World Oil’s Shale Tech Conference Address

December 6, 2018: World Oil’s Shale Tech Conference Address

This week I was honored to deliver the lunch time address at World Oil’s Shale Tech conference in Houston, TX. I chose the topic, Why Methane Emissions Matter; with the explanation that natural gas is a foundational fuel for today and tomorrow. I talked about how methane emissions are one issue that the industry must address for natural gas to remain a competitive fuel in an increasingly low carbon economy.

I shared ONE Future’s founding principles, our members, our efforts to reduce methane emissions and most exciting – our latest progress report, where we surpassed the original goal we set for the organization. I expressed that one of the key drivers to our success was adopting a performance-based approach to reducing emissions. ONE Future’s results demonstrate that when companies have the flexibility to deploy resources and technology in the most cost-effective and efficient manner then results are more robust and achieved more quickly.

Because I was speaking to folks in our industry, I also talked to them about how ONE Future members were focusing on three key stakeholder groups: employees, customers and investors/shareholders. If we listen to and take into account each of these groups as we reduce methane emissions, then both the environment and the competitive sustainability of natural gas would be addressed.

The presentation was very well received, and I talked to a few folks who expressed interest in our coalition. I encourage you to download the full presentation.

Until next time,

Richard Hyde, Executive Director

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What do the annual emission intensity numbers really mean?

November 27, 2018: What do the annual emission intensity numbers really mean?

ONE Future announced that it had released its 2017 annual emission intensity numbers. The results showed that the intensity was 0.552% significantly surpassing our 2025 goal of 1%. I have received questions over the last several days asking: was the goal too low; are these numbers real; and what do you do now?

We set our goal in 2014 when the EPA national emission intensity was 1.44%. At the time, many were saying that for natural gas to be sustainable and competitive against other fossil fuels, methane emission intensity needed to be at or below 1%, so that is where we set our goal. At the time we believed that 1% by 2025 was actually a stretch goal.

As you can see from the report posted on our website, the numbers are real and we are proud that the investment of time and resources has paid off. The numbers reported include the emissions that ONE Future members report to the EPA through the Greenhouse Gas Inventory and also include additional emissions not reported because they fall below reporting thresholds. In addition both the National Energy Technology Laboratory and Innovative Environmental Solutions have independently reviewed the numbers.

ONE Future members will continue to work to reduce methane emissions. We believe that our results show that a performance-based approach to reducing emissions works and will continue to be a leader in finding and deploying innovative technology that is cost effective in emissions abatement.

ONE Future also wants to encourage other members of the natural gas industry to join us in reducing methane emissions. As an industry we have demonstrated we are able to meet the growing energy needs of our country, however, in order to ensure that natural gas is a sustainable long-term fuel source, the entire natural gas value chain needs ensure they are doing their part in reducing methane emissions.

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Methane Emissions and Green House Gases Reduction go Hand-in-Hand

October 17, 2018: Methane Emissions and Green House Gases Reduction go Hand-in-Hand

In an article from Reuter’s last week, Shell Chief Executive Ben van Beurden said, “Shell’s core business is, and will be for the foreseeable future, very much in oil and gas… and particularly in natural gas.”

And it’s not just Shell (RDSa.AS) that is betting that the demand for natural gas will continue to increase for decades, along with BP (BP.L) and Total (TOTF.PA) also rising to the demand to develop cleaner energy sources, they are investing more and more in solar and wind power, electric vehicle technology and even forestation.

Still, they see oil, and especially natural gas, the least polluting fossil fuel, playing a major role throughout the decades of transition and beyond as demand for electricity and plastics grows.

By 2035, Shell expects global gas demand to grow annually by 2 percent, twice the pace of worldwide energy demand, van Beurden said.

This increase in demand is just one reason that the efforts of ONE Future make sense for oil and natural gas companies. ONE Future’s members begin with a focus on the outcome we want to achieve. In the case of natural gas methane emissions, our desired outcome is to collectively achieve an average rate of emissions across all facilities that is equivalent to one percent (or less) of total produced and delivered natural gas.

Qatar, one of the world’s largest natural gas suppliers, is set to grow its liquefied natural gas (LNG) capacity by over 40 percent by the next decade to around 110 million tonnes per year, as demand for the super-chilled fuel is set to soar, particularly in fast-growing economies such as China and India.

“We believe that natural gas will continue to play a key role, not as a so-called transition fuel but rather as a destination fuel,” Qatar Petroleum CEO Saad Al Kaabi said.

Shell is investing more than any other of its peers in clean energy, spending $1 billion to $2 billion a year on renewables and low-carbon energy. That compares with a total annual spending budget of $25 billion-$30 billion.

The investments “might even make people think we have gone soft on the future of oil and gas. If they did think that… they would be wrong,” van Beurden said.

It’s important in the years to come that we focus on reducing methane and protecting our environment in every way possible, all while ensuring natural gas is a sustainable energy source for decades to come.

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October 1, 2018: Methane Emissions Reduction Gains Global Momentum

October 1, 2018: Methane Emissions Reduction Gains Global Momentum

An important article ran in the Houston Chronicle last week, commending several well-known energy companies on their recent pledge to reduce methane emissions. Exxon Mobil, Chevron and Occidental Petroleum were mentioned as the most recent to join in the Oil and Gas Climate Initiative (OGCI). OGCI’s pledge is to reduce methane emissions to a methane intensity level of 0.25% by 2025; and with the addition of these new members, OGCI represents a significant portion of the global natural gas production.

ONE Future commends OGCI and its new members for their efforts to reduce methane emissions to a methane intensity level of 0.25% by 2025. Also, we’d like to extend a hearty invitation to these companies to consider joining the ONE Future coalition, and to expand their efforts into the U.S.

Collectively, there are many organizations working to reduce methane emissions worldwide, ONE Future focuses on such reductions within the U.S natural gas value chain, with the underlying premise that voluntary programs can help lead the way in reducing methane emissions. ONE Future’s goal is to reduce these emissions to a methane intensity level of 1% or less by 2025 and is on track to achieve this goal in 2018.

The more industry participation in ONE Future, the greater the emission reductions, and the cleaner the natural gas industry. In short, we believe that the entire value chain has a key stake in reducing methane emissions to maintain the current advantage that natural gas enjoys today and to ensure successful sustainability for the future.

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ONE Future Welcomes Berkshire Hathaway Energy!

September 13, 2018: ONE Future Welcomes Berkshire Hathaway Energy!

If you haven’t already seen the official press release, we announced today that Berkshire Hathaway Energy (BHE) Pipeline Group has joined with the coalition. BHE consists of two natural gas pipelines that operate in the Transmission and Storage Segment: Northern Natural Gas Company pipeline system stretches across 11 states, from Southern Texas to Michigan’s Upper Peninsula, providing access to five of the major natural gas supply regions in North America.

With the addition of BHE, our members now account for approximately 10% of the total natural gas production, 32% of the US natural gas transmission miles and 9% of the US natural gas distribution.

Our coalition is growing, not only by companies (we are up to 15 member companies with this addition), but geographically across the country and we couldn’t be happier. Every company’s efforts count, and are important in achieving our mutual goal of reducing emissions across the natural gas chain to one percent or less by 2025.

Membership is a great step for BHE, but they have already been actively working to reduce emissions – its natural gas transmission pipelines’ operational practices and methane leak detection programs are designed to minimize the release of methane emissions. These leading practices resulted in the gas transmission pipelines’ combined leak rates, measured as a percentage of throughput, of 0.053% and 0.046% in 2016 and 2017, respectively. If you’d like to learn more about Berkshire Hathaway Energy, we encourage you to visit their website.

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The Methane Emissions Triangle

September 5, 2018: The Methane Emissions Triangle

In an op-ed that I recently read in the Wall Street Journal, it seems that the author is stating that neither side in the climate change argument has any real answers to the problem, and in my opinion, it is unlikely they will come to an agreement. One point that the author makes is that status quo is a problem. I agree with that point and will take it one step further; we can agree to disagree on climate change and still successfully address methane emissions.

I believe that the status quo from the perspective of the natural gas industry, as it specifically relates to methane emissions, can harm the reputation and competitiveness of the industry. That is one of the reasons that ONE Future was created in 2014, to ensure the sustainability and competitiveness of natural gas.

We in the industry must change the way we view methane emissions. I believe that many in our industry equate methane emissions reductions with climate change. While I don’t think industry would argue that methane has an environmental impact, I believe that industry needs to think of methane emissions reductions in a totally different way.

While the environment is very important to everyone, we in industry need to change our way of thinking about why we need to reduce methane emissions and as a result change the status quo.

I believe that methane emission reductions should be viewed as a triangle. At the top point is safety. All in the industry view safety as a priority; reducing methane emissions is a key element in increasing safety for our employees and for those who live near our facilities.

The second point is investors. Companies have a fiduciary responsibility to effectively and efficiently utilize the capital resources provided by investors. Some investors have been pushing back on companies to demonstrate how they are using resources in a sustainable manner, while continuing to make a profit.

The third point is customers. Customers are why companies are in business. Natural gas companies want to produce and deliver the commodity that is purchased. Each part of the value chain has a responsibility to do that.

As you can see; all three of these points are intertwined, thus the imagery of the triangle, and within the triangle resides the environment. If the industry will focus on the triangle as it relates to methane emissions, then the environment and the natural gas industry will both be winners.

Richard Hyde, Executive Director

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How ONE Future is Working with the EPA

August 30, 2018: How ONE Future is Working with the EPA

Colorado is one of the many states in the U.S. considering how to deal with methane emissions. One of the approaches they are considering is using a voluntary method, similar to ONE Future’s program. As states begin to look at dealing with methane emissions voluntary programs should be considered because I believe the voluntary, performance-based approach is superior to any command and control type of program. When companies can take the most cost efficient and effective path to reducing methane emissions, I am confident state’s success will be much greater than a one-size fits all approach.

Yesterday I made a presentation to the Colorado Oil and Gas Association State Hydrocarbon Energy Reduction work group to describe how ONE Future worked with EPA to develop a successful voluntary program that include transparency and accountability. ONE Future’s goal of 1% methane intensity by 2025 provides member companies a definitive accountable target. Reporting our progress each year will create transparency and accountability; we know that will lead to credibility.

As an example of our accountability, the National Energy Technology Lab (NETL) issued a study that encompassed ONE Future member company’s data plugged into the NETL Life Cycle Analysis model. The results showed that the ONE Future protocol achieved a 0.67% methane intensity. While this is a great result and shows that we are on the right track, we still must execute the program to achieve the goal not only of reducing emissions but achieving credibility.

As more states begin to look at how they will deal with methane emissions, I hope they will look at the ONE Future voluntary, performance-based model as an example of what a successful approach is for their state and their citizens.

Until next time,

Richard Hyde, Executive Director

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The U.S. Natural Gas Advantage

August 15, 2018: The U.S. Natural Gas Advantage

Forbes recently published an article in which the author discusses the advantages that the U.S. natural gas supply has over Russia’s gas supply based on lower methane emissions rates from U.S. gas. The author states that Gazprom’s system has a leak rate of 5-7%, though admits that emissions are not being fully accounted for so it could be higher, while the U.S. rate, depending on the source, ranges from 2.6% to 1.5%.

Based on just the emissions rate it is obvious that the U.S. gas supply has a distinct advantage. While I agree with this advantage, the author goes on to criticize the Trump Administration and industry for attempting to undermine the methane regulations that give the industry this advantage and I couldn’t disagree more.

ONE Future members are working diligently to further reduce methane emissions using our voluntary, performance-based protocol developed in conjunction with the EPA. While there are no LNG exporters that are members of ONE Future currently, ONE Future production sector members produce approximately 10% of the U.S. natural gas.

I firmly believe that a voluntary, performance-based approach is superior to a regulatory, one-size fits all approach because it is more cost effective and most importantly it works. We are seeing investment funds and banks push for reducing emissions and I believe we may soon see end-use customers push for the same thing here in the U.S.

While I am no expert on emissions issues in Europe, it is clear that the U.S. has an emissions rate advantage over natural gas supplies worldwide. I believe that the advantage stems largely from the work that industry organizations, like ONE Future, are doing on their own to reduce emissions, recognizing the importance of it not only from an environmental standpoint, but from a safety, investment and customer standpoint as well.

Richard Hyde, Executive Director

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Self-Regulate, While You Still Can

August 9, 2018: Self-Regulate, While You Still Can

I read recently that Mexico is the latest country to crack down on methane emissions from its oil and gas wells, and is even looking to use some regulations that were established by the Environmental Defense Fund.

Mexico’s President-elect, Andres Manuel Lopez Obrador, made the announcement as part of a $16 billion investment plan to boost flagging oil production, refinery capacity and electrical generation.

Drew Nelson, international affairs director of the Environmental Defense Fund said, “Mexico has shown real leadership in developing sound regulations to address methane pollution. The draft rules draw on learnings from other oil and gas jurisdictions already successfully controlling methane emissions across North America.”

This initiative is commendable, but I believe that programs such as ONE Future also serve as a great example of the benefits of self-regulation based on science rather than arbitrarily set goals. If companies are able to achieve measurable results on their own, they won’t be at the mercy of the “one size fits all” regulations that governments might impose, not to mention the expense which will ultimately affect the end users.

ONE Future’s members begin with a focus on the outcome we want to achieve. In the case of methane emissions, our desired outcome is to utilize a voluntary performance-based approach to collectively achieve an average rate of emissions across all facilities that is equivalent to one percent (or less) of total produced and delivered natural gas.

With that goal in mind, each member company has the flexibility to deploy their capital where it will be maximally effective in reducing emissions. For one company that may be deploying an innovative technology, for another modifying a work practice, or another retiring an asset. To demonstrate credible and measurable results, ONE Future companies agree to measure their emissions and track their progress over time according to uniform, EPA-approved reporting protocols. This is effective, because most studies demonstrate that the majority of methane emissions come from a small fraction of sources. Our approach allows companies to focus their resources on identifying and addressing those sources.

If you have questions or are interested in becoming a member, we hope you’ll reach out.

Richard Hyde, Executive Director

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Working Together to Reduce Methane Emissions

August 2, 2018: Working Together to Reduce Methane Emissions

An article published earlier this year in The Conversation gives an excellent summary of the efforts on behalf of the U.S., Canada and Mexico from the last several years to reduce their methane emissions.

The article’s authors are Kate Konschnik, Director, Climate & Energy Program, Nicholas Institute for Environmental Policy Solutions, Duke University; and Sarah Marie Jordaan, Assistant Professor of Energy, Resources and Environment and Canadian Studies, School of Advanced International Studies, Johns Hopkins University.

Konschnik and Jordaan state that, “In 2016 U.S., Canadian and Mexican leaders pledged to reduce methane emissions from the oil and natural gas sector 40 to 45 percent below 2012 levels by 2025. Today, however, Canada is just beginning to contemplate more comprehensive regulatory limits on methane. Mexico has made only nonbinding pledges so far, and the Trump administration is rolling back federal methane regulation.”

They go on to discuss briefly the role and progress of science, governmental and nongovernmental agencies in methane reduction citing, “…many discrepancies in how methane emissions are measured from place to place. States and provinces have inconsistent reporting requirements, applying different thresholds over which facilities must report emissions. And there are unexplained differences between facility-level estimates of methane coming out of leaky valves and pipes on one hand, and measurements of methane in the atmosphere near oil and gas facilities.”

They conclude that the path to success will require active coordination across industry, environmental organizations, academia and government, integrating science and policy to move North America toward a lower carbon future.

ONE Future is proud to say that we are one step ahead of that suggestion! At thirteen members strong and growing, and with a mission to demonstrate credible and measurable results, ONE Future has companies agree to measure their emissions and track their progress over time according to uniform, EPA-approved reporting protocols.

We are thankful for our progress and delighted to see discussion increasing around the efforts needed to reduce methane emissions. For more on how you can become a member, visit our website.

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