An Industry You’ve Never Heard Of Is Trying to Cut Over $1.8 Billion in Wasted Natural Gas

Can a little-known, fledgling industry make the oil and gas industry more efficient and a little less dangerous to the climate by tackling methane leakage?  A new report offers a close look at the “methane mitigation industry.”

The fracking boom has allowed natural gas to seriously threaten — and in many cases supplant — the dominance coal-fired power generation has held over America’s electric grid. Many people who care about climate change and air pollution have cheered this development because when burned, natural gas gives off less pollution, including carbon dioxide, than coal does.

There are two problems with this narrative.  The first is that burning more natural gas does not help the climate picture if it replaces low-carbon, renewable energy that would otherwise be deployed.  The second is that methane, the principal component of natural gas, is 86 times better at trapping heat in the atmosphere than carbon dioxide is.  And not all extracted methane arrives at its intended destination on the consumer end.  A not-insignificant amount is emitted at the wellhead, or while being stored and distributed — seeping past inadequate valves, leaking out of pipelines.  The natural gas system is the largest industrial source of methane emissions in the U.S., and those emissions are expected to grow.  That’s bad news for a livable climate.

So what can the industry do right now to stop it?

The new report, prepared for the Environmental Defense Fund by Datu Research, takes a deep look at the “new and rapidly emerging methane mitigation industry.”
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The process of fracking itself can be made to waste less methane by using reduced emissions completions (RECs).  After the fracking fluid is sent down into the well to fracture the rock, a mix of gas, water, sand, and chemicals comes back up.  While dealing the wastewater comes with its own set of issues, many companies just let the initial bursts of methane vent into the atmosphere, but REC equipment can be installed to separate out the gas into the pipeline going to market.
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Absent a price on greenhouse gases or direct regulation of methane leaks in the oil and gas industry, companies often ignore the externality of wasted gas if the loss is smaller than the gain of leaving that well as-is — they can earn higher returns drilling the next well.

“To fully realize the economic and environmental benefits of stopping these harmful and costly methane leaks, federal and state regulators need to put in place commonsense requirements to detect and fix the leaky infrastructure,” said Greg Dotson, Vice President for Energy Policy at the Center for American Progress.
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It’s not clear how far the EPA is going to go on regulating methane under the Clean Air Act. They will likely address control requirements to new wells, but there is a significant amount of leakage from existing wells, so people like Brownstein are looking for the agency to extend regulatory action to existing wells.  Currently, the U.S. requires companies to control gas leakage as they finish drilling a new well, but not methane leaks from oil wells that have natural gas mixed in, known as “associated gas production.”  Far too many wells are “associated” for them to be ignored under a policy hoping to address methane leakage rates.  Some states, like Colorado and Ohio, already require this, but the U.S. as a whole does not.

An Industry You’ve Never Heard Of Is Trying to Cut Over $1.8 Billion in Wasted Natural Gas