Compliance solutions across the energy landscapeFebruary 2, 2023
Marco Cota, CEO of Talanza Group, talks to The Energy Year about the group’s expertise and services and how it is working to regulate methane emissions from oil and gas activities in Mexico and other countries in Latin America. Talanza Group is an energy industry consultancy specialised in regulatory compliance.
How did Talanza Group start, and what specific services does it offer?
Talanza Group was founded in 2017 as a consultancy to help bid round winners start their E&P operations. At the time, there was a lot of movement and activity coming from Houston to Mexico to prepare for fulfilling procedures for starting operations rapidly. We put together a group of consultants with great expertise in regulations. It’s important to know how to prepare certain documents, review technical documents, ensure legal compliance and complete the submission process accurately. We were critical actors regarding these regulatory processes at the time.
Today the government takes a long time to approve critical requirements such as social or environmental impact assessments. An upstream firm may need us to carry out periodical assessments in areas it is working on. There are constant updates to such assessments because the impact a firm makes when exploring is very different from the impact of its development or production activities. We do the same for safety regulations established by ASEA [National Agency for Safety, Energy and the Environment]. We help companies navigate these sometimes complex procedures.
Ultimately, we accompany clients at every stage of their projects with regulatory and governmental intelligence. We try to offer solutions for any problem that crops up within the energy landscape. We also formulate adequate compliance plans and risk assessment to anticipate any unexpected regulatory requirements related to exploration, appraisal and development plans, technology transfer programmes, drilling permits, tax models, local content, etc.
How has the creation of authorised third parties such as Talanza Group contributed to reducing emissions in the oil and gas sector?
In 2016, Mexico, the US and Canada met to reaffirm their commitments to the Paris Agreement. One of the commitments was precisely to issue a specific regulation for methane emissions in the oil and gas sector. The US was the first to update its New Source Performance Standards (NSPS) in 2016, followed by the publication of new regulations from Mexico and Canada, both in 2018.
With these regulations, we became the first region to have a regulation for controlling methane emissions and discharges in the hydrocarbons sector. Since then, Talanza has become one of the first and few authorised third parties in the area of methane emissions in Mexico. Regulations on emissions are applied through authorised third parties, and we obtained our authorisation from ASEA in 2021.
We have taken on an important role in the sector, contributing to the regulatory framework to prevent and control methane emissions. In Mexico, the regulation of methane emissions is done through an instrument called PPCIEM, which is the programme for the prevention and integral control of methane emissions. The entire value chain has to comply with it. We make sure companies contribute and respect the methane pledge for 2030, which is to reduce emissions by 30% in oil and gas activities. We see if companies are in compliance with this regulation, similar to a regulator.
We started doing regulatory compliance management for several clients, and many companies started asking for assessment services to see if their plans were compliant. Now, we are international consultants for other Latin American governments in designing and implementing regulations, like the one for methane emissions control.
What efforts have been made to lower emissions, and how important is the reduction of methane emissions in particular?
On the one hand, ASEA is making companies comply through official norms and rules by issuing substantial fines, and they can even close facilities until they comply. Furthermore, there is international pressure from the financial sector – on all companies, but starting with oil and gas companies – to have a better greenhouse gas footprint. Financial institutions are putting pressure especially on international companies. IOCs have been moving toward net zero for some time now.
In particular, methane emissions are a large contributor to global warming, which makes reducing them key, especially in an industry where companies now strive to meet sustainability goals. A molecule of methane in the atmosphere lasts around 12 years, whereas a molecule of CO2 can last centuries. Reducing the impact of methane will have short-term benefits, meaning that, if we can stop methane emissions right now, this will have a huge impact on our environment in 20 years’ time.
The oil and gas sector is key for reducing methane emissions because its infrastructure goes from the subsoil to where hydrocarbons are consumed – that is, from wells, discharge lines, separators, compressors, tanks, refineries and gas-processing stations all the way to the final consumer. All along the way, there are three sources of methane emissions: leaks, venting and non-combustible gas. These three sources emit unburned methane. The problem is that, unlike venting or non-combustible gas, one does not know where leaks are, and these increase the costs and risk profiles of projects.
How have concerns about methane emissions shifted from a safety issue to an environmental issue?
Before the Paris Agreement, the industry was concerned with methane gas leaks, not for environmental reasons but rather for safety ones. Methane gas leaks can lead to terrible accidents and explosions. However, environmental concerns and the improvement of safety standards have led to attention shifting to the reduction of methane emissions for environmental reasons. Today, emission reductions are accounted for. If your emissions are zero, that doesn’t mean you can’t emit. You can emit, but you have to compensate or clean up what you emit. Now the industry is detecting leaks that they didn’t before thanks to new technology.
As a company, we are heavily involved in emissions accounting. We rigorously account for a company’s emissions, from the commute of its employees, the light they consume, to the type of bulbs they use. We have been working with firms in the US and Mexico to establish a methodology that has a GHG [greenhouse gas] protocol accreditation that can be used by the Mexican industry to generate emissions reports. These are very important reports for shareholders, distributors and stakeholders, including communities and the government.
How important is the joint venture between Talanza and Infratech regarding detecting and inspecting leaks?
In 2020, Talanza launched a JV with the Canadian company Infratech called Eminent for detecting and quantifying methane emissions in Latin America. It offers end-to-end services with the aim of making oil and gas-related operations more efficient while guaranteeing regulatory compliance. We now specialise in inspections, as Infratech helped us train Mexican inspectors. We now do inspections for oilfields, wells, compressors, separation batteries and tanks, but we also do inspections in midstream facilities for gas transportation, wheeled transportation and pipelines and downstream gas distribution systems.
For instance, we did an inspection of the natural gas distribution system in the metropolitan area of Monterrey. Here, we applied statistical sampling methodologies to make representative samples. There were more than 100,000 measurement points, which is physically impossible to cover, but with the support of statistics, we managed to inspect the whole system. Today, we are probably the company doing the most inspections in the country, and we are using the latest technologies, such as optical gas imaging (OGI).
Tell us about the different methods and technologies used when inspecting facilities.
We have a team of inspectors that go onsite to do inspections. We use OGI to do these inspections. This technology works with infrared, but it has a cooling chamber that makes it highly sensitive to methane. OGI is safe, as we can do inspections from a distance – from 1.5 metres to 30 metres – thanks to the zoom lens. Our inspectors record and scan the facility, identifying methane leaks in real time, and send the information straight to our cloud system. Once all the information has been collected onsite, we use our data processing and analysis expertise. Quality control and quantification is done from Alberta, Canada.
From here, we are able to design and deliver personalised reports for our clients covering the whole of their methane emissions. The reports include how they have advanced toward their goals, information on the causes and economic value of the emissions and how to reduce them. It takes 48 hours from the time the inspector detects a leak until the report is issued. The report is issued on a web-based platform, which the client accesses. With this information, customers can optimise their supply chain, create a plan for the control of leaks as well as preventive and predictive maintenance and implement continual technological advances.
What work have you carried out in Colombia, and what interest do you have in the LatAm region?
In March 2020, we started working with the Colombian government, supporting them in the drafting of a regulation on methane emissions reduction. The regulation came out this year . It is a regulation that takes lessons learned from the US, Canada and Mexico. Now we are supporting its implementation. First, we were contracted directly by the UN Environment Programme to support the Colombian government. Subsequently, after a six-month contract, the Colombian government extended our contract as implementation advisers. They have been giving us extensions over time. We have yet to see the direction of the new administration on this matter.
We are interested in penetrating other markets in Latin America, such as Guyana, which is experiencing an oil and gas revolution. Matters such as methane emissions reduction should be prioritised from day one in such a green industry.
What new areas do you see the group strengthening in the coming years?
We see Talanza consolidating itself as an adviser to the governments of other countries for the design and implementation of their regulations. We have experience in Mexico, not only with the government but also with the private sector, and have gone through several reforms. We have seen the positive aspects and the flaws of our own industry.
Each industry or country has its own challenges, and there are very important variables that have to be considered. Thus, we see ourselves advising more regulatory projects, especially in Latin America. We are also doing inspections with Eminent in Colombia, following which we expect to see an expansion of the group into other parts of LatAm on the inspections side, mainly in our operational services branch, Eminent. As for Talanza Energy Consulting, we will consolidate and expand our consulting, regulatory compliance and emissions accounting audit services in-country and also in the region.