Friday, October 08, 2021

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Report: SoCal Pipeline Operator Took Hours to React to Spill Alarm

 
The location of the suspected breach in the San Pedro Bay Pipeline (USCG)

PUBLISHED OCT 6, 2021 2:52 PM BY THE MARITIME EXECUTIVE

 

In an enforcement order released Tuesday, the U.S. Department of Transportation's pipeline regulator said that the operator of the ruptured crude line off Orange County had indication of a breach several hours before it shut down the line or reported a potential spill. 

At about 0230 hours on Saturday morning, the control room personnel for operator Beta Offshore received a low pressure alarm on the San Pedro Bay Pipeline, an indication of a potential breach. According to the Pipeline and Hazardous Materials Safety Administration (PHMSA), Beta Offshore reported that the line was shut down at 0601 - more than three hours after the alarm.

Beta Offshore did not report the possibility of a breach to the U.S. Coast Guard's National Response Center (NRC) until 0907, more than six hours after the first alarm.

This timeline does not appear to be consistent with previous public statements from Beta's parent company, Amplify Energy; at a press conference Tuesday, Amplify CEO Martyn Willsher told the OC Register that his firm became aware of the potential leak at about 0800 - more than five hours after the alarm and two hours after his firm had shut down the pipeline.

In its order to Beta Offshore, PHMSA did not address the earliest spill reports sent to NRC, which were submitted by a third-party vessel on Friday evening - long before the first alarm sounded.

An ROV and dive inspection of the full 18-mile length of the San Pedro Bay Pipeline was completed earlier this week. One section of the line measuring 4,000 feet long has been displaced horizontally by about 100 feet, and a portion of this segment has a breach of about 13 inches across. According to PHMSA, the damaged section is located about five miles offshore in about 100 feet of water, within reach for commercial divers.

The unified command for the response believes that the damage is not consistent with normal wear and tear: the steel pipeline is 16 inches in diameter, half an inch thick and coated in concrete, and it is not likely to move on its own. Investigators are considering multiple potential causes, but one possibility is an anchor strike from one of the dozens of vessels waiting in San Pedro Bay. The bay's anchorage is unusually busy due to unprecedented congestion at the twin ports of LA / Long Beach. 

As a precautionary measure, PHMSA has ordered Beta Offshore to keep the pipeline shut down until it authorizes startup. It also ordered a complete test procedure for the full length of the pipeline, including metallurgical testing on the failed pipe wall section. Beta must also review and assess its emergency response and public-notification procedures.


'Protect Our Coast,' Wildlife Defenders Say

 as California Oil Spill Puts Species at Risk

"Once inundated with oil, it is impossible to fully remove oil from these wetlands," said marine conservation group Oceana.

The National Audubon Society has designated Pacific waters off Southern California's coast as a crucial habitat for elegant terns, and ocean conservation group Oceana said Thursday that this week's oil spill in Huntington Beach is likely to harm the species. (Photo: Mark Watson/Flickr/cc)

October 7, 2021

Marine conservation group Oceana on Thursday called on the federal government to protect wildlife throughout the United States' coastal areas as experts assess the long-term damage done to dozens of species by a crude oil spill near Huntington Beach, California last week.

An analysis released by Oceana showed that numerous vulnerable and endangered species have been put at risk following one of the largest spills in the state's recent history, which sent at least 126,000 gallons of crude oil into Pacific waters and nearby wetlands last Saturday—the result of a ruptured pipeline.

"Wildlife and coastal economies cannot continue to be jeopardized by dangerous offshore drilling," said Geoff Shester, California campaign director and senior scientist at Oceana. "It's past time to permanently protect our coast from offshore drilling."




The Eastern North Pacific's remaining population of endangered blue whales use the area for feeding on krill, which may now be threatened with a massive die-off due to the oil spill, Oceana reported. The spill may also leave gray whales unable to migrate through the area as they do every year.

"Wildlife and coastal economies cannot continue to be jeopardized by dangerous offshore drilling. It's past time to permanently protect our coast."

Elegant terns, a bird species considered vulnerable due to the extremely limited number of places where it nests, could lose "one of their only remaining nesting sites left in the world," Oceana said, impacting their feeding areas.

"Toxic oil spills don't discriminate in polluting ocean ecosystems. From the seafloor to the ocean's surface, the waters off Southern California contain some of the most endangered species and fragile habitats on the West Coast," said Shester. "While the extent of the damage to oiled habitats and wildlife and the economic implications of closed fisheries are still unfolding, we hope that this analysis will help inform response efforts and that it will be considered when ensuring the responsible party is held fully liable for damages that could have been prevented."

Other seabirds who make their habitats in coastal wetlands—including brown pelicans, black skimmers, and least terns—may also suffer lasting effects of the spill even after cleanup crews do what they can to mitigate the damage.

"Once inundated with oil, it is impossible to fully remove oil from these wetlands, which are critical stops along the Pacific Flyway for dozens of species of migratory birds," said Oceana.

The group's warning was echoed by experts including Steve Murawski, a marine ecologist at the University of South Florida.

“Once the oil is in the marsh and it gets down below the level of the sediments, it is there pretty much forever," Murawski told The Guardian Thursday.

Along with bird and marine species commonly known to the public, Oceana identified deep-sea wildlife and sectors of the economy that are expected to suffer the effects of the spill, including:

At least 15 types of deep-water coral, which provide key nursery grounds for recreational and commercial fish species and which can be smothered and killed by spilled oil;

Rocky reefs and kelp forests, which have been federally designated "habitat areas of particular concern" because of their sensitivity, rarity, and ecological importance for a diversity of Southern California fish and invertebrates; and

Commercial fisheries including market squid, tunas, swordfish, spiny lobster, spot prawn, and red sea urchin, which were valued at $27.2 million in 2020 and have a full value "several times greater" when factoring employment, processing, and seafood products.

"We need the federal government to stop selling off our oceans for offshore drilling and Congress can make sure that happen in the Build Back Better Act, which is currently being negotiated," said Diane Hoskins, campaign director at Oceana. "We know that oil is toxic. We know we shouldn't eat it, breathe it, or swim in it. But for marine wildlife, that's not an option when oil spills occur."

The group found that an end to all new leasing off California's coast would protect 654,000 jobs threatened by oil spills and over $50 billion in gross domestic product for the state, as well as prevent more than 19 billion tons of greenhouse gas emissions and more than $720 billion in damages to people, property, and the environment.

"It's time to permanently protect our oceans from any more offshore oil and gas leasing," Hoskins said.


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Analysis: Even Before Orange County Leak, California Pipeline Incidents Caused $1.2 Billion In Damages




PRESS RELEASE
For Immediate Release
Thursday October 7, 2021
Center for Biological Diversity


Video Maps Nearly 1,400 Pipeline Leaks, Spills, Other Problems Since 1986

WASHINGTON -
As Orange County beaches suffer a massive oil spill reportedly caused by an undersea pipeline linked to offshore drilling rigs, a new analysis reveals a troubling history of pipeline accidents in California.

Released today by the Center for Biological Diversity, the analysis found that since 1986, nearly 1,400 oil and gas pipeline leaks, spills and other incidents in the Golden State have caused at least $1.2 billion in damages, as well as 230 injuries and 53 deaths.

A new time-lapse video informed by the analysis maps every significant pipeline incident in California — along with their financial costs and toll in injuries and deaths — from 1986 to July of 2021. On average California has suffered 40 significant pipeline incidents a year, according to the federal data.

“The Orange County spill is a wake-up call on the risks of oil and gas pipelines, but these things have been wreaking havoc in California for decades,” said Kristen Monsell, oceans legal director for the Center. “The leaks and spills and pollution go on year after year. These deadly and costly incidents will continue until we put an end to this dirty extraction business.”

Today’s analysis focuses on pipeline incidents since 1986, including spills, leaks, ruptures and explosions. It’s based on records from the federal Pipeline and Hazardous Materials Safety Administration, which maintains a database of all U.S. pipeline incidents classified as “significant” — those resulting in death or injury, damages more than $50,000, more than five barrels of highly volatile substances or 50 barrels of other liquid released, or where the liquid exploded or burned.

Hundreds of miles of pipelines run through California’s coastal areas. They transport oil and gas from drilling and fracking.

Today’s analysis does not include the damage caused by the Orange County leak, which investigators believe came from a breach in an undersea pipeline linked to the Elly platform, an offshore rig built in 1980. The leak released an estimated 144,000 gallons of oil into the ocean, killing birds, fouling beaches and saturating the Talbert Marsh ecological reserve.

“Whether oil and gas pipelines are in the ocean or on land, they’re basically time bombs,” said Monsell. “This video shows how much damage they do to our coastlines and in our communities. That’s one more reason why President Biden and Gov. Newsom must stop approving new fossil fuel projects and wind down existing drilling.”




At the Center for Biological Diversity, we believe that the welfare of human beings is deeply linked to nature — to the existence in our world of a vast diversity of wild animals and plants. Because diversity has intrinsic value, and because its loss impoverishes society, we work to secure a future for all species, great and small, hovering on the brink of extinction. We do so through science, law and creative media, with a focus on protecting the lands, waters and climate that species need to survive.


Orange County oil spill leaves many clues, dead ends and mysteries, but few answers

oil spill
Credit: Unsplash/CC0 Public Domain

Nearly a week after a 13-inch tear in an undersea pipeline resulted in a massive oil spill off the Southern California coast, the clues keep piling up, but the mystery of what caused the rupture and who is ultimately responsible remains unsolved.

Like other investigations into mechanical failures that have led to catastrophic results, an understanding of the chain of events that led to the spill is playing out like twist-filled thriller. Leads are being followed. Some have already resulted in dead ends; others are still unfolding.

It's still unclear how the  ruptured, when the damage was done and what could have prevented it. Even the exact location of the pipe running along Orange County coast is also the subject of some doubt.

"The frustrating part is that the information is coming at investigators at the speed of light, and they can be inundated with irrelevant noise," said Richard Kuprewicz, who by his account has investigated hundreds of pipeline incidents over the course of 20 years. "They have to filter that out of the way."

As containment and mitigation efforts advance, nearly a dozen government agencies have become involved in an investigation that has already taken them to the Port of Oakland, where authorities spoke Wednesday to the operators of a German container ship that had been on-site at the time of the spill. The ship was allowed to continue on with its journey, however, and the ship's owners said the vessel was no longer under scrutiny.

Kuprewicz warns that answers may take time.

"We should have an answer in a couple of months, which is about how long it takes to do the forensic analysis," he said, which should include removing the damaged pipe from nearly 100 feet of water. "They should be able to determine with a high degree of confidence what the most likely failure mechanism was."

Of course, determining the cause of the rupture will be easier than finding out who is responsible. "It will take more time to get to the who, than to the why," Kuprewicz said. "The why follows the science. The who follows the rule of law."

As of Thursday, the most probable suspect continued to be a shipping vessel that might have hit and possibly snagged the pipeline in the process of anchoring. But identifying that ship will require establishing when the pipeline was damaged. Complicating that work is the possibility that damage took place months before the pipe cracked open.

The answer to these questions is critical in not only preventing a similar spill from taking place but also in determining liability, which could possibly extend to criminal negligence.

Already a performer on the Huntington Beach boardwalk has sued the pipeline operator in federal court, claiming that the spill will harm his business and has exposed him to hazardous chemicals. The lawsuit is seeking class-action status.

On Thursday, another lawsuit filed in  on behalf of Laguna Beach shoreline property owners also seek class-action certification and damages for loss of enjoyment, potential lowered property values and diminished rental income.

Rebecca Ore, commander of the U.S. Coast Guard Sector Los Angeles-Long Beach, was reluctant to give an estimated cost of the cleanup. "We're still in the early phases of this, and responses can be a long-term effort," she said.

But Kuprewicz anticipates this effort could "easily go into the hundreds of millions."

"Oil spills don't tend to be cheap affairs, and this is a high-profile oil spill with a high-profile investigation," he said. "I've seen minor pipeline failures that have escalated into billions of dollars."

Orange County Supervisor Katrina Foley said there is a federal liability trust that will be used to reimburse public agencies for the cost of the cleanup. It is not clear how much money is in the trust.

"We are tracking every single minute, every single supply, piece of equipment," Foley said. "All the public agencies are working towards submitting reimbursements. I don't have any reason to believe we won't get reimbursed."

Seven days into the investigation, what is known is clear: The pipeline, which is 16 inches in diameter, is nearly 18 miles long, and connects three offshore oil platforms—Ellen, Elly and Eureka—with an onshore processing plant in the Port of Long Beach.

The infrastructure is owned by Amplify Energy Corp., a publicly owned energy company headquartered in Houston. Its portfolio, according to its website, includes "mature, legacy oil and natural gas fields."

Amplify has owned the property for nine years. It was initially developed by Shell Oil Co. in the late 1970s and went into production in January 1981. It is one of more than two dozen offshore oil platforms that are a familiar sight off the coast.

Late in the afternoon of Friday, Oct. 1, Newport Beach resident Jolie Sheppick noticed a smell, "like when they resurfaced the streets in the area and had a spill."

But even as Sheppick and others began calling authorities, workers in Platform Elly's control room were unaware of a problem in the pipeline until 2:30 a.m. Saturday when, according to federal regulators, they received an alert indicating low pressure.

Low-pressure alerts do not always mean a release in the line, and "it isn't reasonable to expect an operator to shut down a line whenever they hear a low-pressure alarm," said Kuprewicz, but "something doesn't look right here."

In comments this week, Martyn Willsher, who runs Amplify Energy, has not explained what warnings his company may have received or what initial actions they took.

He has said, however, that a little after 8 a.m. Saturday, workers performing a line inspection noticed a sheen in the water and "instantly" radioed back to the offshore platforms, where workers launched an incident response plan. The offshore platforms and pumping operations were "shut down immediately thereafter."

About half an hour later, Amplify Energy notified its crisis and emergency management company and federal regulators, according to Willsher, adding, "If we were aware of something on Friday night, I promise you—we would have immediately stopped all operations."

The initial suspect was corrosion. "Steel pipes want to corrode," Kuprewicz said.

Even if the pipeline was damaged by a ship anchor, corrosion could have played a role in the rupture, slowly compromising the steel at the point where it was weakened or stressed, but investigators will also take into consideration other factors, independent of an anchor strike or corrosion, including a manufacturing defect at welding sites.

Given these possibilities, the role that inspections could have played in preventing the spill will come under scrutiny.

Offshore platforms and pipelines are monitored by a raft of federal regulatory agencies that are mandated to conduct periodic inspections of aging equipment. In California, their work alone focuses on more than two dozen platforms from just north of Point Conception to Huntington Beach. Some are in state waters, some are in federal waters, and all are about 40 years old.

"It's not a robust system of oversight," said Miyoko Sakashita, oceans program director for the Center for Biological Diversity.

Newly released documents from the federal Bureau of Environmental Safety and Enforcement show that the broken pipeline had been inspected every two years since 2007 by private contractors hired by Amplify Energy.

In 2019, repairs were made in three areas where pipeline deformation occurred, according to the summary report by federal investigators. "The internal inspection is acceptable and no remedial action is recommended at this time," the bureau concluded.

But as speculation grows over the role that corrosion and lax government oversight may have played in the spill, the Joint Unified Command, overseeing the investigation, announced on Tuesday that divers and footage from remotely operated submarines discovered that a 4,000-foot section of the pipeline had been violently displaced.

"The pipeline has essentially been pulled like a bowstring," said Willsher, describing some force that had pulled the pipe about 105 feet in an almost "semicircle."

The suspicion that an anchor might have caught and dragged the pipeline comes at a time when disruptions in the global supply chain, due to the pandemic, have led to a fivefold increase in traffic over the last few years. The bottleneck has required many more ships to wait at anchor before entering the ports.

Not long after the spill, early analysis of satellite imagery suggested that the container ship might have crossed the pipeline after straying thousands of feet from its anchorage.

After examining the images, however, the nonprofit environmental watchdog group Skytruth said it had found no evidence of drifting.

On Wednesday, Coast Guard officials boarded the ship that was in Oakland at the time and later released it without explanation. The ship is currently in route to Mexico.

The owner of the ship, Hapag-Lloyd, was aware that some marine traffic information showed that it had moved while it was anchored, but that "seems to be wrong," a company spokesman said. The ship's captain has provided logs, updated hourly, showing the ship did not leave its anchorage place for several days, he said.

Tracking down the responsible ship could prove extremely difficult. Investigators haven't always been able to find the culprit in suspected anchor strikes of underwater pipelines, or even come to a final conclusion that it was an anchor that caused damage, federal records show.

Investigators continue to look into the possibility that other ships damaged the pipeline, but some have raised the question of whether the pipeline might have moved so that its position on nautical charts was no longer accurate.

As the investigation continues, Kuprewicz advises patience. The first priority is to contain and mitigate the spill. Other answers will come in time, he said.

"The public tends to make conclusions that outpace the science," he said. "They think they can solve this right off the bat. But there is a due process to these procedures. The rule of law applies, and this process takes a while."

Video shows damaged pipeline responsible for oil spill off Orange County coast

©2021 Los Angeles Times.
Distributed by Tribune Content Agency, LLC.

 

What is chaos? A complex systems scientist explains

paper butterflies
Credit: Unsplash/CC0 Public Domain

Chaos evokes images of the dinosaurs running wild in Jurassic Park, or my friend's toddler ravaging the living room.

In a chaotic world, you never know what to expect. Stuff is happening all the time, driven by any kind of random impulse.

But  has a deeper meaning in connection to physics and , related to how certain systems—like the  or the behavior of a toddler—are fundamentally unpredictable.

Scientists define chaos as the amplified effects of tiny changes in the  that lead to long-term unpredictability. Picture two almost identical storylines. In one version, two people bump into each other in a ; but in the other, the train arrives 10 seconds earlier and the meeting never happens. From then on, the two plot lines might be totally different.

Usually those little details don't matter, but sometimes tiny differences have consequences that keep compounding. And that compounding is what leads to chaos.

A shocking series of discoveries in the 1960s and '70s showed just how easy it is to create chaos. Nothing could be more predictable than the swinging pendulum of a grandfather clock. But if you separate a pendulum halfway down by adding another axle, the swinging becomes wildly unpredictable.

Chaos is different from random

As a complex systems scientist, I think a lot about what is random.

What's the difference between a pack of cards and the weather?

You can't predict your next poker hand—if you could, they'd throw you out of the casino—whereas you can probably guess tomorrow's weather. But what about the weather two weeks from now? Or a year from now?

Randomness, like cards or dice, is unpredictable because we just don't have the right information. Chaos is somewhere between random and predictable. A hallmark of chaotic systems is predictability in the short term that breaks down quickly over time, as in river rapids or ecosystems.

Why chaos theory matters

Isaac Newton envisioned physics as a set of rules governing a clockwork universe—rules that, once set in motion, would lead to a predetermined outcome. But  proves that even the strictest rules and nearly perfect information can lead to unpredictable outcomes.

This realization has  for deciding what kinds of things are predictable at all. Chaos is why no weather app can tell you the weather two weeks from now—it's just impossible to know.

On the other hand, broader predictions can still be possible. We can't forecast the weather a year from now, but we still know what the weather is like this time of year. That's how climate can be predictable even when the weather isn't. Theories of chaos and randomness help scientists sort out which kinds of predictions make sense and which don't.

Physics Nobel: deciphering climate disorder to better predict it
Provided by The Conversation 
This article is republished from The Conversation under a Creative Commons license. Read the original article.The Conversation
Environment lobby calls out Carney's climate finance credibility

Mia Rabson
The Canadian Press
Thursday, October 7, 2021 9:50PM EDT

Mark Carney, Governor of the Bank of England speaks at a Bank of England Financial Stability Report Press Conference, in London, Monday, Dec. 16, 2019
. (AP Photo/Kirsty Wigglesworth,pool)


OTTAWA -- Former Bank of Canada governor Mark Carney's credibility as a global climate finance leader is under fire as environment lobby groups say he is allowing some of the world's biggest banks to use him as cover to keep funding fossil fuels.

Carney is widely expected to run for the federal Liberals in a future election and campaigned for some Liberal candidates in the election that ended last month. But he turned down openings to run in that campaign himself because of his previous commitment as the United Nations special envoy on climate action and finance.

As part of that role he is also chairing the Glasgow Financial Alliance for Net Zero (GFANZ), aiming to get the biggest financial institutions around the globe to both commit and lead the way to net-zero emissions by 2050.

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The alliance is to play a critical role at next month's UN Council of the Parties climate talks, known colloquially as COP26, where a big focus will be on finding the finances to fund the climate promises to achieve needed reductions in greenhouse gas emissions.

A coalition of more than 90 Canadian and international environment groups published full-page ads Thursday in the Toronto Star and Financial Times asking Carney to beef up the membership requirements in that alliance.

"While we applaud your role in establishing frameworks to help green the financial system, too many signatory banks and other financial institutions are using GFANZ and 'Net Zero' promises as greenwash, empty promises without meaningful actions or clear accountability," the ad says in a letter printed beside a giant photo of Carney superimposed on a background of flooding waters, smoke stacks and a sky tinted orange from wildfires.

Carney's office did not immediately respond to a request for comment.

Richard Brooks, climate finance director at Stand.earth, said membership in the alliance is based on a general commitment by financial institutions that by 2050, all of their investments will be net zero -- in other words any businesses or projects they invest in will produce no emissions or ensure any emissions that are produced are captured by nature or technology.

But Brooks said there is no immediate requirement for follow-through and no commitment to divest from fossil fuel companies. He said for many of the companies, they signed up and then just continued on with business as usual.

"The threshold that's been set is very much, 'Hey, join the club and then sometime in the future we'll ask you to make some more commitments about how you're going to change your practices on this road to get into net zero emissions by 2050,"' Brooks said.

Brooks said the science is clear that action cannot be punted down the road. He said the membership requirements should be tightened so any financial institution involved has to commit to completely phasing out the financing of all fossil fuel companies and to cut in half the emissions produced by the investments they do make by 2030.

He said any institutions that don't meet those goals should be kicked out immediately so they can't use their membership as "green cover" while they squeeze every last drop of profit out of the fossil fuel sector.

"We've had way too many years, decades, of talking and talking and not enough acting, and it's really time to call people on their talk, and force them to walk," said Brooks.

A statement from the coalition behind the ads said most of the alliance members have not provided any details on how they intend to reduce their fossil fuel investments and have no short-term targets for reducing emissions themselves.

They also say many members in the alliance are still among the biggest funders of fossil fuels and some have even issued new financing to fossil fuel infrastructure since joining the alliance.

That includes Brookfield Infrastructure, which over the summer moved on its plan to take over Inter Pipeline, the biggest transporter of oilsands bitumen in Alberta.

The UN says more than 160 financial firms are signed onto the alliance but very few are Canadian. There are no Canadian banks among the 43 banking members, and only a handful of asset owners and managers, including the Caisse de depot et placement du Quebec.

This report by The Canadian Press was first published Oct. 7, 2021.
Carbon Might Be Your Company’s Biggest Financial Liability

ESG
HARVARD BUSINESS REVIEW
by Robert G. Eccles and John Mulliken
October 07, 2021

Yaroslav Danylchenko/Stocksy

Summary.
The price of carbon may be zero in many places today, but it’s unlikely to remain zero for long. That means that many companies have hidden liabilities on their books. To cover their carbon short position, executives can take several steps: Measure the position in carbon terms; determine if carbon intensity will increase or decrease as revenues increase; determine a set of carbon prices to use and the timing of putting them into place; price out future emissions; and finally discount the “carbon cash flows” by using your company’s cost of capital to discount the future carbon prices and determine a total economic impact in today’s dollars. Executives should then share these calculations with investors in their quarterly reports.


Through some combination of government intervention and the development of carbon trading markets, it seems inevitable that a price will eventually be put on carbon around the world. Underscoring this, a carbon price has been proposed as part of several bills before Congress, but other mechanisms like a cap on emissions in a sector or geography would achieve the same effect. Economic models and the experience of the EU Emissions Trading System suggests that a price could likely be between $50 and $100 per ton of CO2 in the near term and rise from there. At $100 per ton that would represent five percent of the global economy. Five percent of the global economy is a huge number. But where does this liability sit? With the world’s corporations.

A sad joke for corporate climate activists is that acting on climate plans is always “the next CEO’s job.” But every company has an uncovered “Carbon Short” position based on their emissions, and it needs to recognize this hidden liability today. This short position arises from the carbon emissions produced by their own operations (Scope 1 and 2, in the argot of climate accounting), and their products and services (Scope 3). Most companies don’t recognize this liability because these emissions are priced at zero today, were priced at zero last year, and so it seems natural to assume that they will be priced at zero in the future. One could say that companies are engaging in the carbon futures market, assuming that this fundamental “input cost” will never change. Anyone who works in commodity markets knows that uncovered positions can turn from profit to significant loss in the blink of an eye.

As Nicholas Kukrika, Partner at Generation Investment Management, puts it, “Companies need to manage their carbon exposure, and there is just about enough time if companies start mitigating these risks today. Corporate executives might be tempted to wait for ‘cheaper technologies’ to come, but there are projects that make perfect economic sense even at today’s relatively low carbon prices.”

To see the implications for one company, consider the example of ExxonMobil. The company recently had three board members replaced by a small activist investor, Engine No. 1, as a result of its failure to recognize that the energy transition requires some fundamental changes in its strategy and capital allocation decisions. Why were investors so incensed? In 2020 ExxonMobil released 112 million metric tons of CO2 “equivalent” (along with carbon, they also released other greenhouse gasses such as methane). At $100/ton, they would owe $11B annually on their own emissions. Since the company has earned only $8 billion on average over the past five years, this means they would rapidly be bankrupt. That surely is a good way to finally get the attention of their board. Add in the company’s share of the annual $60 billion from pricing the roughly 600 million metric tons of its Scope 3 emissions (it’s not clear how much they could pass on to purchasers) and the situation is even more dire.

Some companies, however, are already choosing to act now. Take Ryanair, the European low-cost airline. Like all airlines, Ryanair is an “existential emitter,” meaning that there is no readily available substitute to fossil fuels that they use to conduct their core business of flying passengers. Listen to their FY2021 earnings call on May 17, 2021, and you’ll hear a vision of the future. The carbon they emitted in 2020 cost them €150 million last year. Since that time the EU market price per ton of CO2 emitted has doubled. However, they’ve already purchased CO2 options to hedge that exposure so that it doesn’t reach the ~10% of profit that it might have by one analyst’s estimate.

Ryanair aims to develop a competitive advantage due to their fuel-efficient fleet and focus on operational efficiency. They claim that any passenger who flies with Ryanair instead of a legacy carrier is lowering his or her environmental footprint by 50%. So as the price of carbon rises, they believe they will steal market share through price competition and branding. Group CEO Michael O’Leary said on the earnings call that they aim to “get to zero carbon emissions by 2050 and also to continue to reduce our fuel consumption and make flying with Ryanair ever more green.” They are managing their climate risk as financial risk.

Companies need to start covering their carbon short today and they can do so with these five simple steps:

Measure the position in carbon terms. Calculate the total emissions and carbon intensity (number of tons per dollar of revenue) of the company’s operations and supply chain. Use the Scope 1, 2, and 3 emissions’ calculations that will likely soon be part of reporting requirements.

Absent any capital projects, determine if carbon intensity will increase or decrease as revenues increase and model all future emissions.

Determine a set of prices to use and the timing of putting them into place. A basic approach would be to start with assuming prices of $50 in 2022, $100 in 2024, $200 in 2026, and $300 in 2028. This is one example of a forward price curve; scenario analysis could use several.

Price the forward emissions by multiplying the forward price by the emissions amount in each year to determine a total annual cost.

Discount the “carbon cash flows” by using your company’s cost of capital to discount the future carbon prices and determine a total economic impact in today’s dollars.

Based on the total economic impact, the company can assess the set of possible capital projects that will enable it to decide which carbon emissions to avoid now. Some will be pure efficiency projects that make sense with even a low carbon price. Some will be low capital-intensity projects with long lead times which can be started now to ensure that emissions are lower in the future as prices likely rise. Some will be higher capital-intensity projects that can be planned now but only triggered when the timing and level of carbon pricing is clearer. Some companies will choose to use offsets, though these are unsettled and the risks remain substantial.

The price of carbon may be zero in many places today, but it’s unlikely to remain zero for long. Recognizing each company’s carbon short position in a variety of carbon prices is a powerful tool. Following this recipe will drive the attention of management and the board to necessary changes in strategy and capital allocation in the transition to a net-zero world. It will be even more powerful if the company discloses to its investors how it is doing so. This begins by articulating its approach to the five steps above and then describing efficiency and capital expenditure projects. Done right, these steps will lead to a reduction in both carbon intensity and absolute carbon emissions as well as a protection of shareholder value in a decarbonizing world.

This progress each company makes toward managing its “Carbon Short” should be reported on a quarterly basis during the earnings call. Yes, companies must have a long-term plan for covering their carbon short by being net-zero by 2050, but they should provide short-term updates on the risks they face and the progress they’re making on their plan. It’s no longer the next CEO’s job.


Robert G. Eccles is a visiting professor of management practice at Saïd Business School, Oxford University, and a senior adviser to the Boston Consulting Group.

John Mulliken is the founder of Carbonware.org and was the CTO of Wayfair.
'NEVER GIVE UP NEVER SURRENDER'
ExxonMobil and Chevron among members of newly launched Asia Pacific gas advocacy body


Advocating for industry in the Asia Pacific: ANGEA chairman Nigel Hearne is also the president of Chevron's Eurasia exploration and production business 
Photo: JOSH LEWIS

Newly formed group will advocate for gas to complement new energy solutions to help accelerate the region's energy transition

US supermajors Chevron and ExxonMobil have joined forces with Jera, JGC, Mitsubishi Heavy Industries, Santos and SK E&S, to establish the Asia Natural Gas & Energy Association (ANGEA).

ANGEA, which was launched this week, claims to represent energy producers, buyers, suppliers and companies in the Asia Pacific region and aims to ensure the long-term future of natural gas and other low carbon energy sources in the region’s energy mix.

The newly formed advocacy body will look to partner with governments throughout the Asia Pacific region to advise them as they develop energy policies and solutions that are also in step with a low carbon future.

ANGEA said it would provide advice to help governments meet their national energy needs, achieve global climate goals as established by the Paris Agreement, and encourage investment to support social and economic changes needed for “a stable and consistent energy transition”.

While the group will advise on renewables and energy conservation, ANGEA noted in Tuesday’s launch statement that it recognised natural gas was complementary to new energy solutions and enabling an acceleration of the energy transition in the Asia Pacific region.


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“Asia Pacific will be 60% of the world’s economic growth by 2030. This will require nations to meet a significant increase in energy demand, while simultaneously switching to renewable and lower-carbon energy sources to meet energy security needs,” said ANGEA chairman, and the president of Chevron’s Chevron’s Eurasia exploration and production, Nigel Hearne.

“Effective policies, investment and regulations will be vital not only to integrate these multiple energy sources effectively, but to deliver energy efficiency improvements while transforming economies to reflect new energy, economic and environmental challenges.”

ANGEA will be overseen by a board comprising senior representatives of the founding members, while other major global and regional companies would also announce their involvement soon.

ANGEA said its members would look to utilise their expertise across the life cycle of the industry from energy development and production to transport, distribution and storage.

The founding members have also agreed to appoint an Eminent Persons Advisory Council — a group of independent and regional experts — to provide ANGEA's board and executive team with "high level expertise" across a range of policy areas.

 

CREATING METHANE FROM CAPTURED CARBON DIOXIDE AND THE FUTURE OF CARBON CAPTURE

There’s something intrinsically simple about the concept of carbon (CO2) capture: you simply have the CO2 molecules absorbed or adsorbed by something, after which you separate the thus captured CO2 and put it somewhere safe. Unfortunately, in physics and chemistry what seems easy and straightforward tends to be anything but simple, let alone energy efficient. While methods for carbon capture have been around for decades, making it economically viable has always been a struggle.

This is true both for carbon capture and storage/sequestration (CCS) as well as carbon capture and utilization (CCU). Whereas the former seeks to store and ideally permanently remove (sequester) carbon from the atmosphere, the latter captures carbon dioxide for use in e.g. industrial processes.

Recently, Pacific Northwest National Laboratory (PNNL) has announced a breakthrough CCU concept, involving using a new amine-based solvent (2-EEMPA) that is supposed to be not only more efficient than e.g. the previously commonly used MEA, but also compatible with directly creating methane in the same process.

Since methane forms the major component in natural gas, might this be a way for CCU to create a carbon-neutral source of synthetic natural gas (SNG)?

CARBON CAPTURE IN A NUTSHELL

Process flow diagram of a typical amine treating process used in petroleum refineries, natural gas processing plants and other industrial facilities.
Process flow diagram of a typical amine treating process used in petroleum refineries, natural gas processing plants and other industrial facilities. (Credit: Raminagrobis, CC BY-SA 4.0)

The most common type of carbon capture (CC) system is a CO2 scrubber that is used with fossil fuel power plants or similar sources of flue gas. This gas is led through the liquid solvent, typically amine-based. Amines are derivatives of ammonia, with at least one of its three hydrogen atoms having been replaced by a substituent. Monoethanolamine (C2H7NO, MEA) is a primary amine that in a water-based solution can efficiently absorb CO2 and H2S from flue gas.

When the resulting CO2 rich amine solvent is then led into a regenerator unit which heats up the rich solvent to about 118 °C at 69 kPa, it causes the absorption to be reversed and the gases to be released. Most of the MEA is recovered in this manner and can then be returned to absorb more CO2 from the flue gas.

Problems with MEA include the high water content in the solvent. Water has a high specific heat, which means it takes a lot of energy to get hot. MEA also reacts with carbonyl sulfide (COS) and carbon disulfide (CS2) to form heat-stable salts, which remove MEA from the process and require an additional process step to be removed.

After the CO2 gas has been captured this way, it is generally compressed before transport for use, storage or sequestration. The heating up of the rich amine solvent in the regeneration process, as well as the compression of the captured carbon dioxide all cost considerable amounts of energy. This is where the economics of CC are not very favorable, and prefer input gases that are already rich in the gas that is to be captured.

Mitsubishi Heavy Industries CO2 capture plant at the EOR project in Texas
Mitsubishi Heavy Industries CO2 capture plant at the EOR project in Texas, USA. (Credit: Hirata et al. (2018), MHI)

Over the years, various alternatives have been developed to MEA which require less water, and processes that omit or reduce the compression step. Examples of the former are for example Shell’s Cansolv capture technology and Mitsubishi Heavy Industry’s KM CDR process with its proprietary KS-1 solvent. These all have the same goals: use less water, reduce the amount of amine solvent caught in the flue gas that’s emitted into the atmosphere and improvement of the recovery rate of the solvent while reducing energy requirements.

None of these processes are suitable for something like direct air CCS, though. Although one can technically lead atmospheric air through one of these capture plants, the difference in CO2 content in the air versus flue gas is immensely different (>9% in flue gas versus 0.04% in air), leading to a very low efficiency rating.

Even so, with flue gas the capture rate of CO2 is generally above 90%, but <99% (claimed 98% for Cansolv, >90% for KM CDR). This means that although most of the CO2 is indeed captured, some of it still is emitted with the flue gas, along with amine solvents.

PNNL’S 2-EEMPA

In PNNL’s paper by Heldebrant et al. (2021) titled Integrated Capture and Conversion of CO2 to Methane using a Water-lean, Post-Combustion CO2 Capture Solvent a number of claims are made:

  • >90% conversion of captured CO2 to hydrocarbons (mostly methane).
  • More efficient than the usual Sabatier process (skipping the CO2 compression & transport steps).
  • Process conditions are 170 °C and <15 bar H2 pressure with ruthenium catalyst.
  • Better performance of 2-EEMPA than MEA.

There are a number of steps involved in this process, from absorbing the CO2, to getting it to the point where it can react with the hydrogen that is added to create the hydrocarbons. Heldebrant et al. first describe the Sabatier process, using a combined cycle natural gas turbine plant equipped with Shell’s Cansolv (using a 50% by weight amine solvent) process as example:

  1. CO2 captured in the absorber & released in the stripper (regenerator) at 2 bars of pressure.
  2. Pure CO2 is compressed and mixed with hydrogen.
  3. Mixture is added to methanation reactor for the Sabatier reaction.
  4. The Sabatier reaction runs at 350 °C and 30 bar with an Ru/Al2Ocatalyst.
  5. The exothermic reaction provides heat for the stripper unit and power generation.

The PNNL version does not use the proprietary Cansolv process, but instead its own 2-EEMPA (N-(2-ethoxyethyl)-3-morpholinopropan-1-amine). Heldebrant et al. claim a CO2 capture efficiency of >95% with coal-derived flue gas.  2-EEMPA-based solvent is projected to have a ~4% water content by weight in operation. At this water ratio, 74% of the CO2 captured by 2-EEMPA (as EEMPA-carbamate) is converted to hydrocarbons when hydrogen is introduced and with an Ru/Al2O3 catalyst present. Of these, 92% of these were methane.

At the same conditions, MEA showed a conversion ratio to hydrocarbons of <20%. The entire process chain can be summarized as in the following graphic:

Proposed FG-to-SNG process with the IC3M technology.
Proposed FG-to-SNG process with the IC3M technology. (Source: Heldebrant et al. (2021))

The benefits compared to the traditional Sabatier process are a lower reaction temperature (170 °C instead of 350 °C), lower pressure (15 vs 30 bar) and lower cost for constructing and maintaining the equipment.

A STORY OF EXTERNAL FACTORS

As alluded to earlier in this article, a major consideration with carbon capture is the efficiency of the process. If we consider that CCU as proposed here relies on a rich source of CO2, as well as a pure source of hydrogen, it would appear that the former would have to come from flue gas and similar waste streams from the fossil fuel industry. For the latter, things are more problematic if we wish to not create additional waste.

Currently virtually all hydrogen on the market is produced through steam reforming (SMR) of natural gas. This makes it not carbon-neutral: if it requires natural gas as input for SMR to create the hydrogen needed to create the SNG, one may as well directly use the natural gas.

This is further illuminated by Howarth et al., whose recent study details the effectiveness of so-called ‘blue hydrogen’, which uses CCS with SMR of NG and came to the conclusion that it’s more effective to just burn the NG directly. This leaves then only so-called ‘green’ hydrogen as viable input for this SNG process to conceivably make it carbon-neutral.

In 2020, only 4% of worldwide hydrogen was produced via electrolysis, some of it from low-carbon power sources. Even if all hydrogen at these SNG production facilities came from electrolysis facilities powered by VRE or nuclear power, that would still leave the CO2 as an issue. If this came from fossil fuels, then it merely postpones the moment this carbon enters the atmosphere to when the SNG is burned.

True carbon-neutral fuel is conceivable, but so far no viable source of carbon has been found. Carbon from flue gas costs about $7.5 per ton, extracting carbon from sea water as carbonic acid would cost about $50 per ton and direct air carbon capture between $94 and $232 per ton. This then leaves PNNL’s process primarily as a way to use the carbon from fossil fuels (coal or NG) twice, though at a considerable energy investment.

NO FREE LUNCH

In light of these considerations and also based on PNNL’s own press release,  it would seem clear that the ability to generate methane using this method is mostly transitional, to support the transition to low-carbon ways to power the modern world. The only likely exception to this is probably extra-terrestrial exploration, where in-situ resource utilization (ISRU) is likely to become a big thing.

One of the reason why SpaceX’s Mars-bound Raptor rocket engines are methane-fueled is due to the relative ease with which methane can be produced even on locations like the surface of Mars. When the nearest source of terrestrial methane is suddenly a planet away, the electrical and others costs of even DACC and electrolysis of water to slowly create a trickle of methane fuel for the trip back or to sustain a colony do not seem as outrageous any more.

One major benefit of water-lean solvents like 2-EEMPA is also likely to be the more efficient capturing of CO2 at fossil fuel plants. Whether this is enough to make big players like MHI and Shell sit up and pay attention is still anyone’s guess, but it’s hard to deny the benefit of more efficient CCS at fossil fuel plants.