Sound Independent Research Informs Constructive Methane Dialogue

Sound Independent Research Informs Constructive Methane Dialogue

June 7, 2016

New data and information bring new debate and conversation. After all, that’s the purpose of research and science. So when new research and science enter a particular debate, most rational minds will evaluate this information with an open mind and take the findings into account when making decisions.

Last week, Our Nation’s Energy Future (ONE Future) — a coalition of natural gas companies focused on identifying technical solutions and public policies that help reduce methane emissions – published a report it commissioned from economic consulting firm ICF International. The report found that the cost to reduce methane emissions from natural gas systems was nearly five times greater than previous estimates suggested. Our statement in response to release of the study can be found here.

The report, available here, drew on extensive consultation with ONE Future members, including how various technologies were performing in the field and the actual costs associated with implementing those technologies into members’ methane emissions monitoring programs. The report used the 2012 EPA emissions inventory as a baseline, which was the most recent data set available when the study began over a year ago. Importantly, the report also used a natural gas input price of $3.00/Mcf of gas ($2.25/Mcf – 25% royalty and fee payments), which is in line with current and near-term forecasted gas prices.

With these data in-hand, the experts at ICF International ran their marginal abatement cost (MAC) model and concluded the following:

“The analysis estimates [methane] reductions for each segment of the natural gas industry. The MAC analysis identified reductions totaling 88.3 Bcf/year of methane at a total annualized cost of $296 million or $3.35/Mcf of methane reduced for all segments except the distribution segment. An additional 12.3 Bcf of reductions were projected for the application of reduced emission completions for gas wells with hydraulic fracturing. This was not required in 2012 but is now legally required, and was therefore included as a reduction from the baseline but not as part of the MAC analysis.  This brings the total industry?wide methane reduction to 109.5 Bcf from the 2012 baseline emissions.”

To be clear, this study was commissioned by ONE Future to determine realistic (and as close to real as possible) cost estimates for various methane abatement technologies and the amount of reductions each one of these technologies would achieve.

Unfortunately, some are twisting and turning the findings to push a prescribed agenda; namely, a defense of the status quo regulations that do not account for the elements incorporated in this report. To be clear, this new report never makes the claim that methane reductions shouldn’t be achieved because of cost. Simply put, our goal was to find out where we could achieve the best bang for the buck in reducing methane; anything to the contrary is a blatant misrepresentation of the report’s findings and ONE Future’s position.

We hope that this study will provide a road map for companies to consult when deploying capital in the most cost-effective methods to achieve the greatest possible reduction in methane emissions.

Furthermore, this analysis provides new and additional data to inform our companies’ involvement – and that of the entire industry – in the Natural Gas STAR Methane Challenge Program – a flexible, voluntary partnership between U.S. EPA and the and natural gas industry that focuses on achieving cost-effective methane emission reductions from natural gas operations. Since the inception of the STAR program 23 years ago, U.S. companies have eliminated more than 1.2 trillion cubic feet (Tcf) of methane emissions by implementing approximately 150 cost-effective technologies and practices.

We as a coalition are absolutely committed to reaching a methane emissions goal of 1 percent of production or less – and our hope is to do so in the most cost-efficient manner possible. What this new ICF study shows is that an abatement strategy should not be a one-size-fits-all strategy, but rather be founded on a performance based programthrough which companies have the flexibility to meet the end goals and transparently demonstrate their compliance.

We are certain that this piece of independent research will not be the last analysis on methane emissions abatement technologies and costs. But based on the current body of research in this space, it’s certainly the most accurate to-date. And as technologies evolve even further, we would expect costs to come down and methane emissions to be reduced even more. After all, that’s the purpose of research and science – things evolve, and one’s opinion should too.

About ONE Future: ONE Future is a coalition of companies from across the natural gas industry focused on identifying policy and technical solutions that yield continuous improvement in the management of methane emissions associated with the production, processing, transmission and distribution of natural gas.