The shale gas revolution has been a boon for North America, allowing for cleaner burning natural gas to take on a greater role in the electric power sector. And as environmental regulations tighten, particularly in the U.S., shale gas will allow utilities greater wiggle room to comply with stricter air pollution limits.
But, there are downsides to the increasing use of natural gas – one that could catch a lot of companies off guard. That is the aging and creaky condition of the web of pipelines that course throughout Canada and the United States. Old pipelines tend to leak methane, which can both increase the greenhouse gas emissions profile of natural gas, and lead to regulatory crack downs.
The big question is the rate of methane leakage. Several notable studies have found that natural gas distribution pipelines in older cities like Boston and Washington DC are leaking methane at a surprisingly high rate. And the same is true for much larger transmission pipelines that transport natural gas at the wholesale level.
Plugging those leaks will be critical in preserving the environmental gain that natural gas has over coal. Put another way, assuming tightening environmental regulations are inevitable, pipeline companies are going to have no choice but to minimize gas leaks in their pipeline network.
Currently, most pipelines are equipped with sensors that measure flow rates. When there is a leak, the sensors pick up the drop in pressure. But, a U.S. Department of Transportation report found that these sensors only find leaks about 40% of the time.
One interesting company has zeroed in on a potential solution to this problem. Synodon Inc. [TSXV-SYD], based in Edmonton, is a company that uses advanced remote sensing technology to detect methane leaks from natural gas pipelines.
Synodon’s realSensTM technology uses remote sensing during aircraft fly-overs to detect even the smallest leaks, allowing pipeline owners to stop small problems from turning into big ones.
The technology was originally developed in the Canadian Space Program, and the small Canadian company is now applying it to the oil and gas industry.
Remote sensing has become more popular as technology has improved and costs have come down. It is used for a wide range of industries, such as measuring deforestation, tracking sea ice, or oil and gas exploration.
Synodon says its realSensTM is far better at detecting leaks relative to what oil and gas companies traditionally use.
Synodon just announced that one of its major clients in British Columbia decided to extend its contract. The client originally signed up in 2012, and apparently pleased with Synodon’s services, will extend the contract to cover 2,600 kilometers of pipeline throughout its operations in the Canadian province.
“This signing reconfirms the typical sales cycle which Synodon has been using in its forecasting models where an initial contract with a pipeline operator of between 5 – 20% of their network is usually followed by one covering close to 100% of the system within 1 to 2 years”, said Adrian Banica, Synodon’s CEO in a press release. Synodon says that once pipeline companies see what realSensTM can do, they quickly extend and expand their contracts.
That is because Synodon’s remote sensing services could in fact save pipeline companies money. The damage caused by leaks and accidents to public property adds up, but detecting smaller leaks and preventing them from growing worse could avoid future costs.
A 2012 study from the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) found that pipeline accidents can cause $5 billion worth of damage in a given “bad year.” As a result, pipeline companies could spend up to 10 times more than they already are to reduce leakage, and make up the savings in fewer accidents.
The problem the company will have moving forward is convincing pipeline companies that such an approach is worth the upfront investment. Pipeline operators often view the elimination of methane leaks as too expensive – plugging holes costs money, and the lost natural gas doesn’t necessarily have a huge effect on their bottom line. But the first few clients signed up by Synodon appear to be pleased with the results.
Synodon is still in the early phases of commercialization, but has signed up an impressive list of clients, which include Access Midstream, Suncor Energy, SourceGas, and Enbridge Energy Partners, among others.