Chesapeake Energy moves to certify Gulf Coast gas output as RSG by end of 2021

Chesapeake Energy will work with a pair of environmental groups to certify its Haynesville shale production in Louisiana as responsibly produced by year end, with plans to later do the same with its Appalachia production, as the natural gas industry continues to respond to environmental concerns at home and in global LNG markets.

MiQ — a joint venture between RMI and SYSTEMIQ — and Equitable Origin were chosen as the third-party certifiers. MiQ will provide a quantitative assessment of the company's methane emissions and detection practices, while Equitable Origin will certify to a broader qualitative environmental, social, and governance standard.

The new initiative will be Chesapeake Energy's second responsibly sourced gas certification project, having previously launched a pilot program with Project Canary in April. The pilot involved installing on-site continuous methane monitoring devices on select Chesapeake well pads in the Marcellus and Haynesville basins, as well as undergoing Trustwell certification.

Chesapeake's Haynesville gas production totaled around 532 MMcf/d in the first quarter, according to a May 12 investor presentation. The Haynesville shale basin has seen steady production growth over the past several years, with Platts Analytics data showing year-to-date production volumes of 12.43 Bcf/d, up from 12.03 Bcf/d in 2020 and 11.73 Bcf/d in 2019.

Appalachia plans

Following its Gulf Coast certification process, Chesapeake aims to complete certification of its Appalachia gas production by Q2 2022. Chesapeake produced 1.26 Bcf/d of gas in Appalachia in Q1, according to the May 12 investor presentation.

Appalachia has emerged as the country's dominant basin for RSG certification, likely due to the basin's lower emissions profile. Four out of the top five Pennsylvania gas producers have announced RSG certification efforts for some or all production.

Competitive advantage

The company's focus on RSG and reducing its emissions profile has been positioned as a competitive advantage by Chesapeake's leadership.

"As you think about the LNG markets, as you think about the fact that Chesapeake is having our gas stamped with the RSG seals of certification around being a responsible producer, we expect to advance our efforts there and work with downstream users of our products to enhance the value that we deliver to our shareholders, and ultimately, we deliver to the buyer community," Chesapeake Energy's CFO, Domenic J. Dell'Osso, said at the company's Q1 earnings call.

Chesapeake has set a goal of net-zero direct greenhouse gas emissions by 2035. The company's plan to achieve this objective includes eliminating flaring at wells and initiating electric frac procedures.

Additionally, the company has established a target of reducing its overall methane intensity to 0.9% by 2025, down from a 2019 intensity of 0.17%.