Cost-effective methane emissions reductions from U.S. oil and gas

(WASHINGTON, D.C. – March 3, 2014) An independent analysis conducted by ICF International (ICF) has determined that the onshore segment of the U.S. oil and gas sector can significantly reduce emissions of methane – a highly potent greenhouse gas and the primary ingredient in natural gas – using currently available technologies and at a low annualized cost. Released today, the new report reveals that by adopting proven emissions-control technologies, industry could cut methane emissions by 40 percent below projected 2018 levels at a cost of less than one cent per thousand cubic feet of produced natural gas. Some of these measures pay for themselves over time through the sale of captured natural gas, according to the report, which was commissioned by Environmental Defense Fund (EDF).

“We participated in this study because knowing the facts is essential,” said Southwestern Energy Company (SWN) CEO Steve Mueller. “And one of the key takeaways is that there clearly are ways to reduce methane emissions at low cost and sometimes even positive financial payback to companies. At Southwestern Energy, for example, we have already demonstrated that capturing emissions through reduced emission completions can be accomplished for the same cost as venting the gas into the atmosphere.”

ICF’s analysis uses data and commentary from numerous organizations, including oil and gas producers, pipeline operators, equipment vendors, service providers and a trade association. Achieving the 40 percent in reductions would require industry to adopt fewer than a dozen viable emissions control strategies across 19 different sources within a five-year timespan, including such measures as shifting to lower-emitting valves, or pneumatics, that control routine operations, and improving leak detection and repair to reduce unintended methane leaks from equipment, also known as “fugitives.” The most economical of these measures would save industry a combined $164 million per year.

“ICF’s in-depth analysis points out the vast potential this nation has to address one of the key environmental issues confronting U.S. oil and gas development,” said Fred Krupp, President of Environmental Defense Fund. “We now have a clear path to protecting American communities and the global climate from methane pollution – and it turns out to be an extremely low-cost path. This report is a call to action for commonsense policymaking and accelerated industry leadership starting now.”

Why Methane Matters

The ICF report comes at time of heightened awareness of methane’s role in global climate change. More than one-third of today’s human-caused global warming comes from highly potent, short-lived climate pollutants, including methane, black carbon, tropospheric ozone, and hydrofluorocarbons (HFCs), according to the Intergovernmental Panel on Climate Change (IPCC). Also known as short-term forcers, this special class of greenhouse gas and aerosol pollution contributes to extreme weather events such as heat waves, droughts and more intense storms. And these emissions are on the rise. IPCC data suggests that more than 50 percent of the warming over the next two decades, due to today’s greenhouse gas and aerosol emissions will come from these short-lived pollutants.

That rising awareness has helped drive momentum on the issue. President Obama asserted in his June 2013 Climate Action Plan that reducing methane emissions is “critical” to tackling the problem of climate change. Capturing the immediate potential to minimize methane emissions from U.S. onshore oil and gas operations by 40 percent, along with continued reductions in emissions of carbon dioxide – the principal contributor to climate change – is one of the most cost effective steps the U.S. can take to meet its climate goals.

Currently, there are no federal limits on the amount of methane pollution that oil and gas operations can emit, and no federal air regulation of existing oil or natural gas infrastructure. New natural gas wells are required to control emissions during well completions (when a well is cleared from sands and liquids to make way for production) under current U.S. Environmental Protection Agency requirements but the regulations do not generally cover oil-and-gas-producing hybrid wells, which are common as the price of oil remains high relative to natural gas. ICF expects all existing onshore oil and gas sources will account for almost 90 percent of the U.S. onshore industry’s methane emissions in 2018.   

“The environmental benefit of reducing methane emissions is clear, and we must stop wasting the natural gas that is so essential to our national energy security,” said former Secretary of State George Shultz, who has served in the cabinets of Presidents Reagan and Nixon.

ICF’s report, “Economic Analysis of Methane Emission Reduction Opportunities in the U.S. Onshore Oil and Natural Gas Industries,” is available here. This new analysis complements other research EDF is engaged in to help advance methane science and provide deeper understanding of methane emissions from the natural gas supply chain, in order to inform policymakers about opportunities to reduce methane emissions. Learn more about EDF’s methane research series here.