Many top upstream and midstream companies in the US oil and gas sector are making meaningful methane disclosures to address increasing investor concerns about the gas, according to a report by the Environmental Defense Fund.
The EDF report, The Disclosure Divide: Revisiting Rising Risk and Methane Reporting in the U.S. Oil & Gas Industry, found that nine of the top 64 upstream and midstream companies release comprehensive reports on their methane leak detection and repair programs (LDAR), with many of the remaining companies carrying out some form of methane management program.
“Bright spots in the report include Southwestern Energy, which not only has a quantitative target, but is also committed to continuous improvement,” the report found. Noble Energy was also highlighted for releasing extensive details on its LDAR program in the Denver Julesburg Basin, the Appalachian Basin and onshore Texas.
“Noble’s methodology for inspections is conducted with infrared cameras. These efforts are reported as contributing factors to Noble Energy’s 1.62 billion cubic feet (bcf) reduction in methane emissions in 2016,” the report said.
Top performers also included shale-focused US producers Consol Energy, EOG Resources, Hess, Noble Energy, and WPX Energy as well as diversified international players ConocoPhillps and ExxonMobil and North American pipeline giant TransCanada.
To receive the highest distinction, each of the companies had to disclose three key details about its LDAR program, namely: The scope of the program, the frequency of inspections, and the methodology used for methane detection.
EDF noted that LDAR is evolving rapidly with emerging technologies like continuous monitors being piloted by Shell and Statoil, drone-based monitors, and predictive analytics.
Methane, a key component of natural gas, is a greenhouse gas 84 times more potent than carbon dioxide that is linked to climate change, according to EDF.
Activist Shareholders Push for Disclosures
The increased disclosures come as the Trump administration is rolling back aggressive methane-reduction regulations written by the Obama administration’s Environmental Protection Agency and Interior Department, measures that were criticized by the oil and gas industry for the complexity and high cost of compliance.
Regardless, the focus on methane emissions is unlikely to abate as a growing number of investors are pressuring oil and gas companies to increase their environmental disclosures. The EDF report found that five of the seven companies that began offering more details on their LDAR practices in 2017 were targets of methane-shareholder resolutions during the past two years.
EDF bloggers Kate Gaumond and Sean Wright note that 390 investors representing more than $22 trillion in assets have signed a letter supporting the Task Force on Climate-Related Financial Disclosures, an organization that advocates for a unified set of recommendations for corporate climate disclosure.
Among those calling for these measures is CalSTRS, California’s second largest public pension fund. “As a long-term global investor, we recognize that methane emissions are one of the most financially significant environmental risks we face,” Brian Rice, portfolio manager at CalSTRS said in a press release.
The push appears to be working. Cimarex Energy started providing more information about its methane management practices after it received methane shareholder resolutions in 2016 and 2017. ExxonMobil has likewise been the target of similar shareholder action and last year unveiled a comprehensive methane emissions reduction program focused on its shale-focused subsidiary XTO Energy (SO Jan. 28’18).
Industry is Leading its Own Efforts
The oil and gas industry has created its own group to address environmental concerns. In December, a host of players joined with the American Petroleum Institute to create a partnership designed to reduce the environmental impact operations across the US (SO Dec.24’17).
The voluntary effort, called the Environmental Partnership, is comprised of 26 producers who have pledged to initially focus on reducing emissions of methane and volatile organic compounds (VOCs) from their operations.
The move is as a step in the right direction, though many environmental advocates would still like to see more.
“EDF looks forward to working with leading companies and other stakeholders to support methane regulations that build from and improve upon federal and state regulatory models and ensure that we are tapping all cost-effective solutions to comprehensively address oil and gas methane emissions,” EDF business director Ben Ratner said in a press release.