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Oil and gas producers' methane emissions could rise in COVID-19 aftermath: IEA


Warns against weakening methane emissions regulation

Highlights profitability of eliminating wastage

Methane estimated at 8% of UK upstream emissions

London — Methane emissions by the global oil and gas industry could rise rather than fall in the aftermath of the COVID-19 crisis, contrasting with an expected reduction in CO2 emissions, as weak prices and policy shifts hamper efforts to contain the potent greenhouse gas, the IEA said June 18.

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In its 'Sustainable Recovery' report responding to the industry downturn, the IEA said it would cost $15 billion annually to reduce by three-quarters the industry's methane emissions, and regulators and companies needed to take action.

Methane, the main component in natural gas, is seen as a more powerful, though shorter-lived greenhouse gas than CO2. In the upstream industry, methane emissions derive from leakage, and 'venting' of gas during oil production and processing.

The IEA report estimated the industry's current methane emissions at 82 million mt/year, equivalent to 2.5 Gigatons of CO2.

The US shale revolution has met with particular criticism over methane emissions, although the industry and regulators claim progress on the issue. The IEA points on its website to "large data gaps" in relation to methane emissions by Russia and the Middle East, while also acknowledging uncertainty on the subject overall.

Global CO2 emissions are set for a record fall of around 8% this year thanks to a drastic reduction in energy demand resulting from COVID-19-related lockdowns, after flat-lining last year, according to the IEA.

By contrast, abatement of methane emissions is likely to be crimped by gas prices that were low even before the COVID-19 crisis, reducing the incentive to eliminate wastage, along with the possibility of regulators reducing their watchfulness, the IEA report said.

"While global emissions of CO2 will fall this year, a similar reduction in methane emissions from oil and gas cannot be taken for granted. The drop in natural gas prices means that many reduction and prevention measures are now less cost-effective to deploy than was previously the case."

"Declines in revenues from oil and gas operations may also mean that companies pay less attention to efforts to tackle methane emissions; regulatory oversight of oil and gas operations could also be scaled back," it added.

The report said, however, a third of the sector's methane emissions could be eliminated at effectively no cost, with $5 billion spent on preventive measures resulting in $10 billion of savings from methane being sold instead.

"Reducing leaks and the flaring of natural gas could substantially improve the trade position of a number of natural gas producers," it said.

The report singled out for praise Canada's federal government, which has included in recent stimulus spending $550 million for methane emissions reduction by the oil and gas industry. The IEA also pointed out the many jobs that could be created or saved in the course of cutting such emissions.

The UK's oil and gas industry body, Oil & Gas UK, estimates that methane accounts for 8% of greenhouse gases emitted in the course of the upstream oil and gas production process, or about 1.2 million mt of CO2-equivalent in 2018. On June 16, the group made a commitment to halve the UK's upstream CO2 emissions, including methane, by 2030, and to curb CO2 emissions by 90% by 2040.