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EQT seeks independent carbon impact certification of Marcellus gas

Highlights

Largest US producer eyes Appalachia premium

Energy transition prompts proactive emissions programs

Houston — Most of EQT's Marcellus output will undergo an independent assessment of its environmental impact as the largest US natural gas producer recalibrates how shale is marketed amid the global energy transition away from fossil fuels.

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The company announced April 15 a program for about 4 Bcf/d of production from over 200 well pads in Pennsylvania to be certified based on the environmental, social and governance performance of how it is sourced. Methane emissions will be quantified.

The effort, which EQT considers to be a pilot that could be expanded, is part of a trend across the upstream, midstream and LNG sectors to guard against a future in which global gas consumption may eventually decline.

From detailing their carbon footprint to trying to capture carbon before it is released to identifying supplies that are responsibly sourced, the industry effort is partly about messaging that not all shale is created equal. In EQT's case, it hopes it can generate a premium for its gas if it can validate that its supplies are more environmentally friendly than supplies from other US basins.

"We want to differentiate our gas and Appalachia gas specifically as being the cleanest and the most responsibly produced," company spokesman Andrew Breese said in an interview.

He added, "There's definitely some messaging to be had. Not necessarily shale gas, but Appalachia shale gas. Shale gas coming out of the Permian – shale coming out of the oil – is a whole different thing from an ESG perspective."

Two groups, Equitable Origin and MiQ, will oversee the independent, third-party audit of EQT's natural gas production from the selected well pads in Pennsylvania. About 0.4 Bcf/d of gas production in Ohio and 0.7 Bcf/d of production in West Virginia is not covered by the program, according to EQT.

The certification, or score, determined for the selected EQT gas production will be based on multiple factors, including corporate governance and ethics, social impacts, human rights and community engagement, and environmental impacts, biodiversity and climate change. The quantification portion of the assessment will account for methane intensity, company practices, and methane detection.

Theoretically, with the certifications in hand, EQT could provide or sell them to end-users that procure supplies from the producer. That material could then be used by the end-users in their business processes around their carbon footprints.

The certification program follows EQT's announcement in January of a separate project to certify gas produced from two of its well pads, also located in southwestern Pennsylvania. The earlier program is a partnership with Project Canary, an environmental standards company based in Denver. Gas producer Chesapeake Energy announced a similar pilot program with Project Canary on April 13 that will be tied to the Marcellus shale and Louisiana's Haynesville shale.

Elsewhere across the gas value chain, Cheniere Energy, the biggest US LNG exporter and the country's biggest individual physical consumer of gas, said in February it would give its LNG customers emissions data associated with each cargo it produces at its two US export terminals. Tellurian CEO Octavio Simoes said in an interview with S&P Global Platts on March 25 that the developer of the proposed Driftwood LNG terminal in Louisiana supports a carbon tax to reduce greenhouse gas emissions.

Carbon capture

Also in March, NextDecade launched an aggressive carbon capture project tied to its proposed Rio Grande liquefaction terminal in Texas. With strict carbon emissions goals, European utilities are being pressured to shy away from signing new deals for importing US shale gas. France's Engie said in November 2020 that it had halted talks with NextDecade about a supply deal tied to Rio Grande LNG.

Against that backdrop, French energy major Total, which is both a producer and offtaker of LNG in North America, said April 13 it is working with Germany's Siemens Energy to study ways to reduce carbon emissions in LNG production.

EQT recognizes that it isn't the only producer taking a proactive approach to addressing its carbon profile, though it believes its comprehensive certification program may draw other upstream operators into similar efforts.

"What that's going to do is hopefully act as almost a pilot or test case that there's the potential for a market premium for certified gas," Breese said.