Natural Gas Companies Plug Leaks, Easily Surpass 2025 Goal

Darren Barbee Senior Editor, Oil and Gas Investor Hart Energy  Sunday, November 25, 2018

A coalition of natural gas companies, including E&Ps, midstream and downstream operators, far exceeded its target for reducing methane emissions eight years ahead of schedule.

In November, Our Nation’s Energy Future (ONE Future), an alliance of 16 companies, reported its 2017 methane intensity—the ratio of net emissions to throughput volumes—was 0.55%, surpassing its initial goal to reduce emissions to 1% by 2025. In 2012, the overall natural gas industry’s methane intensity was 1.44%.

The One Future companies collectively account for 10% of U.S. natural gas production, 32% of gas transmission miles and 9% of distribution. Other companies, including oil and gas majors, have entered similar groups in order to increase profitability and to demonstrate their stewardship of the environment.

“Today’s report validates that through targeted investment in abatement technologies, we can significantly reduce methane emissions across the natural gas supply chain,” said One Future Executive Director Richard Hyde said. “We are demonstrating that natural gas can indeed meet the growing energy needs of our country in a sustainable manner, and as our coalition continues to grow, we look forward to helping new members across the country achieve their methane reduction goals.”

One Future’s protocols were developed in partnership with the U.S. Department of Energy and its results were independently reviewed by the National Energy Technology Laboratory and by Innovative Environmental studies.

One Future’s operators span the production and distribution cycle in the Williston, Green River, Anadarko, Permian, Appalachian basins and other areas. Operators include Antero Resources, Apache Corp., EQT Resources, Hess Corp. and Southwestern Energy.

Southwestern Energy’s focus on natural gas emissions led it in September to sell gas to New Jersey Natural Gas, a distribution company serving over half a million customers throughout New Jersey. Southwestern adopted One Future’s methane leak/loss rate goal of 0.36% of gross production by 2025 and surpassed it, with a 0.19% methane intensity, the company said.

One Future companies have invested in reducing emissions since 2014, upgrading and replacing pipeline infrastructure as well as actively seeking and repairing system leaks. The organization also worked out EPA-approved reporting protocols to demonstrate “credible and measurable results,” One Future said in a press release.

Other industry-led groups, such as API’s The Environmental Partnership, and a voluntary, CEO-led organization, the Oil and Gas Climate Initiative (OGCI), have pledged to reduce emissions.

The OGCI members represent about 30% of global oil and gas production. Royal Dutch Shell Plc, an OGCI member, has targeted methane emissions intensity below 0.2% by 2025. The target covers all oil and gas assets for which Shell is the operator.

At Hart Energy’s Executive Oil Conference in Midland, Texas, incoming U.S. president, Gretchen Watkins said Shell is no longer installing flares at new well production pads in the Permian Basin.

“I trust as an industry we recognize that the drive to reduce greenhouse gas emissions has both social and material value,” Watkins said.

The company has phased out greenhouse intensive technology, such as high-bleed pneumatically operated controllers and is also using solar energy to power its well pads.

Two of One Future’s members joined in fourth-quarter 2018 and their data is not reflected in One Future’s November report.

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Skip,

I'd appreciate it if you can post the segment of the article related to Haynesville companies lagging behind.  Part of that may be due to how emissions are lumped in a given area.  If you lump East Texas and North Louisiana (all production) as "Haynesville" the methane intensity of the older, lower producing conventional wells causes the methane intensity of the area to be relatively higher.  The methane intensity of Haynesville wells tends to be fairly low due to high productivity with a limited surface equipment requirement.  So I'm curious if the authors are lumping all production in the area, or are making the claim for Hanyesville/Bossier only.

The article lists the basins where there are ongoing programs to limit fugitive emissions.  The Haynesville is not one of them.  The issue for me is less about emissions per well groups (old or new, vertical or horizontal, etc.) as about the willingness of companies to address the problem.  If we believe that methane is a powerful green house gas then there is benefit in limiting fugitive emissions wherever they occur and in whatever volume.  This should be one of the lesser controversial climate issues as every mcf saved is money in the pocket of operators and mineral lessors.  Even if the profit on the gas saved does not quite cover the early costs to address the problem for operators, they benefit by improved public perceptions and cut into the claims by hard greens that natural gas does not significantly benefit the effort to slow global warming.  The major companies that have joined ONE Future have come to the conclusion that it is better to be seen as taking action as opposed to just ignoring climate change or claiming that the problem is of little significance. 

I'm not disagreeing with this: "The major companies that have joined ONE Future have come to the conclusion that it is better to be seen as taking action as opposed to just ignoring climate change or claiming that the problem is of little significance."

Some of the Haynesville operators have joined a similarly focused group called the Oil and Gas Climate Initiative:  https://oilandgasclimateinitiative.com/our-members/#history

https://oilandgasclimateinitiative.com/oil-and-gas-climate-initiati...

"The Oil and Gas Climate Initiative (OGCI) today announced a target to reduce by 2025 the collective average methane intensity of its aggregated upstream gas and oil operations by one fifth to below 0.25%, with the ambition to achieve 0.20%, corresponding to a reduction by one third."

Exxon and BP are part of the OGCI, so while the One Future group doesn't represent much of the Haynesville, OGCI has a little more representation in this play.   

Although Exxon, and I'm assuming XTO, are members along with BP.  The only LA member is BHP and I doubt seriously if they have applied any of the mitigation efforts here as they ramped down development in 2013 and have only recently started to drill again at a very low pace, one rig.  Hopefully BP will do something when they assume control of the assets.

The major LA Haynesville companies not participating are:

Vine O&G, GEP Haynesville, Indigo Minerals, Comstock, Aethon and Chesapeake

There are a handful of other LA HA operators that have too little production to mention.  The listed companies are responsible for the majority of production.

The largest source of these CO2 emissions is natural gas flaring which does not occur in the Haynesville.  In the Permian Basin you don’t even need a flashlight at night.  To compare the two is really misleading.  If I owned a pipeline or compressor station in the Haynesville and was loosing a bunch of gas I would fix it.

Jay

Flaring should be limited in all basins but regulators rarely have the political backing to do so.  I'm not comparing the Haynesville with any other basin.  I am comparing companies that have implemented emission mitigation programs with those who are not.  It is a false equivalence to say that one basin shouldn't take steps to address the problem because it has lower fugitive emissions than another.  All companies in all basins should have aggressive programs to reduce emissions.  If the relatively easy and common sense actions are not taken very soon they will quickly become insufficient to the task of reducing the rate of global warming.

Yep, I agree.  I also know for a fact that the rules/regs for the flaring of associated gas in the Permian are really lax.  If you want to reduce these emissions, this would be a great place to start.

jay

Somehow, this seems appropriate:  https://www.reuters.com/article/us-natgas-waha-pipelines/get-your-n...   

Prices at the Waha hub fell to an average of 25 cents per million British thermal units (mmBtu), according to SNL data available on the Refinitiv Eikon going back to 1991.

Traders said small amounts of fuel were even sold at negative prices as producers struggled to get rid of the gas.

That compares with an average of $2.16 per mmBtu so far this year, $2.71 in 2017 and a five-year (2013-2017) average of $3.11.

The Permian is the biggest oil-producing shale basin in the United States and since gas is associated with much of the oil comes out of the ground, it is also the nation’s second-biggest shale gas producing region, behind the Appalachian.

Associated gas from oil basins is the bane of natural gas basins in an excess supply market.

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