Oil and Gas Industry Leaders Begin Waking Up, Stepping Forward on Methane

Vocal opposition from parts of the oil and gas business against policies to limit the industry’s heat-trapping methane emissions can sometimes obscure emerging efforts by some companies to tackle one of the sector’s biggest environmental and reputation challenges – and one that’s becoming ever more prominent by the day.

But not everybody in oil and gas is digging in their heels. In fact, there’s a growing list of companies working in various ways to start solving the problem. None of these initiatives alone is likely to get us where we need to be. But together they’re helping pave the way toward a more comprehensive answer that levels the playing field by creating sensible performance standards for everyone in the industry.

One of these emerging efforts is the Oil and Gas Methane Partnership, a voluntary effort to improve emissions reporting and accelerate best practices to reduce methane. Launched at the 2014 United Nations Secretary General’s Climate Summit, OGMP includes BP, Eni, Pemex, PTT, Repsol, Southwestern Energy, Statoil, and Total. The companies agreed to seek out ways to survey, assess and disclose their methane emissions, and find new opportunities to reduce them.

Journey Begins with the First Step

The OGMP recently issued its first annual report, detailing emissions found in nine key sources categories throughout individual operator’s systems. As a serious collaborative effort by oil and gas companies to address methane, it constitutes a solid, strong step toward development of sector-wide best-practices to cut these emissions.

For example, Southwestern Energy reduced emissions more than 11,000 metrics tons by instituting best practices during the phase after a well is drilled and hydraulically fractured, routing more gas to sales rather than venting it to the atmosphere. Elsewhere, Statoil conducted a methane mapping exercise spanning all Norwegian offshore operations (comprising nearly 90% of the company’s upstream assets).

OGMP’s efforts to increase transparency and responsibility are an example others should follow. And indeed, OGMP welcomed its newest participating company Engie, a global integrated energy company, as part of the release of its first-year emissions report – an encouraging sign that the initiative is taking broader hold.

Now the second and most important phase of the companies’ work must begin. More participants should be ramping up the share of their facilities entered into the OGMP program, and all expand the emission reduction activities they’re applying to those facilities.

Plucking Ripe Opportunities

The International Energy Agency says oil and gas methane emissions are among five key pillars to reduce global greenhouse emissions, and that methane emissions must be minimized if natural gas is to have potential to play a constructive role in the transition to a decarbonized energy system.

Fortunately, there are cost-effective strategies to reduce these emissions, creating important opportunities for countries trying to meet their greenhouse-gas goals, as well as for companies looking to reduce product waste while demonstrating more responsible stewardship.

Curbing oil and gas methane generally requires little in the way of new capital or fundamental changes in business practice. Often, it’s as easy as tightening valves and repairing leaks. In places like Colorado, where industry reductions are required, companies are finding that the benefits outweigh costs of regularly checking for leaks.

Follow the Smart Money

With new temperature records being set around the world on a monthly basis, business and policy leaders are demonstrating renewed urgency to reduce greenhouse emissions of all kinds. crucially, investors are also watching much more carefully to see how energy companies are responding, making methane management one more opportunity for competitive advantage for leaders  – or for those that lag behind.  (For more on this, see our latest guide for investors, just released last month.)

Carbon dioxide remains the key to long term climate protection, but methane – which is responsible for about a quarter of the warming we’re experiencing – represents both a major threat and a huge, highly cost effective opportunity to achieve much-needed results quickly. The smart money leaders in oil and gas are the ones taking the challenge seriously.

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