Certified natural gas market advances with new developments in US, Canada

Two new developments in the North American certified gas space this week could advance the nascent market, as the early wave of action from producers observed in 2021 begins to be met with steps to facilitate transactions with gas buyers.

As of Dec. 16, 24 producers in the US have publicly announced plans to certify some or all gas production, resulting in an anticipated 7 Bcf/d of certified gas by year-end 2021. A further 8.3 Bcf/d of gas will have undergone certification by the end of 2022.

In Canada, third-party certification has been completed by three producers so far, according to public statements. The three producers –Seven Generations, Pacific Canbriam Energy and Vermillion– each chose to partner with Equitable Origin for certification, with only one of the three choosing to make public the volume of gas certified.

Certified gas pooling areas

Kinder Morgan filed a proposal (RP22-417) with the Federal Energy Regulatory Commission to provide supply aggregation pooling services for third-party certified natural gas at five locations along its Tennessee Gas Pipeline, the company said Dec. 15.

Tennessee Gas Pipeline, which is one of the country's major Northeast-to-Southeast and Northeast-to-New England gas supply routes, would be the first pipeline system to offer this service.

"We've moved from the innovation stage to early adopter stage over the last year, and now we're seeing the market grow and accelerate into that next phase," Roy Hartstein, CEO of consulting firm Responsible Energy Solutions, told S&P Global Platts in a Dec. 16 phone interview.

Hartstein cautioned that it was too early to say whether this development will lead to new indices for certified gas, but that having pooling areas "facilitates transactions, which helps figure out the direction things will go."

To qualify for TGP's new pooling areas, a methane intensity of 0.2% or lower will be required, along with third-party certification from MiQ or Project Canary. The acceptable threshold for MiQ certification will be the MiQ Standard's grades A, B or C, while for Project Canary will be its TrustWell rating of Gold or Platinum.

Aggregating certified gas into pools and co-locating them with existing pools on TGP could provide benefits to both producers and end users, Kinder Morgan spokesperson Katherine Hill said in an email.

"[The pools] are designed to provide RSG producers a location to aggregate their supply into one location for ease of nominations and offer depth [and] liquidity to the market," Hill said.

"At the same time, the end-users and transporters looking to pull from the pools will have the opportunity to buy from a deep market with a high degree of transparency."

The pooling areas involved are:

• 100 Leg – Zone 0 – North supply area pooling area
• Station 87 – Zone 1 supply area pooling area
• 200 Leg – Zone 4 market area pooling area
• 300 Leg - Zone 4 market area pooling area
• 300 Leg Marcellus – Zone 4 market area pooling area

If given regulatory approval, Kinder Morgan expects the service to become available in the first quarter of 2022.

The proposal to provide pooling areas follows Kinder Morgan's strategic agreement announced in mid-September to transport certified gas from Southwestern Energy along Tennessee Gas Pipeline to the Northeast starting Nov. 1.

Southwestern was an early pioneer of the certified gas movement, seeking out certification from IES and signing the first publicly known supply deals in 2018 and 2019 with gas utilities in the Northeast and Mid-Atlantic regions. IES has since merged with Denver-based certifier, Project Canary, whom Southwestern chose as its partner for the producer's current certification efforts.

A number of other producers who have sought out third-party certification have production areas near Tennessee Gas Pipeline's path through the Appalachian states, including EQT, Olympus Energy and Seneca Resources.

Canadian-certified gas supply deal

In another milestone for certified gas development, a group of energy companies in Canada announced a supply agreement Dec. 16 that could link certified gas with the country's largest gas hub and on to end users.

Producer Vermillion Energy will supply certified gas from Alberta to Uniper, which will in turn manage flows to wholesale supplier Access Gas Services. Access Gas Services is a subsidiary of Rockpoint Gas Storage Canada, which owns and operates the 154 Bcf of storage capacity at AECO Hub in Alberta, as well as the 21 Bcf Warwick Gas Storage in the same province.

"Through our downstream owned company, Access Gas Services, Rockpoint is able to connect our customers to responsible gas producers who are committed to ESG leadership," Sheri Doell, Rockpoint Gas Storage's vice president of origination and renewable energy, said in a Dec. 16 statement.

The transaction will be underpinned by exchange Xpansiv's DF Registry, with certificates uploaded into the registry to ensure production accountability and traceability.