Natural Gas Leaks: A $30 Billion Opportunity and Global Warming Menace

A new study released Tuesday suggests that the global oil and gas industries allow as much as 3.6 trillion cubic feet of natural gas — and almost certainly far more — to escape into the atmosphere annually. The leakage rate represents at least $30 billion in lost revenues, the analysis found, and it reinforces previous studies suggesting that the much-touted climate benefits of the expanding shale boom are unlikely to be realized unless these so-called fugitive emissions are brought under control.

While the chief component of natural gas, methane, breaks down in the atmosphere more quickly than carbon dioxide, it has far more planet-warming potential while it is present.  The gas escapes from storage tanks and vents at oil production sites, and in even greater amounts all along the natural gas production and delivery chain — rising from wells, poorly constructed processing facilities, and leaky transmission and delivery pipelines.  Over a 20-year time frame, the cumulative leakage in 2012, the new study suggested, would represent as much as 7 percent of total global greenhouse gas emissions — or the equivalent of about 40 percent of total carbon dioxide from coal-fired power production.

For all of this, governments have done little to date to monitor, measure or regulate methane emissions.  And given the varying quality of country-to-country reporting of methane leaks in the oil and gas industry — most of which comes from somewhat crude, bottom-up measurements taken on the ground near production, processing and delivery infrastructure — the study suggests that its findings, which put the overall global leakage rate at 3.2 percent, are almost certainly on the low side.

“Even the best country data relies on bottom-up emissions inventories,” said Drew Nelson, the senior manager for natural gas with the Environmental Defense Fund, an industry-friendly environmental group that commissioned the analysis, in an email message.  “There have been studies in the U.S. that suggest our bottom-inventory is under-reporting emissions by 50 percent.  This study relies on those bottom-up inventories and many places have far less capacity on their inventories than we do.”

Ethan Davis, an energy analyst and consultant with the Union of Concerned Scientists who looked over the new analysis, concurred, noting that even if the 3.2 percent leakage rate was accurate, it is above what some studies have shown would be necessary to realize any climate benefit from the coal-to-natural-gas switch.  Even so, “Adding this all up,” Davis said in an email message, “there is very good reason to think this is likely a low leakage rate — especially for global sources.”

Some of the world’s major natural gas producers are among the biggest methane leakers. Russia, the United States, Uzbekistan, Canada and Mexico top the list, according to the report, which was prepared by the Rhodium Group, a New York-based consultancy that specializes in energy market analysis.  Should nothing be done and the oil and gas industries grow globally as predicted over the next 15 years, the study found, emissions would expand by as much as 23 percent.  Climate scientists, meanwhile, suggest that global emissions must be cut roughly in half by mid-century in order to keep planetary average temperatures from rising to potentially dangerous levels.

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