Responding to investor calls for targeting net-zero carbon emissions, natural gas drillers are turning to new ESG certifications.
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While more U.S. shale gas producers are working with environmental, social and governance data providers to demonstrate high environmental and social standards for production, some environmental and investor groups remain concerned about whether those certifications can become an industry standard.
Project Canary Inc. provides solar-powered devices for continuously monitoring methane emissions and volatile organic compound levels that can be installed along the oil and gas value chain to detect real-time fugitive methane emissions. Appalachian drillers such as EQT Corp., Range Resources Corp. and Chesapeake Energy Corp., as well as LNG exporters including NextDecade Corp., have recently partnered with the startup amid mounting pressure to decarbonize operations.
"This ESG tsunami is a hundred-foot wave," Project Canary co-founder and CEO Chris Romer told S&P Global's Energy Evolution podcast. "Investors and banks need to think very carefully about the pad-level ESG data they need to have ... They need to get away from sustainability reports that basically show the picture of Bambi next to a drilling rig."
Andrew Logan, senior director for oil and gas at nonprofit investor network Ceres, said he has fielded inquiries from several investors about what Project Canary calls responsibly sourced gas. However, it also competes directly with renewable natural gas, which is refined from methane waste sources such as farms and landfills instead of fossil fuels.
"Renewable natural gas is something that's an easier sell for investors ... in a way that natural gas branded as 'responsible' is never going to be," he said. "I think there is certainly a group of critics of the industry that are not going to be satisfied by any certification approach."
For Andrew Baxter, the Environmental Defense Fund's director of energy strategy, the primary issue is that certifications like Project Canary's cannot be independently audited.
"It's almost like a self-certification," he said. "Using a single technology like a fixed ground-based sensor often doesn't capture the full picture. You don't acquire all of the data that you need to fully understand the emissions profile of that particular asset."