INSIGHT by CERES
Updated analysis benchmarks the relative emissions intensity and total reported methane, carbon dioxide, and nitrous oxide emissions of more than 300 U.S. oil and gas producers and finds dramatic variations between companies and basins.
Ceres and Clean Air Task Force, with analysis from ERM, today released the third annual report, Benchmarking Methane and other GHG Emissions of Oil and Natural Gas Production in the United States, which analyzes the production-based emissions of the largest oil and gas producers in the United States and highlights dramatic variation among producers and basins.
The report provides clear, consistent information that investors, operators, natural gas purchasers, policymakers and regulators can use to compare producers’ performance in an industry where voluntarily reported emissions metrics have historically been inconsistent and non-comparable.
This year’s analysis found that reported methane and greenhouse gas intensity in the oil and gas sector have declined 28% and 30%, respectively, between 2019 and 2021, despite an increase in natural gas and total hydrocarbon production. However, these trends are not consistent across basins or individual companies and can fluctuate year to year.
While overall emissions trended down in this year’s report, the gap between leaders and laggards continues to grow. The report found that natural gas producers in the highest quartile of methane emissions intensity have an average emissions intensity that is nearly 26 times higher than natural gas producers in the lowest quartile of methane emissions intensity.
Emissions intensity varies even between similarly sized operators in the same geographic area, according to the data, largely due to different equipment choices and operational practices. For example, pneumatic controllers were the largest source of reported production-segment methane emissions, making up 65% of the total. Fuel combustion equipment, including engines and heaters, was the largest source of total reported production-segment CO2 emissions, responsible for 65% of all reported CO2 emissions.
The findings can help shareholders differentiate between potential investments, and inform regulators, lawmakers and company executives about the main causes of reported methane emissions, as well as which companies are disproportionately responsible for them.
This edition of the analysis includes charts and data that track annual changes in emissions intensity, and the quantity of methane and other greenhouse gases emitted per unit of production, for each producer from 2015 to 2021. The underlying data suggest that these shifts in intensity can be attributed to a combination of factors including changes in operational practices, federal and state regulations, changes in corporate structure, or the sale of aging, high-emitting assets to firms below the reporting threshold.
“Oil and gas producers are not equals when it comes to methane emissions, and this research makes clear that a company’s climate impact is a direct result of operational and investment decisions within its control. While a number of leading companies have brought their methane emissions down since our first report three years ago, the gap between leaders and laggards has actually grown. For the poorest performing operators, high leak rates are a choice. Recent majority votes on methane-related shareholder proposals, including one last month at Coterra, underscore the investor consensus that the companies that will be best prepared for a low-carbon future are the ones taking ambitious steps now to bring emissions down.”
-Andrew Logan, senior director of oil and gas at Ceres
Methane is a primary driver of climate change, and it is more than 80 times more potent than carbon dioxide over its first 20 years in the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) found that methane emissions alone are responsible for about half a degree Celsius of the global warming the planet has experienced to date, and methane levels in the atmosphere continue to rise every year. Due to its relatively short-lived atmospheric impact, reducing methane emissions is the best available tool to slow global warming in the near-term. As the differences in performance in the report released today suggest, there are already solutions readily available that can rapidly reduce methane emissions from the oil and gas sector.
“The findings of this new report demonstrate what is possible when oil and gas producers use well-known, readily available means to reduce their methane and other greenhouse gas emissions. More important still, the report highlights what happens when they don’t—underscoring the need for strong federal and state regulations that can standardize best practices across the industry.”
– Lesley Feldman, Research and Analysis Manager at Clean Air Task Force
The report is informed by data submitted to the Environmental Protection Agency (EPA) and does not account for orphan wells or abnormal process conditions (also known as “super-emitters”), which are major contributors to total emissions. Rather, it is designed to provide an analysis of publicly available, equipment-level data that can be applied consistently across companies. Abnormal process conditions comprise a significant quantity of total industry methane emissions, which makes it is important for companies and regulators to aggressively pursue innovation and adoption of technology that will allow their direct measurement and remediation.
The report is a collaborative effort between Ceres and the Clean Air Task Force, with support from the Bank of America Charitable Foundation. The full interactive datasets are available at https://www.sustainability.com. ERM, which provides strategic consulting services to support the transition to a net-zero emissions economy — performed the analysis using data from EPA’s Greenhouse Gas Reporting Program.
“With data spanning back to 2015, this updated analysis provides a valuable dataset to analyze oil and gas producer emissions. With continued focus on GHG emissions, the analysis helps stakeholders and producers benchmark performance and supports decision-making as part of the transition to a decarbonized economy.”
-Robert LaCount, ERM’s Climate Change lead for North America
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies, and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.