Big Green Report Admits O&G Methane Emissions Fell 28% from 2019-21
“ You read that right. Oil and gas production keeps increasing, but methane and CO2 emissions from oil and gas companies are decreasing–dramatically.”
Big Green Report Admits O&G Methane Emissions Fell 28% from 2019-21
May 24, 2023 Industrywide Issues, Research
Three far-left organizations, the Clean Air Task Force (CATF), Ceres, and ERM Group, published their third annual report, “Benchmarking Methane and other GHG Emissions of Oil and Natural Gas Production in the United States” (full copy below), which analyzes the production-based emissions of the largest oil and gas producers in the U.S. While the aim of the report is to name-and-shame big oil and gas companies (the worst offenders) with respect to methane and so-called greenhouse gas emissions, the report could not gloss over the elephant in the room: This year’s analysis found that reported methane and greenhouse gas intensity in the oil and gas sector have declined 28% and 30%, respectively, between 2019 and 2021, despite an increase in natural gas and total hydrocarbon production.
You read that right. Oil and gas production keeps increasing, but methane and CO2 emissions from oil and gas companies are decreasing–dramatically.
While it’s mildly interesting to us that a rabidly leftist group like the Clean Air Task Force is admitting methane emissions from oil and gas are decreasing, some of the peripheral data in the report caught our attention.
The following graph from page 17 in the report shows the methane (CH4) and carbon dioxide (CO2) emissions by shale basin, along with overall hydrocarbon production by basin. The hydrocarbon production is converted into barrels of oil equivalent, so it’s a fair, apples-to-apples comparison. The chart shows while the Appalachian (M-U) basin is second in hydrocarbon production only to the Permian, Appalachia’s so-called GHG emissions are smaller than not just the Permian, but the Williston (Bakken), and the Gulf Coast. The M-U’s GHG emissions are only slightly larger than the Anadarko Basin in the Midcontinent region.
click for larger version
The following chart shows sources of emissions for each basin:
click for larger version
There are a number of interesting slides starting with Slide 25 that tabulate emissions and production for the top 100 hydrocarbon (both oil and gas) producers in the country. You can get lost in the data and charts (interesting stuff). As an example, here’s one chart that caught our eye:
click for larger version
While this slide and several more that follow it review data on emissions intensity for 100 drillers, what caught our attention here is that when you convert both oil and natural gas into the same units–barrels of oil equivalent–EQT (which produces almost all natural gas) is the third largest producer in the country, not far behind Exxon and ConocoPhillips! And Southwestern Energy (again, almost all natural gas and some NGLs) is #5! Chesapeake Energy, which drills in the PA Marcellus, is the #7 largest producer. Coterra Energy, which drills exclusively in northeastern PA, is #9 on the list. This is truly astonishing, that when you convert oil and gas into the same units, our companies are beating out big oil companies when it comes to the production of hydrocarbons.
The CATF issued the following press release to announce the third installment of their research report:
Updated analysis benchmarks the relative emissions intensity and total reported methane, carbon dioxide, and nitrous oxide emissions of more than 300 U.S. oil and gas producers and finds dramatic variations between companies and basins.
Ceres and Clean Air Task Force, with analysis from ERM, today released the third annual report, Benchmarking Methane and other GHG Emissions of Oil and Natural Gas Production in the United States, which analyzes the production-based emissions of the largest oil and gas producers in the United States and highlights dramatic variation among producers and basins.
The report provides clear, consistent information that investors, operators, natural gas purchasers, policymakers, and regulators can use to compare producers’ performance in an industry where voluntarily reported emissions metrics have historically been inconsistent and non-comparable.
This year’s analysis found that reported methane and greenhouse gas intensity in the oil and gas sector have declined 28% and 30%, respectively, between 2019 and 2021, despite an increase in natural gas and total hydrocarbon production. However, these trends are not consistent across basins or individual companies and can fluctuate year to year.
While overall emissions trended down in this year’s report, the gap between leaders and laggards continues to grow. The report found that natural gas producers in the highest quartile of methane emissions intensity have an average emissions intensity that is nearly 26 times higher than natural gas producers in the lowest quartile of methane emissions intensity.
Emissions intensity varies even between similarly sized operators in the same geographic area, according to the data, largely due to different equipment choices and operational practices. For example, pneumatic controllers were the largest source of reported production-segment methane emissions, making up 65% of the total. Fuel combustion equipment, including engines and heaters, was the largest source of total reported production-segment CO2 emissions, responsible for 65% of all reported CO2 emissions.
The findings can help shareholders differentiate between potential investments, and inform regulators, lawmakers and company executives about the main causes of reported methane emissions, as well as which companies are disproportionately responsible for them.
This edition of the analysis includes charts and data that track annual changes in emissions intensity, and the quantity of methane and other greenhouse gases emitted per unit of production, for each producer from 2015 to 2021. The underlying data suggest that these shifts in intensity can be attributed to a combination of factors including changes in operational practices, federal and state regulations, changes in corporate structure, or the sale of aging, high-emitting assets to firms below the reporting threshold.
“Oil and gas producers are not equals when it comes to methane emissions, and this research makes clear that a company’s climate impact is a direct result of operational and investment decisions within its control,” said Andrew Logan, senior director of oil and gas at Ceres. “While a number of leading companies have brought their methane emissions down since our first report three years ago, the gap between leaders and laggards has actually grown. For the poorest performing operators, high leak rates are a choice. Recent majority votes on methane-related shareholder proposals, including one last month at Coterra, underscore the investor consensus that the companies that will be best prepared for a low-carbon future are the ones taking ambitious steps now to bring emissions down.”
Methane is a primary driver of climate change, and it is more than 80 times more potent than carbon dioxide over its first 20 years in the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) found that methane emissions alone are responsible for about half a degree Celsius of the global warming the planet has experienced to date, and methane levels in the atmosphere continue to rise every year. Due to its relatively short-lived atmospheric impact, reducing methane emissions is the best available tool to slow global warming in the near-term. As the differences in performance in the report released today suggest, there are already solutions readily available that can rapidly reduce methane emissions from the oil and gas sector.
“The findings of this new report demonstrate what is possible when oil and gas producers use well-known, readily available means to reduce their methane and other greenhouse gas emissions,” said Lesley Feldman, Research and Analysis Manager at Clean Air Task Force. “More important still, the report highlights what happens when they don’t — underscoring the need for strong federal and state regulations that can standardize best practices across the industry.”
The report is informed by data submitted to the Environmental Protection Agency (EPA) and does not account for orphan wells or abnormal process conditions (also known as “super-emitters”), which are major contributors to total emissions.
Rather, it is designed to provide an analysis of publicly available, equipment-level data that can be applied consistently across companies. Abnormal process conditions comprise a significant quantity of total industry methane emissions, which makes it important for companies and regulators to aggressively pursue innovation and adoption of technology that will allow their direct measurement and remediation.
The report is a collaborative effort between Ceres and the Clean Air Task Force, with support from the Bank of America Charitable Foundation. The full interactive datasets are available at
https://www.sustainability.com
. ERM, which provides strategic consulting services to support the transition to a net-zero emissions economy — performed the analysis using data from EPA’s Greenhouse Gas Reporting Program.
“With data spanning back to 2015, this updated analysis provides a valuable dataset to analyze oil and gas producer emissions,” said Robert LaCount, ERM’s Climate Change lead for North America. “With continued focus on GHG emissions, the analysis helps stakeholders and producers benchmark performance and supports decision-making as part of the transition to a decarbonized economy.”
(1)
Here’s how Bloomberg analyzes and summarizes the data from the report:
The intensity of methane emissions from oil and gas production fell 28% between 2019 and 2021 among the industry’s 100 biggest emitters. Greenhouse gas emissions intensity — which includes carbon dioxide, nitrous oxide and methane — dropped 30%, according to an analysis of public data published today by the nonprofits Clean Air Task Force and Ceres, and ERM Group Inc.
The organizations’ goal in pursuing the study, the third annual version, is to make it easier to compare greenhouse gas emission data that regulated companies submit annually to the US Environmental Protection Agency. The oil and gas industry’s CO2 emissions mostly come from burning fossil fuels during the production process or flaring methane, which converts methane to carbon dioxide. Methane is 81 times more powerful than CO2 in the medium term (20 years).
Methane intensity is a ratio of emissions and produced gas. Greenhouse gas intensity is calculated as each company’s CO2, methane (CH4) and nitrous oxide (N2O) emissions divided by produced gas and its oil sales. This year’s results reflect a decline in the total emissions reported to the EPA and an increase in oil and gas production.
The authors hope their analysis of emissions intensity helps standardize reporting across the industry, to make clearer who’s emitting how much. For example, the report shows that Hilcorp Energy Co., a Houston-based oil and gas producer, is the top two emitter, behind ConocoPhillips — even though it’s the 12th largest producer. Hilcorp produces half the oil and gas of the largest producer, Exxon Mobil, and in 2021 put out 108% of the latter’s emissions.
Hilcorp increases its production mainly by buying aging oil-and-gas facilities, many of which can emit a lot before they’re renovated. After acquisitions, the company invests in new infrastructure and equipment, thereby reducing emissions while raising output, said Nick Piatek, a Hilcorp spokesperson. He said it takes several years to update new production and the new “report only provides a nearly two-year-old snapshot.”
The sizable average emissions intensity decline from 2019 to 2021 masks annual fluctuations among companies and the basins they operate in, and also a growing gap between the polluters with the highest and lowest intensity. Companies in the top 25 have an average methane emissions intensity that’s 26 times higher than those in the bottom quarter. For greenhouse gases, the top quarter’s average emissions intensity is 13 times the bottom quarter’s.
“Some companies are doing more on their own, which is great,” said Lesley Feldman, research and analysis manager at Clean Air Task Force and a report author. “But not all companies will, and we need strong regulations to ensure that all companies throughout the whole industry are meeting the same basic standards.”
Nearly two-thirds of methane emissions is tied to a class of machines called pneumatic controllers, which manage pressures or temperatures in a production system, according to the report. The EPA in November issued a proposal that would lead to companies replacing this equipment with cleaner alternatives. Hilcorp removed 14,000 pneumatic devices in 2022, Piatek said.
Nitrous oxide, which is a much smaller contributor to industry emissions, is 273 times stronger than CO2.
In parsing the EPA data, the report leaves out unreported emissions that come from major leaks and emissions from smaller producers that emit less than the agency’s annual threshold of 25,000 metric tons of CO2 or its equivalent in other greenhouse gases.
Harder than compiling the data is attributing what causes changes year to year, company to company, region to region. Policy helps, Feldman said. The report notes several developments that may be helping reduce production-related emissions. The EPA last year proposed standards that may lead states to require regular leak detection and repair at all sites, special vigilance for detecting runaway emission events or replace gas-emitting pneumatic controllers with newer, clean and cost-effective alternatives. A provision of the Inflation Reduction Act, called the Methane Emissions Reduction Program, directs $1.55 billion to EPA emission-reduction efforts. Another provision will charge regulated producers who pollute above a legal threshold.
“Those policies are sending a signal to operators that they need to clean up their act,” Feldman said. (2)
Copy of the full report:
View in Full Screen
…
(1) Clean Air Task Force (May 23, 2023) – Updated analysis shows dramatic variation of methane emissions among U.S. oil and gas producers
(2) Bloomberg (May 23, 2023) – Intensity of Methane Emissions by US Oil and Gas Industry Declined: Report