Originally published on Forbes.com on April 11, 2022

Oil and gas operators are working on finding and fixing methane leaks. This has an out-sized impact on arresting global warming, as well as a lift to oil and gas companies’ bottom line.

The methane bugaboo began around 2003 when a mysterious cloud of methane gas was found, by satellite, hovering above Farmington in New Mexico. It was easy to point the finger at the oil and gas industry because the San Juan basin, around Farmington was the largest gas basin in the USA in the period 2003-2009 with 40,000 wells drilled. Gas prices reached $13/Mcf in 2009 but then busted.

That was before shale gas became a phenomenon and pushed the San Juan basin down to number 5 of gas producers by 2015.

Now the state has two methane clouds, with the second one hovering above the Delaware basin in the southeast corner of the state. This basin has 45,000 oil and gas wells and is the premier oil basin in the US and one of the best oil-producers in the world.

New methane emissions data for 2021.

US government data shows the methane concentration in the atmosphere jumped by 15.3 parts per billion (ppb) in 2020, a record increase. But then the concentration jumped by another 17 ppb in 2021, the largest jump since monitoring by NOAA began in 1983.

Since methane causes 25-80 times more global warming than carbon dioxide, CO2, the data suggests methane release from oil and gas operations and agricultural practices need to be curtailed.

Sources of methane in US.

There are three primary sources of man-made methane releases (Figure 3): Top source is energy. Equal top is agriculture. Third is landfills. The energy band is mostly methane from oil and gas operations including (1) unburned venting of gas from oil and gas wells (about 30%), (2) leaks of gas from wellheads, storage tanks, pipelines, and gas-processing plants (about 70%).

Release of unburned gas from a wellhead is called venting. If the gas is burned the flare releases not methane but CO2.

Agricultural practices include methane from raising livestock (farting and manure) and a small amount from rice cultivation. Landfill waste includes methane from fermentation of food or liquids in rubbish dumps, landfills, etc.

There is also a global contribution from natural wetlands that release methane. A study showed wetlands in South Sudan released methane in quantities that could be seen by satellite. Along with other tropical regions in Africa, South Sudan could have contributed about a third of the methane increase during 2010-2016 (Figure 2).

What climate scientists are saying via IPCC.

A recent UN climate report argued that methane emissions must be cut by a third to avoid global temperature rises that could be catastrophic to the world – a jump of 0.3 C could be saved by slashing methane releases.

The UN highlighted worldwide methane emissions in a comprehensive report. Worldwide, 60% of methane emissions come from man-made sources. Fossil fuels contribute a third of this (20%) and oil and gas makes up two-thirds of that. So oil and gas makes up only 13% of all global methane emissions. It’s not well known or published, but the fraction of methane emissions attributed to oil and gas is only a small part of the world’s total.

The good news is that applying current methods to the three principal sources, fossil, agriculture, and landfills, could mitigate global methane emissions by 45% by 2030. This would result in a drop in global warming of 0.3C by the 2040s, and would support IPCC’s goal to keep global warming to 1.5C by the year 2100.

What oil and gas companies are doing.

Oil and gas companies have a three-prong approach to reduce their carbon footprint: (1) reduce gas flaring intensity, (2) find and fix methane leaks in wellheads, pipelines, and facilities, (3) switch to greener well operations, such as fracking pumps that run on gas turbines or renewable wind and solar electricity. Only item (2) reduces methane emissions.

ExxonMobil, a big player in the Permian basin, announced a program for detecting and reducing methane leaks in Texas and New Mexico — at 1,000 different sites. The major will experiment with eight technologies that include satellites, air-based methods (planes, helicopters, drones), and ground-based methods.

The same company has invested nearly $10 billion in R&D since 2000 to lower methane emissions. They reduced emissions by about 20 percent from 2016 through 2019 in their unconventional operations in the US. Their goal was to reduce methane emissions by a further 15 percent and to reduce flaring by 25 percent by the end of 2020.

And in December 2021, ExxonMobil announced they would achieve net-zero greenhouse gas (GHG) emissions in the Permian by 2030. This includes CO2 and methane.

In December 2021, Pioneer Natural Resources put forward a goal to lower methane emissions 40% by 2040 and GHG emissions 25%.

Shell, Qatar Petroleum, and a host of other producers have committed to continuously reduce methane emissions across the natural gas supply chain. 

State and Fed policy.

The state of New Mexico has put into law that routine flaring and venting of natural gas is prohibited. Operators within the state will have to capture 98% of the gas they produce. This major rule change will come into full effect by end of 2026.

The next-highest gas capture law is 91% in North Dakota – in the Bakken play.

New Mexico has also applied methane leakage limits to the midstream sector, such as pipelines and storage tanks, and was the first state to do so.

The US EPA has proposed a new rule that would sharply reduce methane from new and existing sources in the oil and gas industry. The deadline for public comments on the rule was 31 January 2022.

Leaking gas is wasting money.

Leaking gas is bad for the atmosphere but also bad for a company’s profit. How much money loss are we talking about?  

EDF estimated from extensive measurements that methane leaks from oil and gas operations across the US amounted to 13 million metric tons per year. This was equivalent to about 1.8% of total US gas production of about 100 Bcfd.

Based on $4/Mcf price of natural gas, this represents a loss of $7.1 million per day.

In sum, oil and gas makes up only 13% of all global methane emissions, which is a relatively small part.

But in the US, with a heavy oil and gas industry, the country leaks about 1.8% of the total US gas production of roughly 100 Bcfd. This is a loss of about $7 million per day.

The good news is that oil and gas operators are working on this. Finding and fixing methane leaks is a straightforward matter, with an out-sized impact on arresting global warming as well as a lift to oil and gas companies’ bottom line.