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INTERVIEW: MiQ eyes role for methane emissions standard in global gas trade

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INTERVIEW: MiQ eyes role for methane emissions standard in global gas trade

Highlights

MiQ partnership developing new certification system

Independent third-party system for grading gas supply

Buyers can choose 'differentiated gas': MiQ's Tijbosch

London — The certification of gas supply based on its methane emissions performance could become a key component in global gas trade in the future, a senior official at a newly launched methane emissions partnership said in an interview with S&P Global Platts.

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Georges Tijbosch, senior adviser at the not-for-profit MiQ partnership launched in late 2020, said its certification scheme would see gas suppliers able to differentiate themselves by offering gas with proven lower methane intensity.

This, Tijbosch said, could become an industry standard, with gas buyers also insisting on methane emissions certification in the gas they buy.

"We think that utilities and consumers are no longer going to accept buying gas that is high in methane emissions or that is uncertified," Tijbosch said.

He pointed to the recent decision by France's Engie not to agree an LNG import contract from the planned Rio Grande LNG facility in the US, having come under pressure from the French government and environmentalists, as an example.

Methane is a much more powerful climate pollutant than carbon dioxide, with estimates suggesting it is 84 times more potent than CO2 over a 20-year timeframe.

Methane emissions from upstream operations have been recognized as a problem for some time, but there is increasing scrutiny of the issue, with the EU set to make legislative proposals in 2021.

However, Tijbosch said regulators are hindered by the lack of a standardized global methodology for measuring emissions.

"It is difficult to come up with regulation if there is no consensus on how to measure emissions and what the methodology is," he said.

MiQ, he said, has set up an independent framework that would lead to gas being graded from A to F, depending on the volume of methane emissions at the upstream level.

"This means buyers will be able to choose between different graded types of gas," he said. "A is very low-methane gas and the other extreme is F-rated gas."

Its measurement methodology is at the upstream gas asset-level, so a gas producer in the North Sea, for example, would verify its emissions at its platform.

MiQ would grade the gas produced at the platform and provide a certificate once the gas is transported to a hub, giving the buyer knowledge of the methane intensity of the gas at the point of purchase.

High-level independent auditors would be hired to verify the methane emissions at the platform, paid for by the producer. Talks with potential auditors are underway, Tijbosch said.

'License to operate'

Tijbosch said it would be in the interests of producers to be able to prove the methane intensity of their gas, and they would likely be prepared to pay for the certification process.

"We're already in advanced talks with several producers interested in the scheme," he said.

"It could be considered a cost of running their business, a license to operate to get certified. I think that's where the market is probably going -- consumers are going to ask for gas to be certified as low-methane," he said.

To begin with, MiQ would work with pilot schemes with producers in 2021 to prove the viability of the system.

But the future could see the system used widely across the industry. "Once this kicks off in bigger volumes, then the different shades of gas and the pricing differentials will come in, which will get the producers who are lagging to invest in upgrades," he said.

Tijbosch said there would also likely be pressure from buyers of gas for proof the supply was provided from a source with the lowest possible methane emissions.

The system will also be global in its approach. "How we determine the methane emissions on the upstream level is global. Whether you're a buyer in Japan of LNG from Australia, or a buyer in Europe wanting LNG from the US, or a buyer in Europe wanting North Sea or Russian gas -- it should be equally applicable."

Tijbosch said MiQ's methodology is at asset-level, and that it would ultimately be up to the producer to want to certify its gas as low-methane emission and therefore follow the procedure for measurement laid out by MiQ.

And as new technology becomes available, such as satellite technology, the MiQ system will be evolved.

There are already voluntary initiatives, such as the Methane Guiding Principles, the Oil and Gas Climate Initiative, and the Oil and Gas Methane Partnership, which the industry is using to tackle the issue of methane emissions.

MiQ certification will work alongside these to bring a uniform standard for tackling methane emissions, and improving transparency and accountability.

Tijbosch also warned against industry attempts to self-regulate, saying there were increasing calls for an independent certification system.

Its system for certifying methane emissions could also be used by companies looking to buy upstream assets or upstream companies, to be able to prove their environmental credentials.