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E&P Plus

Editor's note: This article originally appeared in the May issue of E&P Plus.
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Natural gas plays a critical role in providing much needed energy to nearly 179 million Americans every day. It is a key driver in fueling the country’s economy, and its demand will not diminish, even in a net-zero carbon economy. Natural gas powers more than half of the country’s commercial buildings and is the largest source of reliable electricity generation—38%. Natural gas is plentiful, affordable and reliable; the growing use of natural gas in the U.S. has reduced the nation’s methane emissions and lowered household heating and cooking costs.

According to the EPA, total methane emissions from natural gas systems declined 24% from 1990 to 2018. Annual methane emissions from natural gas distribution systems declined 73% from 1990 to 2018, even while natural gas utilities added more than 769,000 miles of pipeline to serve an additional 20 million Americans. Yet more is expected of the industry.

Following the 2020 election, one of President Biden’s first actions was to sign an Executive Order directing the EPA to propose rules addressing methane emissions.

Our Nation’s Energy Future (ONE Future) is a coalition of more than 40 of the largest and most engaged natural gas companies, all focused on reducing methane emissions to a level that ensures the sustainability of natural gas. The core belief of the coalition is that it does not view this as a one or two sector issue; this is a supply-chain issue. Together, we must become more efficient in delivering each molecule of natural gas from production to consumption while minimizing leaks.

While we share President Biden’s view that methane emissions need more attention, we do not agree that a prescriptive, or one-size-fits-all, regulatory approach will be effective.

Instead, ONE Future strongly believes that regulations that take a performance-based approach will always be more successful because setting a performance target allows every company the flexibility to deploy and target capital where it will be most effective in reducing emissions. This is important because studies show the majority of emissions come from a small fraction of sources.

ONE Future also believes performance-based regulations encourage knowledge sharing and technology innovation. The coalition’s members have established best practices such as engineering of facilities, well design, supplier selection and enhanced operational procedures. These practices partnered with technology innovation have led to lower emissions.

In fact, ONE Future member companies have successfully utilized this performance-based approach over the last several years. We set a goal of achieving a 1% methane intensity level, or 99% methane efficiency, by 2025. Methane efficiency is how efficiently a molecule of gas can be moved from production to consumption. Coalition members have achieved our goal in each of the years that we have reported. Our latest report shows that our methane intensity, based on 2019 data, was one-third of 1%. In other words, members are 99.67% efficient in delivering a molecule of gas from the rig to the burner tip.

Identifying targets for performance-based approach

One of the keys to a performance-based approach is to set a target. If the EPA were to follow the Paris Agreement, what target could be utilized for the natural gas supply chain?

One option is the International Energy Agency’s (IEA) STEP Current Policies Scenario, designed to estimate what total emissions and associated temperatures would be if the world pursues a decarbonization path consistent with existing carbon emission reduction pledges. Interim goals are set using a 70% emissions reduction by 2025 and a 90% emissions reduction by 2030, with a net-zero goal by 2050.

Using IEA production data and EPA emissions data, the target would be approximately 00.33% for 2025, a target that ONE Future’s members have already achieved, and they continue to work to attain further reductions.

ONE Future’s results show that a performance-based approach works, today and tomorrow, and it is a step in the right direction.