NGER report. These include:

  • Identifying National Greenhouse and Energy Reporting (NGER) information for the reporting entity and relevant facility.
  • Any NGER (Measurement) Determination that will be applied to estimate emissions.

Relevant section of the Act:

Relevant section of the Rule:

Relevant section of the Method:

Audits

All projects receive an audit schedule when they are declared and must provide audit reports according to this schedule. A minimum of three audits will be scheduled and additional audits may be triggered. For more information on the audit requirements, see the Act, the Rule and the audit information on our website.

Relevant section of the Act:

Relevant section of the Rule:

Specialist skills recommended

Specialist skills will be required to carry out the project with the method. Examples of specialist skills include:

  • Registered professional engineer (PE)
  • Certified Energy Manager (CEM)
  • Certified Measurement and Verification Professional (CMVP)
  • Verified experience in energy or facility management, or measurement and verification

Relevant section of the Rule:

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