This group brings together those who are interested in topics around oil and gas exploration, drilling, refining, and processing.

Post

Responding to the growing demand for methane-differentiated gas

image credit: Progressive industrial gas buyers are looking first and foremost for gas with a better climate performance

As methane emissions from the oil and gas sectors come under increasing scrutiny, Cate Hight and Laura Hutchinson from the Rocky Mountain Institute, a US-based NGO, call for a differentiated gas standard that focuses on climate change and sets the bar for acceptable methane emissions

 

Scrutiny of oil and gas sector methane emissions is continuing to build, even as the US federal government continues its regulatory rollback. Companies are finding themselves in a bind to demonstrate, to both investors and climate-conscious gas buyers, that they are taking voluntary action to reduce these emissions.

An increasing number of companies are including methane mitigation activities in their Environmental and Social Governance reports. Several have joined coalitions focused on methane emission reductions, including the US Environmental Protection Agency’s Natural Gas Star programme, the ONE Future Coalition and the Environmental Partnership, to name a few. There is a lot of scepticism, however, about how much of a difference these voluntary initiatives can make and calls for transparency about actual emission reductions are growing.

Enter the differentiated gas market. Producers have been toying around with the idea of environmentally “better” gas for a few years now. The idea initially emerged at the height of hydraulic fracturing movement in the mid-2000s, when producers sought to demonstrate, via certified practices, that they were minimising groundwater and community impacts.

These early differentiators have taken on more of a climate-oriented flavour over the past few years, with examples including a 2019 transaction between Shell and Tokyo Gas for “carbon-neutral” liquid natural gas in June 2019 and a “responsible” gas transaction between Seven Generations Energy and Energir in February 2020.

Independent Energy Solutions (IES) was an early mover in the differentiated gas space and last month it announced that it is taking its TrustWell standard in a new, climate-oriented direction with a new “Verified Attribute” for low-methane gas production. First earned by Jonah Energy, a gas producer in Wyoming’s Green River Basin, this “badge” can be earned by companies that are also pursuing certification for several other environmental attributes under the TrustWell programme.

This is indeed a promising development as industrial gas buyers are increasingly focused on the methane emissions associated with the gas they procure. A real challenge to the IES approach appears to be a lack of transparency regarding the components of its standard, as well as the company’s practice of auditing against its own standard rather than engaging a third party, and then deciding whether to issue a certificate to the company that is paying them for the audit. This clear conflict of interest is a real risk for scalability of the IES standard, as is the cost- and time-intensive nature of certifying TrustWell producers on a well-by-well basis.

 

DIFFERENT APPROACH

We need a differentiated gas standard that takes a different approach. Progressive industrial gas buyers are looking first and foremost for gas with better climate performance. A standard focused squarely on “setting the bar” for acceptable methane emissions management at a facility-wide scale, backed by clear, credible, and independently verified information about which operators are meeting that bar, fills this gap. This will be key to transforming the global gas market.

Rocky Mountain Institute (RMI) is currently focused on developing a methodology for such a standard and is engaged with an ecosystem of subject matter experts that play essential roles in creating a credible standard, ranging from operators to auditors to certificate registries and gas traders. We are also in deep conversation with gas buyers, ranging from utilities to gas distribution companies to manufacturers, to understand what they really need from this product.

If you are interested in joining us in our efforts to define the future of differentiated gas, please contact us at methane-contact@rmi.org


The views expressed in this opinion are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

Do you have a thoughtful response to the opinion expressed here? Do you have an opinion regarding an aspect of the global energy transition you would like to share with other FORESIGHT readers? If so, please send a short pitch of 200 words and a sentence explaining why you are the right person to deliver this opinion to opinion@foresightdk.com.

FORESIGHT  Contributor's picture

Thank FORESIGHT for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Discussions

Bob Meinetz's picture
Bob Meinetz on May 19, 2020 2:06 pm GMT

"This is indeed a promising development as industrial gas buyers are increasingly focused on the methane emissions associated with the gas they procure."

What is not a promising development is that anyone would believe there is a tractable, verfiable way to prevent fugitive emissions of methane - an invisible, odorless gas.

This, one might presume, is a parallel effort to "CCS" - another unverifiable way to pretend oil companies are assuming responsibility for their CO2 waste by stuffing it back in the ground.

"There is a lot of scepticism, however, about how much of a difference these voluntary initiatives can make and calls for transparency about actual emission reductions are growing."

Indeed there is. Only exceeded by the skepticism more voluntary initiatives, in the form of a "differentiated gas market", "environmentally 'better' gas", "better climate performance" of natural gas, or "clear, credible, independently-verified information" about methane emissions are any more credible than their predecessors. That this "different approach" is somehow different. 

Take it from a veteran follower of the activities of companies manufacturing mass consumables - may it be tobacco, oil, chemical, pharaceutical, or any other: they never have assumed, and never will assume, voluntary responsibility for the waste their products leave behind. In the case of methane, the only effective way to prevent its emissions is surprisingly simple: leave it in the ground.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »