US Oil & Gas Giants Face $4.8bn in Methane-Related Charges, Study Claims

New
Efforts
to
Slash
Methane
Emissions

At
the
COP28
climate
summit, 50
oil
companies representing
nearly
half
of
global
production,
including
ExxonMobil
[XOM] and
Saudi
Arabia’s
Aramco,
pledged
to
reach
near-zero
methane
emissions
and
end
routine
flaring
in
their
operations
by
2030.

In
addition,
the
Biden
administration unveiled
rules to
crack
down
on
releases
of
methane
by
US
oil
and
gas
companies.
They
are
part
of
a
promise
that
nations
including
the
United
States
made
two
years
ago
on
slashing
emissions
by
30%
from
2020
levels
by
2030.

Among
other
things,
the Environmental
Protection
Agency would
require
oil
companies
to
monitor
for
leaks
and
use
remote
sensing
to
detect
large
methane
releases
from
so-called
super-emitters.

Inflation
Reduction
Act
Methane
Fees
Kick
in

Separately,
the
Inflation
Reduction
Act,
the
landmark
law
that
promotes
the
use
of
renewable
energy,
imposes
a
charge
on
methane
emissions
from
facilities
required
to
report
their
greenhouse
gas
emissions
to
the
EPA.
The
charge
starts
at
$900
(£712.21) per
metric
ton
of
methane,
increasing
to
$1,500
after
two
years.
It
is
the first
time the
federal
government
has

directly
imposed
a
charge
on
greenhouse
gas
emissions.

Efforts
to
hit
the
1.5°
Celsius
global
warming
target
set
by
the
historic
2015
Paris
Agreement
will
now
likely
fail,
scientists
say.
The
oil
and
gas
industry
is
one
of
the
largest methane
emitters,
through
leaks
across
the
natural
gas
production
chain
and
companies
venting
gas
from
oil
wells,
storage
tanks,
and
other
production-related
equipment.

Cutting
Methane
Has
a
Powerful
Short-Term
Impact

“If
we
want
to
do
something
[about
global
warming]
that
will
have
an
impact
on
our
kids
and
grandkids,
reducing
methane
is
probably
the
only
thing
we
can
do
now,”
says John
Streur,
chairman
of
Calvert
Research
&
Management,
which
sponsored
the
study.
Calvert
is
owned
by
Morgan
Stanley
[MS].

Oil
and
gas
firms
are
self-reporting
their
methane
emissions,
but
evidence
shows
they
may
be
severely
underreporting
them,
according
to
the
new
study
by
two
climate
data
and
analytics
providers,
Geofinancial
Analytics
and
Signal
Climate
Analytics,
and
sponsored
by
the
Calvert
Center
for
Responsible
Investing.

Enter
satellites.

The
study
analysed
data
from
direct
satellite
observation
of
150,944
active
wells
operated
by
the
top
25
listed
US
producers,
each
observed
an
average
of
53
times
over
the
12
months
ended
March
31
2023.

Existing
emissions,
the
satellites
observed,
would
result
in
roughly
12
times
the
amount
of
methane
fees
that
people
expect
for
the
25
largest
US
producers.
Based
on
self-disclosed
emissions,
the
producers
would
have
to
pay
methane
fees
of
about
$400
million
to
the
US
government
between
2024
and
2026,
the
authors
estimate.

However,
based
on
the
satellite
findings,
the
fees
would
be
an
estimated
$4.8
billion –
more
than
10
times
larger.
The
largest
fees
would
be
owed
by
Diversified
Energy
[DEC],
ConocoPhillips,
Occidental
Petroleum,
and
California
Resources
[CRC].
Indeed,
the
gap
between
self-reported
and
satellite-observed
emissions
is
large,
especially
for
seven
of
the
top
25
US
producers.
The
estimates
assume
no
change
in
emissions
level
from
those
observed
by
satellite.

“Highly
reducing
methane
and
other
short-acting
greenhouse
gas
emissions
would
result
in
a
13%
reduction
in
temperature
rise
by
2100,
versus
the
status
quo
scenario,”
wrote
Mark
Kriss,
chief
executive
emissions
analysis
business
Geofinancial,
in
an
email.

“We
see
a
significant
opportunity
to
work
with
oil
and
gas
companies,
improve
their
methane
tracking
and
reporting
and
work
with
them
to
urge
them
to
reduce
their
emissions,”
says
Streur
of
Calvert.

“There’s
momentum
within
the
oil
and
gas
industry
to
address
this.”

According
to
the
study,
in
addition
to
curbing
global
warming,
reducing
methane
leaks
would
lower
regulatory
risk
and
fine
exposure
and
help
companies
capture
new
markets
requiring
lower
carbon
intensity.

Low
Costs
to
Cutting
Methane
Emissions

Oil
and
gas
methane
emissions
represent
one
of
the
best
near-term
opportunities
for
climate
action
because
the
pathways
for
reducing
them
are
well-known
and
cost-effective, according
to
the
International
Energy
Agency.

“Based
on
average
natural
gas
prices
seen
from
2017
to
2021,
around
half
of
the
options
to
reduce
emissions
from
oil
and
gas
operations
worldwide
could
be
implemented
at
no
net
cost;
implementing
these
would
cut
oil
and
gas
methane
emissions
by
around
40%,”
the
agency
writes.

“Based
on
the
record
gas
prices
seen
around
the
world
in
2022,
around
80%
of
the
options
to
reduce
emissions
from
oil
and
gas
operations
worldwide
could
be
implemented
at
no
net
cost;
implementing
these
would
cut
oil
and
gas
methane
emissions
by
more
than
60%”.

Smaller
producers
are
“identified
with
less
effective
methane
management,”
according
to
the
Geofinancial
and
Signal
Climate
study.
“Perhaps
smaller
firms
not
only
lack
the
resources
to
manage
methane
emissions
efficiently,
but
further
[…]
to
accurately
compute
the
facts
on
the
ground,
even
compared
to
the
underreporting
across
the
sector
in
general.”
The
exception
is
Occidental.

“Dramatically
reducing
methane
emissions
and
other
short-acting
gases
between
now
and
2030
would
flatten
the
greenhouse
gas
curve
until
2050,”
according
to
the
study.

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