By Zhang Jianyu, China Managing Director, and Mark Brownstein, Vice President, Climate & Energy Every November, the International Energy Agency publishes its annual World Energy Outlook – a comprehensive assessment of the economic, technological and geopolitical trends shaping world energy markets. That makes it essential reading for anyone interested in preserving the Earth’s climate. This […]

This post originally appeared in Spanish on El Universal. Not often is a pollutant referred to as an environmental and economic opportunity. But that’s exactly what methane is for countries looking for cost-effective climate solutions and a way to prepare for the 21st century energy economy. And it’s especially important for Mexico right now, as […]

By Ben Ratner and Drew Nelson In spite of the anti-environmental furor of the Trump administration, 2017 has been a year of encouraging commitments by a growing number of global oil and gas industry leaders – including American oil giant Exxon Mobil – that understand methane emissions is a key business challenge. Methane is a […]

A new analysis is taking a closer looking at the scope of New Mexico’s methane problem and the financial impact it's having on the state’s taxpayers. We have known for some time that New Mexico had a problem with methane waste and pollution from the state’s oil and gas industry. A 2015 report from business […]

By Kate Gaumond, Analyst, EDF+Business  When I worked on the trading floor at Goldman Sachs, one of the major services we provided our corporate clients was risk management. Sitting on the commodity desk, we bought and sold financial products that allowed the world’s biggest consumers and producers to manage their exposure to the often fluctuating […]

The International Energy Agency’s new 2017 World Energy Outlook contains the agency’s strongest language yet about the urgent need to reduce methane emissions from the oil and gas sector, and the huge opportunities that exist to do so. Some have taken issue with IEA projections on the overall role of natural gas, suggesting they are […]

As companies flock to West Texas’ Permian Basin to cheaply drill for and extract oil and gas, some operators are flooding the night sky with natural gas flares, polluting the air with unhealthy and climate-altering pollutants, and wasting copious amounts of this important, domestic energy resource. The Permian Basin, which stretches across 75,000 square miles […]

The call to reduce oil and gas methane emissions landed a one-two punch this week that should provide Canada all the motivation it needs to get ahead of this global trend and prepare its energy industry for the future. First, the International Energy Agency’s (IEA) World Energy Outlook analysis stated the future of the natural […]

This post was co-authored by Drew Nelson.  The CEOs of ten leading oil and gas companies today announced intentions to move toward “near-zero” methane emissions, pledging to set a quantitative reduction target by this time next year. At first blush, it might sound like a modest step – a promise to make a promise. In […]

Westerners are a hardy bunch. They are used to working through adverse conditions and making the best of what the land provides. That includes fighting to defend requirements from the U.S. Bureau of Land Management that are designed to cut wasted natural gas and maximize revenue for community projects. This is despite repeated attempts from […]

By Ritesh Gautam and Steven Hamburg Last Friday, the European Space Agency Sentinel-5p satellite went into orbit above the earth. Onboard is an imaging spectrometer instrument called TROPOMI, led by SRON (Dutch Space Agency) and KNMI (Royal Netherlands Meteorological Institute) to monitor the amount of methane, ozone and other air quality-related pollutants in the atmosphere. […]

Alberta’s oil and gas industry is emitting at least 25 to 50 percent more methane than current estimates suggest, according to a new peer-reviewed study. Published in Environmental Science and Technology, a clear pattern of energy waste is occurring across Canada – a problem worth a minimum of $530 million dollars (CAD) of natural gas […]

Here’s a newly-minted cabinet secretary charged with managing 20 percent of the American landscape on behalf of taxpayers and 567 Native American tribes – presented with an opportunity to save his stakeholders millions without lifting a finger. Interior Secretary Ryan Zinke, inexplicably, is rejecting this broad public relations win to instead go to bat for […]

This week, the U.S. Environmental Protection Agency posted the 2016 Greenhouse Gas Reporting Program (GHGRP) data online. While there are positive trends in the type of data included and the ways that data are measured, the general picture is of an industry with many remaining opportunities to reduce emissions. The GHGRP is an emissions reporting […]

Early oil and gas industry adopters of methane management strategies and technologies are starting to see these reductions as an opportunity to gain a competitive edge. Just last week, ExxonMobil announced  a new methane reduction program for its XTO Energy subsidiary, underscoring that the industry is paying close attention to the issue. Methane, the main […]

Last week the California Air Resources Board (CARB) and California Energy Commission (CEC) released interim results from a NASA study that offers the most clear-eyed assessment yet of California’s largest individual sources of methane pollution. Methane – a potent greenhouse gas responsible for about a quarter of global warming – is emitted from several different […]

An announcement last week from one of the country’s largest natural gas producers may have a major positive impact on revenue and clean air in New Mexico. XTO Energy, a subsidiary of ExxonMobil that made a $6 billion investment in acreage in New Mexico’s Permian Basin earlier this year, has now announced a set of commitments to […]

By Andrew Williams

Yet again, another energy company is serving up tangible proof that some in the industry fail to take steps to operate responsibly and protect public health from oil and gas pollution.

According to a September 24 Associated Press article, a malfunction at a natural gas compressor station in Northeastern Pennsylvania resulted in a massive gas leak that — in just a few hours — produced more air pollution than most facilities emit in an entire year.

Most Pennsylvanians never know about these types of malfunctions. In fact, if it were not for the AP story, you might not have heard about this leak in part because DTE Energy – the out-of-state energy company that owns the facility – failed to immediately notify the Susquehanna County Emergency Management Agency. Instead, they waited over a week to report the problem to the county and downplayed the magnitude of the episode, referring to it as a merely a “minor” leak.

This isn’t the first time a DTE compressor station has had a major blow out. And the company’s failure to properly respond runs counter to consistent claims made by some companies and their lobbyists that the industry is doing everything they can to keep emissions down. Incidents like this are a clear indication that some companies prioritize business interests over direct risk to public health and the environment.

Fortunately no one was injured in the event, though there seems to be a pattern developing here, one that should be alarming to approximately 1.5 million Pennsylvanians that live within half a mile of an oil or gas facility. This episode proves the industry cannot be trusted to self-police, and that Pennsylvania officials should develop oversight procedures to prevent these type of incidents.

Governor Wolf proposed to do just that in his plan to cut methane emissions from the oil and gas industry, but he appears to be undermining his own commitments. A budget bill passed by the Senate — and supported by the governor — is larded with bad provisions that create huge environmental loopholes for the oil and gas industry and put Pennsylvanians communities at risk.

The most problematic policy in the bill is a provision that would allow a private committee to approve oil and gas permits – taking power away from the state and giving it to political appointees, many of whom are hand-picked by oil and gas companies.

The DTE gas leak proves that Pennsylvania needs to hold the worst industry actors accountable by implementing strong controls that reduce methane emissions. Companies should be required to check their facilities regularly for harmful gas leaks and they should be required to quickly address them and report them to the appropriate authorities.

Since 2012, sloppy operations at Pennsylvania gas sites have resulted in more than 2.7 million tons of methane and other harmful pollutants being pumped into the air. If the bad environmental loopholes in the current state budget become law, that number will get even bigger and we will possibly see more incidents like this one.

 

By Ben Ratner

The degree to which the oil and gas industry can be trusted to play a constructive role in a low carbon future depends in no small measure on whether and how it reduces climate pollution today. That’s why company insiders, investors, and policy makers should take careful note of the sensible and innovative commitments announced by XTO Energy, the ExxonMobil subsidiary that leads the United States in natural gas production.

The industry’s many outside stakeholders both in the U.S. and around the world are increasingly calling for emission reductions and greater commitment to cleaner production. Companies that heed those calls, and advance new technologies, will be much better positioned to answer society demands for responsibility.

Political Pendulum

Unfortunately, the current picture for much of the rest of the industry is less bright. Oil and gas trade associations—of which companies like Chevron, BP, ExxonMobil and many others are members—have  egged on a Trump administration ideologically bent on eliminating national methane safeguards.

Even as company-level leadership like XTO’s will likely increase confidence in that company’s responsibility, industry support and acquiescence on Trump environmental rollbacks undermines confidence in the responsibility of the silent masses of thousands of operators who have not yet stepped up. Indeed, many in the industry are already concerned that overreach will carry a price when the political pendulum swings back the other direction.

So even as the Trump administration and lowest elements in industry pursue a deregulatory agenda that simply goes way too far, XTO has committed to reducing its methane emissions in the United States, through a set of tangible actions that move the company well beyond compliance.

Commitments to Implementation and Innovation

Elements of the XTO commitment include phasing out a known type of intentionally venting devices in existing facilities; enhancing construction standards to install zero emitting devices at new facilities with electricity access; and undertaking leak detection and repair in existing facilities not already subject to regulations.

XTO will also partner with methane mitigation companies to innovate new, lower-emitting technologies for remote sites that lack electrification. And, ExxonMobil will continue its work with the Stanford Natural Gas Initiative, including the company’s new commitment to serve as a technical advisor on the Stanford/EDF Mobile Monitoring Challenge.

Most importantly for industry, regulators, and the courts, XTO’s actions reinforce the technical and financial feasibility of reducing oil and gas methane emissions, which cast a long shadow over claims that natural gas can play a credible role in the transition to a low carbon energy economy.

Looking Ahead

Of course, any company with the carbon footprint of XTO can and should always do more to address its emissions. We will look for robust XTO disclosure that enables stakeholders to closely follow and assess the progress and results of its U.S. methane program. And we hope that XTO’s announcement is a harbinger of things to come from parent Exxon Mobil, which can expand leadership in support of global methane emission reduction goals, and flaring reduction.

It is too soon to know whether others in the U.S. oil and gas industry will follow suit with strong operational commitments and a more balanced, pragmatic approach to federal and state methane policy.

But we do know that America’s largest driller is raising the bar for methane emission reductions in its onshore operations.

The question now is who will follow?

By Sean Wright

Q&A with Tim Goodman, Hermes Investment Management

When burned, natural gas produces half the carbon as coal, so it is often touted as a “bridge” fuel to a cleaner energy future. But the carbon advantage of natural gas may be lost if too much of it escapes across its value chain.

Natural gas is mostly methane, which, unburned, is a highly potent greenhouse gas accounting for roughly a quarter of today’s global warming. Worldwide, oil and gas companies leak and vent an estimated $30 billion of methane each year into the atmosphere.

EDF’s Sean Wright sat down with Tim Goodman, Director of Engagement at London-based Hermes Investment Management. Goodman, who views methane management as practical self-help for the industry to pursue, engages with oil and gas companies on strategies to manage their methane emissions. This is the first of a two-part conversation with Hermes, a global investment firm, whose stewardship service Hermes EOS, advises $330.4 billion in assets. 

Wright: Do you think the oil and gas industry is changing its overall attitude towards climate after the historic Paris agreement and recent successful shareholder resolutions? If so, how do you see that change manifesting itself?

Tim Goodman, Director of Engagement, Hermes Investment Management

Goodman: I think climate change is obviously an existential question for the industry. The really big question is can it actually change in response to Paris? The industry is beginning to respond as a result of Paris and shareholder proposals and other stakeholder pressure. You’re seeing some of the majors increasing their gas exposure at the expense of oil. You’re seeing a number of international oil companies reducing or ending their exposure to particularly high carbon or high risk assets, such as the Canadian oil sands or the Arctic. The oil and gas industry is also starting to place a greater focus on methane management and its own emissions.

Wright: What about investors – what do you think is driving the continued momentum around methane and climate as we see larger and more mainstream funds tackling these issues?

Goodman: Let’s talk about climate for the moment – the roles of both investors and companies in the run up to the Paris agreement and during the negotiations were crucial. The investors made it absolutely clear that they wanted to see a successful Paris agreement. Addressing climate change is good for business and good for their portfolios. And we saw this with the Exxon vote – the two-degree scenario proposal where mainstream asset managers voted for this proposal. We believe that this happened because of the underlying pressure asset managers were getting from their own clients who have a long-term perspective and see climate change as a risk to their funds.

Specifically on methane, it’s practical self-help for the industry to embark on methane management. It’s an obvious practical measure for investors to engage upon. If you can reduce your contribution to greenhouse gases, save money, and gain revenue by being more efficient and safe, why wouldn’t you do that? It’s an easy entrée into engaging with the oil and gas industry. Whereas the existential question, what’s your business going to look like 20 years from now, is a more difficult question perhaps both for the industry and the companies themselves.

Wright: You pretty much just explained why Hermes prioritized methane – is that correct?

Goodman: Yes. But the science is a big part of it. Methane is a far more potent greenhouse gas than carbon – the more that we can minimize its effects, the greater the window the world has to transition to a low carbon economy. Methane’s effects don’t last as long as carbon, but if we don’t tackle methane, we aren’t taking meaningful action to move to a low-carbon economy.

Wright: What do you see as the risks of unmanaged methane emissions?

Goodman: There is an economic risk and benefit for companies. Most of the measures to manage methane are relatively low-cost and can very easily be implemented for new projects. If you’re not doing them, for example, and you’re fracking shale, you’re at a competitive disadvantage to your peers. The cost-benefits perhaps are more difficult, but still there, in existing infrastructure. But particularly among the oil majors, their relationship with their host governments, local communities, and other stakeholders is vital. It’s important for companies to demonstrate good corporate citizenship. If you’re a laggard on methane, you’re more likely to be considered as an irresponsible partner both commercially and also in your local community. So I think oil and gas companies risk massive reputational and legal risks if they’re not managing methane effectively, notwithstanding the economic benefits.

Wright: What do you typically hear from operators in your conversations about methane management? Do you hear different things from operators in different parts of the world?

Goodman: Methane management is part of a number of important issues that we’re engaging with the industry on, including other pollution, health and safety, human rights, corruption and climate change. What we’re hearing on methane does vary. It’s fair to say in some emerging markets methane management is not often discussed by investors with those companies. But when we do address this topic in these markets, the companies show interest and want to know why it’s important to us, what they should be doing, how they should be disclosing, etc. So we’re often having positive and interesting conversations in these markets.

In the developed markets, there’s a difference. And I think there’s a distinction between Europe and North America. The EU companies, particularly the majors, are realizing it’s an important issue and are talking about it and disclosing at least some data. In private dialogue with North American companies, it is clear methane is often an important issue for them, but their disclosure is less convincing. It does vary around the world, but you also have this interesting phenomenon, where some companies seem to be doing a good job in private dialogue, but the disclosure lags behind what they are actually doing. We also see companies attempting to present their efforts in a better light than perhaps they deserve. It’s a complex mixture, which is why engagement is so important because we are able to view the reality on the ground through private dialogue.