Industry competition key to tackling methane emissions [LNG2023]
Competition amongst natural gas industry players in terms of how effectively and transparently they quantify and reduce their methane emissions will be key to tackling the issue, panellists said at an LNG2023 session on July 11.
“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,” Robert Fee, vice president for international affairs and climate at Cheniere Energy, explained. “We also need to start competing on methane emissions, through measurement, informed data and transparency.”
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This competition on methane emissions can also be effective in the upstream sector, and can hopefully filter down to all levels of the natural gas value chain, he said.
It is also up to consumers to stimulate this competition by demanding cleaner gas supply, added Hiroshi Hashimoto, senior analyst for LNG and gas at The Institute of Energy Economies - Japan (IEEJ). In particular, consuming markets should send clear signals that they want lower methane intensity gas in order to give greater incentives to those countries in the world that are the worst methane emitters, he said.
The industry’s overall performance in addressing methane emissions has been mixed, Julien Perez, vice president for strategy and policy at the Oil & Gas Climate Initiative (OGCI), said. OGCI, which includes 12 of the world’s largest oil and gas producers, had a combined upstream methane intensity of only 0.17% in 2021, after reducing absolute emissions by 40% over the last four years.
But in the industry as a whole, a lot more work needs to be done, he said. Methane intensity in the industry has fallen by 18% over the last decade, and gas flaring is also falling, but absolute methane emissions have risen 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.”
Hiroshi also noted that there was underreporting of downstream emissions that needed to be addressed.
Francisco De La Flor Garcia, director for sectorial and multilateral representation at Enagas, said performance on methane emissions among different companies greatly varied, with there being some clear frontrunners and others barely keeping up with the regulation.
The panellistts agreed that technology – increased deployment and further innovation – had a critical role to play in tackling methane emissions. But so too do maintenance and best practices and policies and regulation.
“They are sequential,” Fee said. “You need the technology first to identify the emitters, and that then informs the maintenance and best practices. Then if companies are not able to deploy the technology or perform those practices, you need the policies and regulations to enforce them to do so.”
De La Flor Garcia drew attention to regulation in the EU that imposes standards for methane detection, quantification and mitigation not only on companies working within the bloc but also third-party gas suppliers elsewhere as a model to follow. In this way, high standards in some key consuming markets can spread worldwide.
The panellists added that not only must the industry compete but also cooperate, in terms of sharing knowledge and best practices to address methane emissions.
This feature was originally published in the LNG2023 Daily, produced by NGW during the LNG2023 conference in Vancouver July 10-13.