Where are the methane risks for investors? This guide helps them find out.

Sean Wright

By Sean WrightFollow
Sean Wright is a Senior Manager at EDF+Business. 
Published November 3, 2016 in ClimateEnergy \ Natural gasPartnerships

A year ago, a hidden methane leak at SoCalGas’ Aliso Canyon facility drew global attention after ballooning into one of the largest environmental disasters in United States history.

Over the course of three and half months, 109,000 metric tons of methane – a potent climate pollutant – leaked into the atmosphere, costing more than $21 million in wasted natural gas. Total estimated losses to the company and its insurance providers so far: $717 million. 

Such dollar figures will catch investor attention. A loss of a valuable resource, in addition to the overall business risk associated with an environmental catastrophe, is not something they wish for. Investors want stability and predictable returns – and they hate waste.

Amazingly, it remains unclear who’s liable for what in the Aliso Canyon leak case, even as lawsuits pile up. Lax or non-existing policies have created uncertainties – not just for local residents and lawyers, but also for those who invest in oil and gas companies.

New guide helps investors ask the right questions

Understandably, investors have raised concerns over the past year about large and small methane leaks across the entire natural gas and oil supply chain. So we recently teamed up with Principles for Responsible Investment to help them better manage methane risks, a potent form of carbon risk that literally leaks away shareholder value.

The outcome is a how-to guide that shows them how companies should measure and report emissions, and what management practices help operators keep more product in the pipe.

A number of investors globally have already committed to using this timely new risk management tool. It’s not hard to understand why.

400 gas storage sites in 30 states pose risk

Aliso Canyon was an outsized example of leaks that continue to occur across the natural gas value chain each and every day.

To this day, there are no sufficient state or national rules requiring operators of 400 similar facilities in 30 states to check equipment for damage. It means that nobody knows how big of a risk any of these gas storage facilities pose.

Accidents aside, natural gas leaks throughout the global oil and gas system cost operators an estimated $30 billion in annual losses, while adding to climate change.

Such leaks are also drawing the scrutiny of regulators and undermining the ability of natural gas to play a role in the transition to a lower carbon energy economy – all significant concerns for investors.

By pushing companies to give accurate information about their methane emissions, investors can begin to understand the extent of the problem, while identifying opportunities for enhanced methane management and climate leadership. Our new guide can help them do exactly that.