Every day, midstream companies in North America transport massive volumes of crude oil, natural gas, NGLs, and refined products to market. Without their pipelines, economic activity would rapidly grind to a halt. Still, environmental critics and ESG-conscious investors and lenders are quick to point out that the commodities that midstreamers pipe are among the leading sources of greenhouse gas emissions, and that, at the very least, pipeline companies should be reducing or even offsetting the carbon dioxide (CO2) and other GHGs associated with operating their networks. That’s now happening in a big way — and in a variety of ways — as we discuss in today’s blog.
It’s official: “ESG” is now the #1 search term on Google in the Houston area. (Not really, but it sounds plausible, doesn’t it?) As we said in Part 1 of this blog series, the oil and gas industry has been responding to the growing interest in Environmental, Social, and Governance issues by examining how it can become “greener,” especially on the GHG emissions front. In the LNG sector, a number of market players have been seeking to differentiate their LNG from that supplied by their competitors by offering buyers the option of contracting for “carbon-neutral” LNG, where every metric ton (MT) of CO2 emitted during natural gas production, liquefaction, shipping, and end-use consumption is matched one-for-one with an MT of independently verified, “nature-based” carbon offsets.
In Part 2, we discussed the 15-plus shipments of carbon-neutral LNG that have been made since Shell sent out its inaugural cargo more than two years ago. We also took a detailed look at a couple of those deals to see where this “guilt-free” LNG was ending up and what was driving the buyers’ decisions to voluntarily pay more for LNG if its Scope 1, Scope 2, and Scope 3 GHG emissions are offset by the retirement of carbon credits. Finally, we noted that while LNG has emerged as the primary testing ground for carbon-neutral cargoes, there also have been at least a few cargoes of carbon-neutral crude oil, LPG, and ethylene, with more likely to follow.
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