Gas industry slow to sign up for voluntary methane cuts

Date: 24-Feb-16
Country: USA
Author: Valerie Volcovici

The head of the U.S. natural gas industry group responsible for persuading companies to voluntarily report their methane emissions says he has not seen - and does not expect to see - a high number of companies participating in the program.

"Right now I will say that market forces kind of militate against a ton of people jumping-up to be proactive," said Tom Michels, executive director of One Future, a coalition of companies from across the natural gas sector that aims to self-regulate methane emissions.

The U.S. Environmental Protection Agency has designated One Future to lead the industry's attempt to reduce methane emissions from gas production, processing, transmission and distribution in the agency's expanded Methane Challenge program.

But only eight companies are currently signed up with One Future, including Apache Corp, Kinder Morgan Inc, Hess Corp and Southwestern Energy Co, out of nearly 8,000 operating independent producers.

Michels says the low gas prices that are pushing some independent and smaller shale producers to the brink of bankruptcy weigh against spending additional money to reduce emissions of the greenhouse gas.

Current market conditions make companies wary of "taking on commitments that they don't have to," he said in an interview with Reuters.

Methane is the second most prevalent greenhouse gas after carbon dioxide and is 84 times more potent, escaping into the atmosphere in varying amounts from leaky infrastructure during production and distribution.

Spurred by the months-long methane leak at the Aliso Canyon natural gas storage facility in California, environmental groups are demanding that the EPA tighten regulations on methane emissions rather than relying on the industry to voluntarily stanch escaping gas.

For its part, the EPA says it plans to give One Future a chance to work. Laura Allen, a spokeswoman for the federal agency, said it hopes to expand participation in its voluntary methane programs despite the downturn in the oil and gas market.

"A period of low oil prices is a particularly important time to run operations more efficiently by keeping more of this valuable economic product - natural gas - in their systems," she said.

The EPA is finalizing a rule that would require new oil and gas processing and transmission facilities to find and repair methane leaks, and to capture or limit methane from shale production.

But the agency has come under increasing political pressure to target methane already leaking from existing oil and gas infrastructure. Allen would not comment on whether the EPA plans to expand its rulemaking to cover existing sources.

Companies that sign up to One Future agree to set a target to achieve a methane emissions rate of no more than 1 percent of production. They are expected to report progress using a uniform set of emission measurements and reporting protocols.

Michels says that the large companies that have agreed to participate account for the "lion's share" of natural gas emissions.

"I think we can get critical mass simply by doubling our numbers," he said, adding, "I think the EPA wants to give the voluntary program a chance to work."

Mark Brownstein of the Environmental Defense Fund wrote in a recent blog post that even if more companies participated, the EPA voluntary program would fall "short on thoroughness, rigor, and urgency."

"It lacks a critical yardstick to measure progress, requiring no quantitative goals whatsoever," Brownstein said.

Environmental groups argue the low response underscores why the EPA needs to establish mandatory rules for the sector's existing sources before President Barack Obama leaves office next January.

The Obama administration set a goal last year of cutting methane emissions 40 percent to 45 percent below 2012 levels by 2025. It also pledged at the United Nations climate change talks in Paris to cut its overall greenhouse gas emissions up to 28 percent below 2005 levels by that same year.

Recent studies by the Rhodium Group and the Clean Air Task Force show that without cracking down on existing sources of methane, there is no way the United States can achieve either goal.

(Editing by Bruce Wallace and Steve Orlofsky)