DealBook: A New Divestment Focus on Campus: Fossil Fuels

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New Tools Pinpoint Natural Gas Leaks, Maximizing a Fuel’s Green Qualities

WASHINGTON — Natural gas is hailed as green and safe, but its environmental benefits and ability to temper climate change are reduced by its tendency to leak into the air undetected. Now, laser technology, some of it borrowed from the telecommunications industry, is giving engineers and scientists crucial new tools to measure leaks and track them to their source.

Pacific Gas & Electric, which operates in northern and central California, has begun training employees to use the technology, a portable gas detector that was recently used in a car driven 785 miles through the streets of Boston.

Natural gas escapes into the atmosphere from two basic sources: natural ones, like swamps and marshes, and human activity, like leaking gas wells and pipelines. The boom in natural gas production, including hydraulic fracturing, has raised concerns about a subsequent boom in leaks, although how much gas escapes remains a mystery. The Environmental Protection Agency has been working on the question for years and “is still operating with guesses,” said John C. Bosch, who specialized in that issue before he retired from that agency four years ago.

But whether from man-made or natural causes, methane — the main component in natural gas — is a major contributor to global warming when released in the atmosphere. According to the E.P.A., over a 100-year period, a pound of methane is 25 times more powerful than carbon dioxide in warming the climate. It can also be dangerous: In 2010, one of Pacific Gas & Electric’s pipelines leaked in San Bruno, south of San Francisco, and the ensuing explosion killed eight people.

“Leaking methane is becoming increasingly relevant from a greenhouse gas standpoint,” said Joseph T. Hodges, a scientist at the National Institute of Standards and Technology, part of the Commerce Department, who helped develop the laser technology used in the new portable gas detector.

The detector, built by Picarro, a manufacturer of scientific instruments that has recently moved into the field of portable methane detection, is able to determine whether the gas originated from wells or was produced by the bacteria in swamps, landfills and sewers. Distinguishing between the two can prevent industrial polluters from plausibly denying that they have leaks.

The system was demonstrated in 2011, when researchers bolted it in the trunk of a car that drove through the streets of Boston, a city with a labyrinth of aging underground gas pipelines. In a peer-reviewed scientific journal last year, the researchers said they had found 3,356 leaks of methane, and some with concentrations 15 times normal methane levels in the atmosphere.

Robert B. Jackson, a professor of global environmental change at Duke and an author of the paper, said Picarro was “pushing the envelope on portability.”

The Picarro detector works like this: An inlet tube takes in air samples, which are sent to a chamber in the trunk of the car. The chamber, about the size of a drum major’s baton with mirrors at either end, bounces a laser back and forth between the two mirrors thousands of times, like a fold-up yardstick. The laser’s path is ultimately several miles long and so is able to precisely measure concentrations of methane in the range of parts per billion.

An anemometer, an instrument for measuring wind speed and direction, is mounted on top of the car, as is a GPS device. In some models, an inlet pipe samples air from various elevations. The system uses an onboard computer to turn the readings into a three-dimensional model of a gas plume — a funnel-shaped flow of contamination — and calculates the location and size of the origin. Methane molecules incorporate a carbon atom of two different types, one more commonly found in gas from wells and the other in gas from landfills and sewers. Studying the ratio, the instrument can say where the gas came from.

Michael R. Woelk, president and chief executive of Picarro, said the advantage of the detector was that it could be used on public roads to locate leaks on private property.

Pacific Gas & Electric has bought six Picarro systems.

“I see it as a game-changer,” said Nick Stavropoulos, the utility’s executive vice president for gas operations. “It’s amazing how much more effective it is in finding gas leaks on our system than traditional technology.” Previously when gas was detected, he said, the utility had to stay on the site until it was determined by a distant laboratory whether the gas was from its pipes or a landfill. Now that determination can be made almost immediately.

Other companies use different techniques for gas detection. Physical Sciences of Andover, Mass., has an instrument like a lantern that projects a laser beam and measures what bounces back. About 2,000 are in use worldwide, according to Michael B. Frish, a manager there.

LI-COR Bio-Sciences, of Lincoln, Neb., makes an “open path” model in which air flows naturally through a chamber. The company has deployed instruments at several landfills to measure their emissions, said Dayle K. McDermitt, vice president for research and development for environmental products. Measurement technology is advancing, he said, but modeling plumes is “still a work in progress.”

The Environmental Protection Agency, which has a history of requiring new controls as technology improves, intermittently hints that it might regulate methane emissions. It already counts on the presence of large amounts of methane to help spot smaller quantities of toxic gases that are currently regulated. Remote detection is outside the norm for the agency, said Eben D. Thoma, an E.P.A. researcher. More often the agency requires measurements at known sources, like tailpipes and smokestacks. Measuring plumes is easiest in wide-open spaces, and harder in “urban canyons” and wooded areas, where the plume is distorted, he said.

Mr. Bosch, the retired E.P.A. official, who now consults for Picarro, said that the agency had had more success in reducing emissions from smokestacks and vent pipes than from “fugitive” sources like leaky pipes and valves.

But Mr. Woelk, of Picarro, said his technology could locate leaks and prioritize them, and that the majority of the gas was generally escaping from a small fraction of the sources.

“Natural gas is the new green energy, supposedly,” he said, but finding and fixing the leaks would make it greener.

Win for Elderly Client Fuels Attorney's Pro Bono Commitment

Image: Photographer's Choice RF

During my first few years as a big firm associate, my approach to pro bono work was much like my approach to dental floss -- a general feeling of obligation coupled with a sense that I should be doing it more often.

That was until recently, when a colleague suggested I volunteer with the Atlanta Volunteer Lawyers Foundation's Saturday Lawyer Program. In the program, attorneys volunteer a Saturday morning to screen pro bono clients and determine how best to handle their cases. If longer-term legal representation is necessary, volunteers may take on the cases themselves.

My first case involved an elderly client (let's call her Ms. Jones) with significant mental and physical health issues whose stepson had taken advantage of her by coaxing her into co-signing an auto loan for him. He came to her house, begging her to "go down and sign some papers for him," and eventually she relented even though she lacked the capacity to understand what she was signing. Of course, the truck he bought was bigger than she could ever use, and the payments bigger than she could ever afford.

Predictably, the stepson defaulted on his payments, and soon the bank was pursuing Ms. Jones for the full balance of the loan -- three times her annual income. Ms. Jones' only significant asset, the one that had made her an attractive co-signer, was her house. When the bank filed a collection action against her, the prospect of losing the house in a forced sale became a real possibility.

Clearly Ms. Jones needed an attorney to defend the lawsuit, and now that she understood the situation, it was also important to her to see that the debt was resolved fairly. With limited resources, she needed a creative solution to do that.

My first move after taking her case was to sue the stepson (now estranged). He had gotten her into this situation, after all, and he would have to help her out. This new lawsuit had the positive effect of sparking a conversation among Ms. Jones' adult children about working out a plan to pay the debt.

In the meantime, we made it clear to the bank that the contract was unconscionable, procured under duress, and lacked a meeting of the minds. Reluctant to engage in protracted litigation on these issues, the bank began to negotiate a settlement with us.

Ultimately, we found a solution that allowed Ms. Jones to keep her house, which she was more than happy to accept. All she needed was an advocate who was willing to sit down with her, get to know her case, and help her out of a bad situation.

Since Ms. Jones' case I've taken three other AVLF cases, and I plan to take more. If you find yourself with that vague feeling of unfulfilled obligation -- the "flossing feeling" -- I would highly recommend giving a little of your professional time to AVLF and a neighbor in need.

Matthew T. Parrish is a commercial litigation associate at Dow Lohnes.

DealBook: Fed Governor's Plan to Limit Bank Size Fuels Debate

Michael Reynolds/European Pressphoto AgencyDaniel Tarullo of the Federal Reserve has suggested a simple tool that could be applied to individual institutions.

Since the financial crisis, academics, politicians and even former bank chieftains have called for the nation’s banking behemoths to be broken up or shrunk — calls that appear to have fallen largely on deaf ears among Washington’s policy makers.

Now, a powerful insider has suggested a simple tool that could place a tight limit on the size of individual banks. Daniel K. Tarullo, a Federal Reserve governor who oversees bank regulation, said in a speech last week that an important part of a bank’s balance sheet could be capped at a set percentage of the nation’s gross domestic product.

That a regulator at the Fed — the most powerful of the banking industry’s overseers — would say that such a structural overhaul of the financial system might be considered, was a sign that the policy debate over what to do about “too big to fail” might be shifting.

Mr. Tarullo’s “statements mark a significant — perhaps even dramatic — shift in thinking at the central bank,” Simon Johnson wrote in a recent column for Bloomberg News. Mr. Johnson, a professor at the Massachusetts Institute of Technology, has been a leading voice in the movement to limit the size of large banks.

It’s not just that the Fed governor’s words provided comfort to supporters of breaking up the banks. They also come at a moment in the debate over the Dodd-Frank Act, when both Republicans and Democrats might be able find common ground.

Mitt Romney and other Republicans have criticized Dodd-Frank, contending that it is overly complex and protects “too big to fail” institutions. Some Republicans looking to repeal Dodd-Frank say they still want to constrain large banks. Their concern is that the law may lead the market to believe that the government protects large banks. In turn, investors might then provide cheap loans to the biggest banks, fueling even more growth in the banks’ balance sheets. As a result, some Republicans may warm to the simple cap on bank size outlined in Mr. Tarullo’s speech.

“I am completely open to the proposal because of my similar concern about the growing size of institutions that are too big to fail,” said Senator David Vitter, a Republican of Louisiana. “Beyond this specific proposal, there is a growing nonpartisan consensus to do a lot more to limit the size of the megabanks.”

Any shift at the Federal Reserve would be notable. The central bank, mindful of the stability of the financial system, has avoided giving strong backing to measures that could have a direct impact on bank size.

Mr. Tarullo did not give an unequivocal, personal backing to a cap on size of banks. But he said that if size were to become a big issue, Congress should take it up, so the effects of a cap could be debated. Mr. Tarullo then detailed a type of cap that he said seemed to have “the most promise.”

His proposed limit would focus on something called “nondeposit liabilities.” These are the borrowings that banks do to finance themselves, excluding deposits.

For example, at the end of June, JPMorgan Chase had $1.24 trillion of nondeposit liabilities, a figure that excludes deposits in the United States, but includes international deposits.

That $1.24 trillion is equivalent to 8 percent of G.D.P. Any legislation would have to decide whether to set a percentage that would immediately force a bank like JPMorgan to shrink. If it were set at 5 percent, JPMorgan would have to shed the excess borrowings, which in turn would lead it to cut its overall size.

Senator Sherrod Brown, Democrat of Ohio, introduced legislation earlier this year that proposed the cap be set at 2 percent of G.D.P., which would force several of the largest banks, including Citigroup, Bank of America and Goldman Sachs, to shrink aggressively. (That bill has not advanced.)

Alternatively, the cap could be set at a percentage of G.D.P. that allows banks to stay at close to their current size. In that case, it would just constrain future growth.

Dodd-Frank has a provision that sets out to limit the relative size of banks. It stipulates that banks cannot have liabilities that exceed 10 percent of the total financial system’s liabilities. But this may not cap bank growth if the whole system is ballooning, as happened in the last decade. From 1999 to 2007, the Goldman Sachs balance sheet grew by 346 percent. But it would have increased by only 48 percent if its growth had been strictly tied to G.D.P. growth in that period.

The cap has its critics.

One drawback is that it might deter banks from issuing longer-term debt, which can act as a stable source of financing in a crisis. Hal S. Scott, a professor in Harvard Law School, said it would be preferable to limit short-term borrowings by banks, since that is more vulnerable to bank runs.

Others say that the economy needs both large and small banks and growth could be harmed by efforts to dictate bank size.

“The costs to society would outweigh the benefits,” said Phillip L. Swagel, a professor at the School of Public Policy at the University of Maryland. “But I realize that the idea of setting limits on large banks is gaining popularity across the political spectrum.”

Others fear that an inordinate focus on one tool to deal with financial stability could backfire. They think that the multifaceted approach of Dodd-Frank is better at catching and moderating the risks in the banking system.

“I think it’s a mistake to think there’s some sort of silver bullet here,” said Michael S. Barr, professor at the University of Michigan Law School. Mr. Barr worked on Dodd-Frank as an assistant secretary at the Treasury Department. He also says he thinks that going back right now and undoing parts of Dodd-Frank would most likely only dilute the overhaul.

“If Congress took up reform, it would only be in the direction of weakening it, not strengthening it,” he said.