Climate Change

The global push to slash methane emissions from natural gas-related operations — from production wells to end-users — and certify gas as being “responsibly sourced” has been accelerating and broadening. It now seems possible that within the next two or three years the majority of gas produced in the U.S. will be certified as responsibly sourced gas, or RSG, and that large numbers of gas buyers — power generators, industrials, LNG exporters and local distribution companies (LDCs) among them — will be buying RSG, or at least moving toward doing so. Further, an RSG market is developing (a handful of trading platforms have already been launched), as are tracking systems to ensure that gas sold as RSG is fully accounted for and legit, with no double-counting or fuzziness. In today’s RBN blog, we begin an in-depth look at RSG and its emergence from a relative novelty to the cusp of wide acceptance.

The National Environmental Policy Act was created to ensure federal agencies consider the environmental impacts of their actions and decisions, but it is the Council on Environmental Quality (CEQ), which serves as the White House’s environmental policy arm, that provides guidance as to how those agencies should evaluate the projects subject to their review. Energy and environmental policy have shifted under President Biden, and interim guidance recently submitted by the CEQ extends efforts to prioritize the administration’s commitment toward lowering greenhouse gas (GHG) emissions. Still, it’s not easy to swiftly change policy, for a variety of reasons. In today’s RBN blog, we look at the CEQ’s interim guidance and why the real-world impact on energy and environmental policy might be hard to quantify for a variety of reasons, at least in the short term.

If the ongoing global energy crunch is teaching us anything, it’s that decarbonizing the world’s economy may be even more difficult than many had figured. While a strong case can be made for reducing — or even slashing — greenhouse gas (GHG) emissions by shifting to low-carbon and no-carbon energy sources, the sheer magnitude of the undertaking means there are likely to be major setbacks and compromises along the way. Setbacks like having to turn to coal-fired generation this winter to help keep parts of the Northern Hemisphere warm and productive, and compromises like acknowledging that sometimes the wind doesn’t blow, the sun doesn’t shine, and utilities need to burn a lot more natural gas to make up the difference — assuming there’s enough gas around to burn, that is. One more takeaway from current events is that energy security in the form of being able to count on your counterparties is a pretty big deal. (We’re looking at you, Vladimir Putin.) With all that in mind, in today’s RBN blog, we examine the long-term outlook for energy and GHG emissions as the United Nations’ climate change conference in Glasgow, Scotland, looms on the horizon.

Methane, the primary component of natural gas, is the second-most-abundant greenhouse gas tied to human activity after carbon dioxide, and pound-for-pound has 25 times the heat-trapping potential of CO2. We also know that a considerable portion of methane emissions come from the oil and gas industry, not just from leaks but from intentional releases such as “blowdowns,” when operators vent natural gas into the atmosphere to relieve pressure in the pipe and allow maintenance, testing, and other work to take place. Sure, it would be better for the environment and most everybody involved if there was a way to capture natural gas instead of releasing it. (Spoiler alert: there is.) But what are the incentives for producers, pipeline owners, or local distribution companies invest in a solution? Today, we consider what midstreamers, transmission operators, and LDCs can do to minimize blowdowns.

Rusty’s Introduction

As a general rule here at RBN, we try to avoid hot button issues like environmental policy.  We have good friends on all sides of these issues, so our practice has been to steer clear of debates where the relationship between facts and outcomes can be subject to so much interpretation.  However, today we make an exception for a blog by Keith Bailey, a highly respected leader in our industry who serves on the boards of MarkWest Energy, Aegis Insurance Services, Cloud Peak Energy, Apco International Oil and Gas, and by the way, was CEO of The Williams Companies when I worked for that company more than a few years back.   Today Keith contemplates the issue of climate change from the vantage point of someone who has been around the track in energy markets and thinks deeply about the big picture issues.