Methane emissions and the need to decarbonize LNG

The liquified natural gas (LNG) sector needs a clearly defined decarbonization plan, which involves reducing methane across its entire value chain. A successful green economy depends on it.

Scientists and engineers have responded by coming up with answers to track methane emissions, including evolving technologies. But what will it take to establish common standards to measure and reduce methane emissions in a global market like LNG?

Methane: a fraction of the challenge

To answer this question, we need to understand just how complex methane emissions are. It’s the second biggest contributor to climate change after carbon dioxide (CO₂). If we reduce its global emissions by 50 percent over the next 30 years, we could mitigate global temperatures by 0.18°C by 2050.

With such a significant impact, it’s no wonder why methane reduction is fundamental to the Paris Agreement. And reducing methane emissions was one of the first major announcements at the 26th United Nations Climate Change Conference (COP26). The Global Methane Pledge is a global scheme involving 100 countries that aims to limit yearly emissions by 30 percent by 2030, compared to 2020 levels.

Tracking methane emissions: easier said than done?

Achieving these targets is not without challenges. Tracking data is a major stumbling block. And there’s no independent, international body collecting and verifying methane emissions statistics.

Amplifying the problem, the actual tracking presents multiple challenges, including tracking methane that escapes into the air through flaring, or as fugitive emissions. Flaring, a process of burning methane and releasing it as CO2, is relatively easy to track. But the same can’t be said about fugitive emissions, which happen unintentionally.

During drilling, storage, and transportation of large amounts of gas, small amounts of methane release into the air. These are hard to track. The traditional approach to estimate emissions has been a bottom-up, engineering-based estimate. But this approach significantly underestimates the number of emissions escaping.

The difficulty in measuring fugitive emissions creates industry uncertainty. How significant are methane emissions compared with total greenhouse gas (GHG) emissions? Are gas industry emissions higher than previously estimated? No one knows. The inability to answer these questions and verify emission rates with data is stalling efforts to change.

Partnerships and mechanisms will drive synergies

But this is not to say there aren’t any efforts to track emissions and get more stakeholders involved. The European Commission, in partnership with United Nations Environmental Programme (UNEP), the International Energy Agency (IEA) and the Climate and Clean Air Coalition (CCAC) are establishing the International Methane Emissions Observatory (IMEO).

With the oil and gas sector its initial focus, the IMEO has five core functions. These include challenging and corroborating company reports using data sourced from satellite observations, aggregate company reports and confidential core sources. Using the collated data, the IMEO will compile and publish a methane-supply index at a regional (EU) and international level.

The Oil and Gas Methane Partnership (OGMP) is another significant collaboration. This 10-membership voluntary organization represents 15 percent of the world’s natural gas production. It consists of leading global energy producers such as BP, Shell and Total. The organization is working with CCAC to introduce standardized measurements for methane emissions by 2023.

Using its latest 2.0 framework, the OGMP aims to get granular on midstream and downstream segments of the natural gas value chain. 62 companies will report their methane emissions from all sources across the value chain. They account for 30 percent of the world’s oil and gas production.

With the EU and UNEP and Environmental Defense Fund (EDF) supporting the OGMP, it's encouraging operators to set reduction targets. Not doing so carries reputational risk and the possibility of losing market share. There’s also a chance that investors might blacklist offenders, with non-EU organizations facing the biggest risk.

The technologies to get us there

The pressure to get a handle on methane emissions has inspired several new and emerging technologies to measure them in oil and gas. These include drones and satellites. Their rapid proliferation has made it possible for stakeholders to compare methane emissions.

Tech developers are working with oil and gas operators to monitor and detect pipeline leaks. Data from the Copernicus satellite program and the Sentinel 5-P satellite is being used by companies such as Kayrros SAS to quantify methane emissions at an asset level. As a result, Kayrros has estimated that there are 100 high volume-methane emitting events at any one time around the world.

Even though the purpose isn’t to name and shame the worst offenders, the results of these programs have shown super emitter events. It’s also highlighted geographic regions with higher methane concentrations such as the Permian Basin in the US.

Going forward, improved top-down data from satellites will help to target bottom-up leak detection on the ground as well as aerial monitoring.

Regulatory requirements moving the industry forward

From a regulatory and policy perspective, the EU is leading the way in monitoring methane emissions and placing requirements on natural gas imports. Its new methane strategy is a major challenge to operators. And where the EU goes, other regions seem to follow. So, restrictions on carbon intensity in the EU will have an enormous impact on LNG suppliers around the world.

In the European Commission’s Methane Strategy (2020) the EU clearly states it intends to leverage its position as the world’s largest oil and gas importer to promote energy-related methane emission reductions globally.

The EU is planning a two-stage approach to improve monitoring and reducing emissions. First, it’s encouraging international, voluntary cooperation from major natural gas producing countries. But if the sector is reluctant to commit, its second step is proposing legislation targets, standardized methodologies, and incentives for desired behavior. The European Commission is already poised to deliver legislative proposals in 2021.

This new legislation is also an opportunity for suppliers. They can produce LNG that has verifiably low GHG emissions and gain a commercial advantage in the EU.

Whether markets such as Japan, Korea and China will follow suit remains to be seen. We also can’t tell the extent global markets will divert LNG flows in response to legislative changes.

Not so far behind the EU’s strategy, the US has committed to reducing methane emissions under its Methane Emissions Reduction Action Plan. These measures will target methane leaking from new oil and gas rigs across the US. And new regulations will require individual states to develop methane reduction plans for existing oil and gas wells.

From tracking and regulations to capturing and reducing

With regulatory requirements to reduce emissions coming into the fold, the next steps for operators are to continue reducing emissions. This includes opportunities to capture emissions. The IEA believes 40 percent of methane can be recovered and sold, which could lead to the best social, economic and environmental outcome.

The time to act is now. But it all hinges on creating a universal methodology to track methane emissions and creating frameworks on how to lower them. This will require collaboration, policy, and investment among stakeholders. We’re already seeing this take shape, with new partnerships forming, and frameworks and technologies coming into the picture. But more can and should be done. LNG is a critical fuel and feedstock as the world's industries move towards a low carbon future. It rests on our ability to reduce methane emissions now.