Scoping MeetingGHG Accounting Issues

Oil & Gas Exploration & ProductionNatural Gas Gathering & Processing

October 25, 2007Santa Fe, New Mexico

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Agenda• Introductions• Background on GHG Protocols• Overview of Existing Protocols• Discussion: Cross-cutting issues• Break-out discussions:

– Exploration & Production– Gathering & Processing

• Wrap Up – report of break-out groups

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Purpose of Today’s Meeting• Identify GHG accounting issues for annual entity

inventory of emissions from upstream O&G activities– Not likely resolve accounting issues today

• Goals:– ID issues that are relevant & answered elsewhere– ID issues not answered elsewhere– Create a parking lot of issues beyond the scope of today’s

discussion

• Assess -- is a protocol needed for these activities?

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Protocol Elements

• Framework document that informs consistent, comparable, transparent, accurate GHG inventory– Definitions– Scope & boundary requirements– Calculations (emission factors,

methodologies)

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Protocol Development Process

1. Conduct literature review2. White paper3. Multi-stakeholder workgroup develops

draft protocol4. Expert review5. Public comment6. Adoption/implementation

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Voluntary vs. Mandatory Reporting?

• Voluntary– Can allow for flexibility– Understand footprint– Often used for corporate disclosures– 3rd-party verification required?

• Mandatory– Typically facility- or unit-based– Consistent approach across all sources– May support regulatory goals – Agency oversight?

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Ongoing GHG Protocol Efforts for O&G Sector

• WRI/CA Registry protocol for NG T&D

• CARB mandatory reporting from petroleum refineries (draft regulation)

• NMED mandatory reporting from petroleum refineries (draft regulation)

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In Development: Natural Gas T&D

• Scope:– Combustion, process vents, non-routine activities,

LAUG, equipment leaks, indirect emissions• Discussion Paper

– www.climateregistry.org• Workgroup formed by CA Registry/WRI• Expert review period• Public Comment period• Expected adoption (early 2008)

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In Development: Oil Refineries• Literature review:

– API Compendium– IPIECA Guidelines

• State of CA technical review of API Compendium• White paper draft commissioned from CA Registry for

use by ARB – www.climateregistry.org

• Public workshops & public comment• Draft regulations for mandatory reporting• Regulations adopted by CARB (expected December

2007)• Protocol developed by CA Registry

– Workgroup to meet December-January – Public comment February 2008

• Protocol adopted by The Climate Registry?

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Source: American Petroleum Institute: Toward a Consistent Methodology for Estimating Greenhouse Gas Emissions from Oil and Natural Gas Industry Operations. Page 4.

Remaining Activities

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Guidance from Current Resources (1)

• GHG Protocol– Framework:

• Direct emissions (Scope 1)• Indirect emissions (Scope 2,3)• Organizational boundaries• Operational boundaries

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Guidance from Current Resources (2)

• CA Registry GRP• TCR GRP

– Geographic boundaries– Materiality threshold– Calculations/emission

factors:• Stationary combustion• Mobile combustion• Indirect emissions

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Guidance from Current Resources (3)

• API Compendium– Identify sources– Identify emission factors– Sample calculation

methodologies

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Guidance from Current Resources (4)

• IPIECA Guidelines– Builds on GHG Protocol

• guidance specific to petroleum industry– Inform boundaries

• Examples of equity share/operational control– Identify & classify sources

• Table 6.1 – Upstream Petroleum Operations– Emissions Calcs

• Outlines tiered approach

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Guidance from Current Resources (5)

• CEC Evaluation– Gap analysis of API

Compendium & IPIECA• Compares w/CCAR GRP

– IDs potential users– Some outdated emission

factors– IPIECA provides framework,

but not program-specific applicability

– Conclusion: most work needed for CH4 emissions

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Break

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Cross-Cutting Issues

• What are sources? – Indirects– Mobile– Stationary– Process– Fugitive

• What terms should be defined?

• Geographic boundaries?

• Organizational boundaries?

• Operational boundaries?

What guidance is currently available?

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Organizational BoundariesOptions: Strengths WeaknessesOperational control •Demonstrates regulatory risk

•Indication of operational performance•Operator is likely to implement changes reductions•Operator has access to emissions information•Preferred by most companies

•Excludes emissions for companies with interest but no operation

Financial control •Discloses financial risk•Assigns emissions to party that receives the majority of benefit•Provides most complete basis for assessing risks/opportunities

•Limited use?

Equity Share •Reflects economic interest•Demonstrates financial risk•Represents multiple owners accurately•Consistent with financial accounting•Generally used in power sector

•Not indicator of control/ability to affect emissions•May have limited access to data

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Operational Boundaries

• What sources are required/optional?• What is a facility?

– Geographic? – Defined by reporter? – Defined by state?

• What degree of aggregation is required?– Entity? – Facility?

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Break-out Groups

1. Exploration & Production

2. NG Gathering & Processing

Discussions will continue in the Roundhouse after lunch.Please meet back here at 2:45.

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Next Steps

• Is a protocol warranted?

– If so, goal: Present for adoption/incorporation• NM mandatory reporting• CA Registry protocol• CARB mandatory reporting• TCR protocol

• Please convey interest to Tom Moore