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Time Has Come Today - How Will EPA's Methane Rule Impact the Certified/Differentiated Gas Market?

The Biden administration’s recent announcement at the COP28 climate change conference in Dubai that it has issued a final rule on reducing methane emissions from the oil and gas industry raises an important question: If the feds will be requiring every producer to phase out flaring, install new equipment, and meet new, aggressive standards for emissions monitoring and leak detection and repair, will there still be a need for entities like MiQ and Project Canary to score or assess the lower-emissions natural gas produced by a significant subset of enviro-conscious E&Ps? In today’s RBN blog, we discuss the potential impacts of the new EPA rule on gas certification/differentiation and the development of a market for low-methane gas. 

This blog series’ aim is to examine the certified/differentiated gas movement, which has been driven to a large degree by growing interest among gas producers, shippers and buyers alike in gas that is produced, processed and transported with minimal emissions of methane along the way. In Part 1, we discussed the outsized climate impact of methane emissions — a greenhouse gas (GHG) with more than 80 times the atmospheric heat-trapping effect of carbon dioxide (CO2) over the short term (five to 20 years) — and the push by an increasing number of E&Ps to reduce their methane emissions and get credit from the market for those achievements.

Part 2 focused on the push by gas producers to have their gas certified as a “low-emissions” hydrocarbon and differentiated (i.e., scored or assessed) based on the percentage of methane that escapes into the atmosphere during the production process, with higher marks being given to gas with a lower methane intensity (MI). We also discussed the two primary alternatives for gas producers seeking to certify or differentiate their gas (MiQ and Project Canary) and noted that as much as one-third of the natural gas being produced in the U.S. each day is certified/differentiated by one of them.

In Part 3, we detailed the efforts that 20 U.S. producers at the forefront of this movement have been undertaking to certify/differentiate their gas. Most of these efforts have been occurring in the gas-focused Marcellus/Utica and Haynesville production areas, though a handful of E&Ps are having MiQ or Project Canary score or assess at least some of their production in the Denver-Julesburg (DJ), the Permian and other basins. Last time, in Part 4, we examined the demand side of the certified/differentiated gas equation — that is, the downstream entities that procure gas for others (local distribution companies, or LDCs) or for themselves (industrials, LNG exporters, etc.), as well as the state regulators who oversee LDC gas procurement. 

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