Economic Evaluation of Methane Emission Reduction in the Extraction, Tra\nsport and Distribution of Fossil Fuels in the EU

Preface On its way to its current form this report has received significant input from a considerable number of experts. In particular, a panel of experts in Brussels discussed a draft version of the report on March 29, 2000 (see Annex 5 for a list of names), and made a number of specific and more general comments and suggestions. The authors would like to thank these people for their valuable inputs into this study. It was attempted to consider their suggestions wherever possible. i EXECUTIVE SUMMARY The fossil fuel extraction, transport and distribution sector comprises the exploration, transport and distribution of oil, natural gas and coal. Within the EU, the fossil fuel extraction, transport and distribution sector is an important source of methane, accounting for 20% of total methane emissions in 1990. This equals to about 2.3% of total greenhouse emissions in the EU in 1990. Between 1990 and 1995 (the latest year for which emissions data was available at the time of writing), emission from the fossil fuel extraction, transport and distribution sector fell by about 20%, due principally to decrease in production of hard coal. In the oil and gas sector, methane emissions occur throughout system: during exploration, in production, at transport and distribution. From wellhead to end user, the gas moves through hundreds of valves, processing mechanisms, compressors, pipes, pressure-regulating stations and other equipment. Whenever the gas moves through valves and joints under high pressure, methane can escape to the atmosphere. In many cases, gas is vented to the atmosphere as part of normal operations. In coal mining, methane emissions occur along the entire supply chain from the mine up to the end-user. The vast majority of the emissions, however, come from gassy underground mines. In summary there are two main sources of emissions of methane in the fossil fuel extraction, transport and distribution sector: • Methane emissions from fugitive sources, including distribution pipelines of natural gas; • Methane emissions from mining of hard coal. Table 1 gives an overview of the production of oil, natural gas and coal of the