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New data finds alarming levels of methane emissions in the Permian, posing long-term risk for oil and gas portfolios

Investors managing oil and gas portfolios are contending with major disruption as two interrelated crises play out: the global COVID-19 pandemic and extreme volatility in the price of oil. Yet even before these events, cracks were showing in the sector’s financial footing. Pressure has been rising on industry to improve returns, while demand to deliver on Environmental Societal Governance initiatives has never been higher.

Into this mix comes new data from scientists working with EDF’s PermianMAP initiative showing that methane emissions in the Permian Basin, the world’s largest oil field, is nearly three times the rate reported in Environmental Protection Agency’s nationwide statistics.

The 3.5% loss rate estimated in the data area is roughly 15 times higher than reduction targets set by leading producers, and significantly higher than many companies have reported. It translates to 1.4 million tons of wasted gas each year, enough to meet the annual natural gas needs of every home in Dallas and Houston combined.

The findings surface a material risk to oil and gas investors and to the future of natural gas from the Permian Basin. At current emissions rates from the basin, burning Permian natural gas for electricity does more near-term climate damage than coal.

A year from now, the U.S. oil and gas sector may look very different for many of the independent operators who make up a large portion of Permian producers. Withstanding this period of economic turbulence will require companies to make tough decisions. Yet even in this time of crisis, operators must keep an eye on future market demands, operational excellence and climate performance.

Permian study findings

The Permian sprawls across West Texas and New Mexico and has more than 100,000 operating well sites. Between October 2019 and March 2020, EDF scientists collaborated with academic institutions to collect data using tower-based monitors, ground-based mobile sensors, helicopters and fixed wing aircraft across a 10,000-square-kilometer study area responsible for 40% of Permian production.

The estimated 3.5% leak rate reflected in the new data stands in stark contrast to the .20% leakage rate agreed to by the 13 of the world’s largest operators in the Oil and Gas Climate Initiative, representing 30% of global oil and gas production. Furthermore, the emissions rate seen in the Permian is more than 10 times the methane intensity of 0.29% that OGCI has been reporting for 2018.

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Posted in Air Quality, Methane, Methane regulatons, PermianMAP, Texas / Tagged | Comments are closed

Demonstrating with data: Shifting the oil and gas industry from awareness to action on methane emissions

In 10 short years, the climate impact of methane emissions from the oil and gas industry has moved from abstract understanding to a widely-recognized fact. Scientific studies conducted around the world have quantified the risk that methane, a powerful greenhouse gas, poses to climate.

Studies have also demonstrated that the oil and gas supply chain is among the largest industrial sources of methane and that reducing oil and gas methane is one of the most immediate and cost-effective ways to limit near-term climate warming today.

Some in industry have begun to respond. Companies like BP and Shell, and coalitions like the Oil and Gas Climate Initiative and One Future have committed to methane reduction targets and begun public reporting. Meanwhile, a group of companies, working with the United Nations Environment Program, European Commission, EDF and others have raised the ambition of another multi-stakeholder initiative — the Oil and Gas Methane Partnership — to improve the scope and rigor of methane management and reporting.  These commitments are important, especially when they are made publicly and demonstrate the oil and gas industry’s commitment to playing a role in the transition to a low-carbon economy.

If the 2010s was a decade of awareness and words, the 2020s must be a decade of action and results. We must move past press releases announcing that companies will reduce methane emissions and begin seeing and believing they are actually doing it.

EDF’s new whitepaper, Hitting the Mark: Improving the Credibility of Industry Methane Data, provides industry a roadmap to the most critical piece of genuine methane action: good data. Hitting the Mark follows the 2018 publication of EDF’s Taking Aim, which presented criteria for establishing an environmentally ambitious methane target. Read More »

Posted in Methane, Natural Gas / Comments are closed

How oil & gas states did (and did not) protect land and water in 2019

By Adam Peltz and Nichole Saunders

Regulating the day-to-day details of an oil and gas operation can be a complex task, with both regulators and operators working hard to prevent leaks, explosions and other threats to worker safety, community health and the environment. As we learn more about technical advancements in the oilfield as well as risks from various aspects of production, it is vital that the regulations requiring best practices are kept up to date.

EDF believes this process of continuous improvement is foundational for protecting land, water and communities from development-related impacts. That’s why we track what states are up to on a consistent basis. Building on our review of state progress toward this goal in 2018, we’ve gathered up the big changes states made this past year and assessed the trends.

Here are the big things we saw in 2019.

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Posted in Methane, Natural Gas, produced water / Tagged | Comments are closed

5 best practices for Canadian methane regulations

The Canadian government recently reaffirmed its commitment to reduce methane emissions from the oil and gas sector by 40 to 45% below 2012 levels by 2025 as part of the Pan-Canadian Framework. In April 2018, the federal government published comprehensive regulations intended to achieve this commitment.

Methane causes 25% of the warming that we are experiencing today, and the largest source of industrial emissions is from the oil and gas industry. Reducing emissions by 40-45% by 2025 will be equivalent to shutting down 1,300 coal plants — or roughly one-third of the coal plants around the world.

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Posted in Methane, Methane regulatons / Tagged | Comments are closed

New time-of-use program empowers Illinois consumers to lower bills, reduce carbon footprint

In early October, the Illinois Commerce Commission approved a new electricity rate that holds tremendous opportunity — a time-of-use rate option for customers of Commonwealth Edison Company, the largest utility in the state. This new pricing structure has the potential to lower bills for consumers, while reducing our reliance on dirty sources of power.

After five years of fighting for a TOU rate in Illinois, EDF and the Citizens Utility Board helped design the voluntary new option for customers, which includes three pricing periods for residential customers: Super Peak (2pm-7pm), Off Peak (10pm-6am) and Peak (all other times), with prices being highest during the Super Peak, and lowest during Off Peak. The pilot will serve residential customers and target electric vehicle owners, whose usage is typically higher but more flexible. The time-of-use option is similar to real-time pricing currently available (also on a voluntary basis) in Illinois, but with distinct, pre-determined pricing periods rather than fluctuating hour by hour as real-time prices do.

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Posted in Clean Energy, Illinois, Time of Use / Comments are closed

Is the oil and gas industry serious about climate?

Hundreds of diplomats and heads of state will converge on the United Nations this week to discuss urgent actions to prevent catastrophic climate change. Just a few blocks away, CEOs and other top executives of the world’s largest oil and gas companies will host a meeting of their own, where they will also be talking about the climate, aiming to showcase the industry’s efforts to address greenhouse gas emissions.

It’s just a 10-minute walk between the two, but the symbolic journey is more like a thousand miles — and oil and gas producers are still struggling with the first steps. Their New York gathering, part of something called the Oil & Gas Climate Initiative (OGCI), could reveal important signs as to how serious they are about picking up the pace.

That challenge is stark: The world’s economy needs to reach net-zero greenhouse emissions by the end of this century if we are to have better-than-even odds of limiting warming to two degrees. Net-zero means not putting more carbon into the atmosphere than we can take out. To hit the global goal, Europe, the U.S. and other advanced economies must get to net-zero by 2050.

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Posted in Methane, Natural Gas / Comments are closed