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Methane Intensity Premiums calculate the cost of bringing the methane intensity of one MMBtu of average natural gas production per production basin to 0.
They are calculated by multiplying the Methane Intensity of each basin by the daily price of the Platts Methane Performance Certificate assessment (AMPCA00), which represents one MMBtu of zero methane-intensive natural gas production.
MPCs are traded separately from physical natural gas and are generated by natural gas produced with a demonstrated methane emissions intensity at or below the Commodity Insights threshold of 0.10%; the current average methane intensity for US natural gas production is 0.437%.
As the world has become more aware of the dangers presented by escalating climate change, it has become increasingly clear that real, measured approaches to carbon accounting are critical across a number of different industries. Commodity Insights use of real-time satellite and natural gas production data to generate its methane intensity calculations will provide much-needed clarity around the actual rate of methane being emitted through US natural gas production, while the MIPs will bring pricing transparency to the financial cost of continued methane emissions and encourage faster mitigation practices.
The new methane-specific numbers will compliment Commodity Insights existing Americas natural gas assessments. Additionally, they are also the latest addition to its suite of fossil fuel carbon intensity calculations, which already cover 104 crude fields globally and Australian LNG production.
The Methane Intensity Premium prices and emissions values will help provide a signal to the US gas market for how oil and gas production can be quantified with airborne measurements while attaching an uplift to in-basin pricing. Producing areas with lower methane intensities may see a higher uplift in MIP price values through the association of Methane Performance Certificates (MPCs).
Market participants in areas with high methane intensity values may recognize the importance of mitigating emissions reflecting in higher price premiums. As ESG standards involve, it will become more important for companies to measure ancillary aspects of their operations and Commodity Insights seeks to provide transparency in an evolving US gas market.
✔ Platts Dimensions Pro: AGP (Americas Gas & Power)
✔ ETA (Energy Transition Alert)
✔ PGN (Natural Gas Alert)
✔ Pages AGP0122, PGN0108
✔ Market Data API: MDC MIP