From the Editor: Managing methane [Gas in Transition]
Widely-regarded as the most evil of greenhouse gases, 80 times more potent than CO2, methane is also the main ingredient of the product sold by the global natural gas and LNG industry. So it makes sense, economically and environmentally, to limit its escape to the atmosphere.
That’s a message the industry has long preached to its critics, not often with any kind of measurable impact. But it’s also a message it continuously reminds itself of, and that was visible at July’s LNG2023 Conference in Vancouver, the International Gas Union’s triennial gathering of the gas liquefaction business.
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
And as efforts to eliminate methane leaks from the natural gas value chain intensify, from production right through to liquefaction and regasification, competition to produce the cleanest and greenest LNG could be the answer.
Cheniere Energy, the largest US LNG exporter, is widely seen as the leader in this space, with cargo tags which present the environmental impact of each molecule of gas delivered from its Sabine Pass and Corpus Christi terminals in Louisiana and Texas.
It’s also a member of the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), the UN’s flagship methane emissions reporting and mitigation initiative, and is working with midstream companies on quantification, monitoring, reporting and verification of greenhouse gas – including methane – emissions along its entire value chain in North America.
Compete or die
Robert Fee, Cheniere’s vice president, international affairs and climate, told LNG2023 his company is responding to what he expects will be increased competitive pressures to eventually eliminate methane emissions.
“The solution to this challenge is competition. In the LNG market we’re competing on price, operational track record, as well as additional contractual terms. We also need to start competing on methane emissions, through measurement, informed data and transparency.”
And competitive pressures to cut and eliminate methane emissions is sorely needed, and while there has been some movement on methane intensity, absolute emissions, says the Oil & Gas Climate Initiative (OGCI), which includes a dozen of the world’s largest oil and gas producers, have actually grown.
Julien Perez, vice president for strategy and policy at the OGCI, told conference delegates that its members had a combined upstream methane intensity of just 0.17% in 2021, and had reduced absolute emissions by 40% over the last four years.
But the wider industry, he said, falls well short of those metrics. Methane intensity world-wide has fallen by 18% over the last decade, and gas flaring – a key contributor to methane emissions – is also coming down as jurisdictions impose no flare policies, but absolute emissions of methane have increased by 20% in the last 20 years.
“We’re not close to where we need to be,” he said. “Absolute methane emissions need to fall by 80% and intensity by 70% in the next decade, in line with the IEA’s Net Zero scenario.”
But reducing methane emissions is not just a job for upstream producers and the liquefaction sector. Consumers also need to play a role by demanding cleaner natural gas.
Hiroshi Hashimoto, senior analyst for LNG and gas at The Institute of Energy Economies – Japan (IEEJ), said consuming markets need to send clear signals that they want lower methane-intensity supplies to incent those exporting countries that are among the worst methane emitters.
Compete AND Collaborate
Alongside competitive initiatives, the gas and LNG industry needs to collaborate – with others in the sector, with impacted stakeholders like indigenous communities, and perhaps most importantly, with governments and regulators.
Yaoyu Zhang, general manager of global LNG and new energies at PetroChina International, said collaboration is “really about” the survival of the LNG sector over the coming years.
“All business organisations are under pressure to manage their operations associated with GHGs and especially for LNG developers it’s almost become a licence for them to operate,” he told LNG2023 delegates.
In the US, the LNG sector – under pressure from customers to cut emissions – is working with the government and taking a common-sense approach to regulations, said Charlie Riedel, executive director of the Center for LNG, which represents large LNG players.
A collaborative approach is needed, he said, more than a government-led prescriptive approach, which could impose regulations that might limit the technologies that are deployed to meet those regulations and bar the use of more effective technologies.
“It’s that honest conversation and dialogue and I think it has to be a collaborative approach. If we don’t take that collaborative approach, you wind up with something that’s overly prescriptive and probably not actually solving the problem.”
The kind of collaboration that Riedel and Zhang are talking about is happening on a couple of fronts, at least.
OGMP 2.0, launched by the US and EU in 2020, is an international framework for measurement-based reporting of methane emissions along the oil and natural gas value chains. More than 100 companies are part of OGMP 2.0, representing about 70% of global LNG flows.
“The objectives are to provide governments and the public with assurance that industry members’ methane emissions are being managed responsibly,” said Rob Smith, vice-president of regulatory affairs at Cheniere Energy.
And GTI Energy, a US-based research and training organisation (and co-presenter of LNG2023), is collaborating with industry on a suite of protocols to measure and report emissions long the LNG value chain.
Chris Moore, its program director, told delegates the Veritas 2.0 methane emission measurement and verification initiative would be released by the end of the year, providing companies and countries with a consistent approach to measuring and verifying methane emissions – critical to an apples-to-apples comparison of companies in the LNG value chain.
LNG2023 demonstrated the gas and LNG industry’s commitment to cutting methane emissions. It’s now time for that commitment to be translated into action, so LNG2026 in Qatar can reveal real and measurable methane reductions.