New, alternative technologies for detecting methane emissions are growing in popularity because of their ability to detect leaks more efficiently and effectively. Since cost is an important consideration when transitioning to one of these newer technologies, we’re devoting this blog to a comparison of costs between using Gas Mapping LiDAR™ (GML) versus traditional Optical Gas Imaging (OGI) technology as the detection portion of an LDAR program.
This cost comparison is a companion to a recent blog post contrasting emissions reduction between these two LDAR options. As a refresher, GML is estimated to detect more emissions compared to the standard program with OGI (39 versus 8 tons per year per site, not including normal operating process emissions).
When an operator is considering an alternative technology for emissions detection, simply comparing only total costs is a reasonable, but often inadequate, metric.
To achieve emissions reduction, or to increase revenue by recapturing the gas, the most important economic metric to evaluate alternative technologies for emissions detection is the cost per emissions detected.
Fundamentally, the amount of emissions detected needs to be included to normalize the cost of a program. A cost per ton comparison is crucial to know what exactly you’re getting for your dollar.
As part of its recently proposed New Source Performance Standards (NSPS) methane rule¹, the U.S. Environmental Protection Agency (EPA) sought comment on an alternative methane detection program using advanced technologies. To fully understand the cost difference between using an advanced program with GML, and using the EPA’s framework, in this blog we calculated the total costs and the cost per ton of reduced emissions, including scanning, repair, and other administrative costs for the EPA’s proposed alternative program using GML (‘Alt Program’) versus the standard program using OGI scans (‘Standard Program’). For the Standard Program, we use the EPA’s proposed frequency of quarterly scans and their direct calculations of cost. For the Alt Program, we follow the EPA’s proposed program for alternative screening and calculate the costs based on bi-monthly scans with GML plus the required additional single annual OGI scan.
For the EPA’s Proposed Rule, they provided supplementary information on emissions reductions and the cost of implementing a monitoring program at a well site (Chapter 12-2021 Well Site Costs and Emissions spreadsheet).
The EPA estimates a cost of $483 per site, per scan using OGI. If we quadruple that number to find the annual scanning cost per site with a quarterly program, the result is $1,932. If the additional cost for repair outlined in the supplementary information of $533 per year, per site, are included, plus an additional $1,740 in other related costs (e.g. administering the LDAR program), the EPA calculates a total of $4,205 for leak monitoring and repair per site, per year. As a more meaningful metric, this total, divided by the EPA’s estimated 8 tons of methane reduced per year (tpy) for the standard LDAR program—to normalize the cost relative to the mass of potential methane reduction (see our previous article on emissions reduction)—results in a cost of approximately $526 per ton of methane emissions reduced, per site.
Now, let’s dive into the cost of the GML Alt Program using these same equations.
The calculations for the GML Alt Program assume bi-monthly scans (six per year) using GML plus one annual OGI scan, as per the requirements in the EPA proposed rule.
For the GML scans, we’re using a conservative price per facility scan of $250 to cover any possible deployment scenarios. To calculate the annual scanning cost per site, this $250 site scan cost is multiplied by six (to account for bi-monthly scanning), resulting in a total of $1,500 per year. When we add this to the single annual OGI scan cost of $483 per year, our resulting total scan costs are $1,983 per year.
The next step, like our calculations for the OGI Standard Program above, is to include the repair cost—estimated at $460 per year per site (see Calculation Notes section below for more detail on this). If we use equivalent ‘other’ costs of $1,740 (EPA’s estimate and used in the above Standard Program calculation), we reach a total of $4,183 per year per site. Already, one can see that the alternative program offers more scans (six GML plus one OGI) and more emissions reduction (nearly five times). When we normalize by the methane reduction of 39.4 tons per year (tpy) per site from our last blog post, this results in a cost of approximately $106 per ton of methane emissions reduced, per site using the GML Alt Program.
Note that our estimation uses conservative assumptions. We assume the single OGI scan is independent of a separate visit in which the repairs occur. In practice and from anecdotal evidence from clients, these two visits can often be combined into one visit and accomplished with a single crew. In certain cases, like unlit flares or open thief hatches, the fix can be performed during routine operations. We also exclude Normal Operating Process Emissions (NOPEs) in our calculations of the total emissions reduction—but note that by including NOPEs in our total emissions detection divisor, the total cost per ton calculates down to $58.
Given the results of both cost calculations, it’s evident that there is stark difference in the cost of reducing one ton of emissions at a single site. The standard OGI plan cost is approximately $526 per ton of emissions reduced, while the GML Alt Program is approximately $106 per ton of emissions reduced: nearly a 5x difference. With many operators scanning hundreds of sites using GML, the potential emissions reduction efficiencies add up quickly.
In addition to the cost reduction from a GML-based Alt Program comes the benefit of recapturing drastically more gas, which can often be brought to market. We’ll dive into this topic in the next article in this series. The large discrepancy in cost per ton of methane reduced, even using highly conservative assumptions in the GML estimate, is a direct result of the fact that GML flyovers capture more emissions from fewer leaks, as found in peer-reviewed literature², and our scans are efficient, by using aircraft to often scan hundreds of sites in a single day. This means that more emissions are detected, yet fewer repairs are needed. It’s also worth noting that this cost calculation doesn’t include any potential process improvements that can result from efficient localization of leaks, like optimizing ground crews deployed to repairs. When it comes to emissions reduction, an advanced technology like Gas Mapping LiDAR is not only ideal for detecting more emissions but is also the more cost-effective option.
For all of the above calculations, we use EPA’s supplemental information that accompanied the U.S. EPA’s Proposed Methane Rule (“Chapter 12-2021 Well Site Costs and Emissions”). More detail on these calculations is provided here:
Standard Program Using OGI
With the EPA’s estimated cost of $483 per site per scan with OGI, we first quadrupled that number to find the annual scanning cost per site using a quarterly monitoring program ($1,932). We then included repair costs, which EPA estimates to be $533 per site, per year, based on an estimated six leaks per survey year for quarterly monitoring.
The EPA also included an estimate for other related costs, including planning, recordkeeping, storing of records, and the total cost amortization per well site over 8 years at 7% interest. These other costs sum to $1,740 annually.
We combined all of the above, then normalized that total cost ($4,205) into a cost per ton by dividing by an estimated 8 tpy of potential emissions reduction per site using the standard OGI program, resulting in a cost of $526 per ton of emissions reduced using quarterly OGI scans.
Alternative Program Using GML Scans
When Bridger identifies an emission source, the EPA’s Proposed Rule would require that the entire site be scanned subsequently with OGI. To account for this, we calculated the number of visit events per year per site that represent the average fraction of sites on which we detect an emission (36%). This is conservative because this number includes normal operating process emissions (NOPEs) which may not require repair and can often be identified using data produced by GML scanning. The 36% of sites (i.e. a probability of 0.36 per site of needing a follow-up OGI scan visit to verify leaks) was combined with the number of repair events per year per site of 0.63, which is the number of average emission sources found per site (this includes NOPEs as well as fugitive emission, to be conservative). These numbers were combined because they represent separate site visits for a total of 0.99.
Next, we multiply this (0.99) by a factor that we extrapolate from the EPA’s emission reduction factor estimates: EPA estimates a 40% reduction potential with a single annual scan 80% reduction potential with quarterly scans, and a 90% reduction potential with monthly scans. So, if we assume that there is approximately an 85% reduction potential with bi-monthly scanning, this is a factor of about 2.2x reduction relative to the 40% reduction with annual scanning. This factor of 2.2 multiplied by the 0.99 site visits per year on average, results in an estimate of 2.18 visits or repair events per year with the bi-monthly scan frequency for the GML Alt Program.
Inputting these numbers into the EPA’s equation for the cost of repair events, we calculate the repair cost of GML to be $193 per year per site. When combined with an annual OGI repair cost of $267 (based also on EPA’s equation for estimating repair costs and matching the equation used for their calculation of the annual OGI scan cost), we have a total annual repair cost per site of $460 when using the GML alternative program.
Other than the above differences in calculations, the alternative program calculations were done using the same assumptions and estimates (including the estimate for $1,740 in other related costs), wherever applicable, provided by EPA in their supplemental information for the Proposed Rule. The total annual scan costs of $1,983, combined with the $460 for the annual repair cost per site, and the $1,740 in other costs, totaled together and then normalized by the total estimated mass of methane reduction potential (39.4 tpy per site) results in $106 per ton of emissions reduced, using bi-monthly GML scans in addition to a single OGI scan.
For more information on the emission reduction mass estimates of 8 tpy and 39.4 tpy using the Standard Program and the Alternative Programs, respectively, please refer to our article on the comparison of Emissions Reduction using these two approaches.
¹ United States Environmental Protection Agency, “Federal Register :: Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review, Vol. 86, No. 217,” November 15, 2021, https://www.federalregister.gov/documents/2021/11/15/2021-24202/standards-of-performance-for-new-reconstructed-and-modified-sources-and-emissions-guidelines-for?msclkid=e92453e7b84111ecacfed74f22e026dc#h-66.
² David R. Tyner and Matthew R. Johnson, “Where the Methane Is - Insights from Novel Airborne LiDAR Measurements Combined with Ground Survey Data,” Environmental Science and Technology 55, no. 14 (2021), https://doi.org/10.1021/acs.est.1c01572.