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The energy industry stands to benefit by implementing methane reduction strategies, both from a business and an environmental standpoint, according to a peer-reviewed analysis overseen by the Environmental Defense Fund (EDF).
Methane has emerged as the “potent paradox” for the oil and gas industry, according to the analysis issued on Friday. How operators manage “preventable” methane emissions may determine the “climate credibility of gas,” said researchers.
“Setting strong methane emission targets can help oil and gas producers differentiate themselves on climate and compete with other energy options,” said EDF Director Ben Ratner, lead author. “Producers must prioritize methane emissions from both oil and gas production to credibly address the full scope of the problem.”
A diverse group of industry experts, including institutional investors in Europe and the United States, peer reviewed the analysis, representing the Columbia University Center on Global Energy Policy, Harvard Management Co., Hermes Investment Management, the Center for Strategic and International Studies, Rocky Mountain Institute and other organizations.
“Setting and achieving methane emission reduction targets is critical to a stable climate future,” said Harvard Management Senior Vice President Michael Cappucci. “EDF’s report provides a framework for strong, attainable methane emissions targets to help investors assess their investment choices.”
Last fall ExxonMobil Corp., BP plc and Royal Dutch Shell plc led a list of eight top global producers that committed to further reducing methane emissions from their natural gas assets. Also taking the pledge were Italy’s Eni SpA, Spain’s Repsol SA, Norway’s Statoil ASA, France’s Total SA and Germany’s Wintershall Holding GmbH.
The global producers’ commitments to reducing emissions were developed in collaboration with EDF; the International Energy Agency (IEA), the International Gas Union, the Oil and Gas Climate Initiative, the Rocky Mountain Institute, the Sustainable Gas Institute, The Energy and Resources Institute and United Nations Environment.
“The IEA has determined that a 75% reduction of global oil and gas methane is possible with today’s technology, and that up to a 50% reduction can be achieved at no net cost,” the paper noted. “IEA’s analysis shows that just these no-net cost reductions would have the same climate impact in 2100 as immediately closing all the coal plants in China.”
According to the latest analysis, only six companies, representing 3% of global oil and gas production, report quantitative methane emissions goals. The analysis offered five criteria for companies to use in crafting methane targets and for stakeholders to evaluate them.
The top recommendation is for targets to feature “broad coverage” across operations and geographies, including a focus on reducing not only natural gas but also oil methane emissions. IEA data indicates that roughly one-half of industry’s upstream methane emissions are from oil development, EDF noted.
“Methane emissions from oil production are, quite literally, a natural gas problem,” said the authors.
“Failure by industry to account for and adequately address oil side emissions in addition to the methane associated with marketed gas undercuts the long-term effectiveness of methane reduction strategies.”
Also recommended for companies is to set absolute versus intensity-based targets, a timeline to achieve reductions, and using consistent, verifiable and robust data to evaluate progress over time.