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New satellite-driven methane calculations could add visibility into US natural gas emissions

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New satellite-driven methane calculations could add visibility into US natural gas emissions

Highlights

Calculations utilize satellite data from Copernicus Sentinel 5P

Emissions will be calculated for 19 US basins at a monthly cadence

S&P Global Commodity Insights announced April 5 that it will launch basin-level methane intensity calculations at a monthly cadence for 19 US natural gas production areas, enhancing visibility into emissions as the industry grapples with calls for greater environmental transparency.

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"It has become increasingly clear that tackling methane emissions needs to be one of the top priorities in the fight against climate change, and this hinges on getting an accurate picture of the scope of the challenge," Paula VanLaningham, global head of carbon pricing at S&P Global, said in an April 5 statement. "Having that visibility as well as a clearer understanding of the costs it entails, is absolutely critical in tackling the problem."

Methane, a potent greenhouse that is between 84 and 87 times more potent than carbon dioxide over a 20-year span of time, has come to the fore for US gas producers in recent years, especially in the wake of a landmark series of studies from the Environmental Defense Fund in 2012-2018 that showed far higher emissions of methane from gas production than was previously understood. A common metric for assessing the severity of such emissions is methane intensity, which involves dividing total production volume by methane emissions.

The emissions numbers used in the S&P Global methane intensity calculations will be derived from data collected by the Copernicus Sentinel-5P satellite, using an attached TROPOspheric Monitoring Instrument. An average monthly emissions rate will then be calculated for each basin using a top-down atmospheric inversion framework, according to an April 5 statement.

The first round of monthly data will be published April 18.

Monitoring versus estimates

The new dataset gets at the heart of an ongoing shift in opinion in the gas industry on best practices to assess methane emissions, with the preference moving toward measurements and away from emissions factor estimates.

Previously, methane emissions from gas production were largely calculated using emissions factors from the US Environmental Protection Agency's Subpart W forms, which large producers are legally required to complete.

"If you use estimates, you are not going to be able to see improvements in real-time, and you're not going to be able to take credit for the changes you make, so this is why we need to start with good measurements" Angela John, director of innovation for new energy ventures at Williams, said at a March 10 CERAWeek by S&P Global event.

Technology is the biggest driver of the shift, with options ranging from "top-down" approaches like satellites and drones to "bottom-up" methods like ground-based sensors.

Experts say that a combination of both approaches is necessary to get a full picture of a given area's emissions, with satellites often lacking granularity and ground-based sensors dependent on wind direction and speed.

In the case of S&P Global's satellite-driven dataset, although each basin has been triangulated to capture areas with heavy concentrations of gas wells, the satellite data does not differentiate between methane emissions resulting from gas production or other sources, like agriculture or industry.

A potential boon to producers

Although having basin-level methane intensity numbers could give ESG-minded gas buyers and investors some insight into which basins are more polluting than others, the predominant use case for the new dataset might be as a signal to producers on where to pursue future acquisitions, invest capital, and concentrate drilling.

Reducing emissions has become a core goal for many larger gas producers, with many setting emissions reduction targets and some tying emissions performance to executive compensation. EQT, the largest US gas producer, has pledged to reduce methane emissions by 65% by 2025.

This interest from producers has been reflected in the momentum of third-party gas certification over the last year. More than 20% of all US natural gas production is set to have undergone the process by the end of 2022, according to data S&P Global collected from public announcements.