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Industry says transparency is ‘front and center’ to winning argument on natural gas

Discussion on methane emissions comes after major study undercuts natural gas' climate credentials.

Flared natural gas is burned off at Apache Corp's operations at a natural gas operation in the Permian Basin of Texas. CREDIT: Spencer Platt/Getty Images
Flared natural gas is burned off at Apache Corp's operations at a natural gas operation in the Permian Basin of Texas. CREDIT: Spencer Platt/Getty Images

A top natural gas industry official acknowledged Thursday that at this late date in the discussion over how to fight climate change, corporate executives may not be the best people to defend the industry’s efforts to reduce methane emissions.

Other constituents — perhaps customers who understand the steps that certain companies are taking to address the methane emissions problem — might be better candidates to tell the story about what the industry believes is the “attractiveness” of natural gas, Greg Guidry, executive vice president of Royal Dutch Shell’s unconventionals division, said Thursday at the World Gas Conference in Washington, D.C.

Given the urgency of taking measures to address climate change, “I don’t know that we have enough time to build the trust” of a public that is skeptical of the industry’s ability to manage methane emissions, Guidry said during a panel discussion on strategies to address methane emissions. “I don’t think we have a license to tell the story,” he explained.

Nonetheless, the panelists agreed that natural gas is one of the climate-friendly solutions to the world’s growing demand for energy. The panel discussion, however, came only a week after the release of a new study, published in the journal Science, that concluded “natural gas could warm the planet as much as coal in the short term.”

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The study found that methane emissions are so large that the total warming from natural gas plants — leaks plus burning the gas — over a 20-year period is comparable to the total warming from coal plants over a 20 year period.

Bernard Looney, chief executive of BP’s upstream division, conceded the industry needs to be more transparent in how it addresses the problems facing the industry.

“There’s a study out this week that our emissions are higher,” Looney said. “Fine, let’s look at it . … Let’s review it. Let’s figure out what we can learn. But this is not something we can wish away or hide from. Transparency with the general public, with our investors is something that I believe is front and central to winning the argument for gas — that this planet needs for decades to come.”

Each of the four industry officials on the panel insisted their companies have made the reduction of methane emissions from their oil and gas operations a top priority. Throughout the discussion, though, the term “voluntary” came up several times, with the officials emphasizing how the industry is succeeding in reducing methane emissions without government intervention.

Addressing the need for regulations was left to the fifth member of the panel — Patrima Rangarajan, CEO of OGCI Climate Investments. Drastically reducing methane emissions on a global basis will not work simply by hoping oil and gas companies will do the right thing, Rangarajan said.

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OGCI Climate Investments was created in 2017 by the Oil and Gas Climate Initiative, an organization created by 10 of the world’s largest oil and gas companies. Rangarajan’s investment vehicle plans to spend $1 billion over the next 10 years to develop and demonstrate technologies that have the potential to significantly reduce greenhouse gas emissions.

“We don’t have a lot of time. Time is our biggest challenge,” she said. There will be oil and gas companies that work to reduce their emissions on a voluntary basis because they know it’s the “right thing to do.”

But strong government regulations will be required to reach the level of methane emissions reductions needed to reverse climate change, Rangarajan said. Reducing methane emissions will only occur because companies are told by governments to address the problem, she said.

At the World Gas Conference event, the oil and gas industry officials were playing the good cops to the Trump administration’s bad cops. The Environmental Protection Agency and the Department of the Interior are doing everything they can to loosen or roll back curbs on methane emissions. The administration is going after the methane rules with the blessing of the American Petroleum Institute (API) and other industry trade groups.

Three of the panelists are from companies — BP, Shell, and Southwestern Energy — that are members of API.

In late 2017, API announced a voluntary program to reduce methane emissions from U.S. oil and gas operations. The Environmental Defense Fund, an environmental group well known for working closely with industry on certain issues, criticized API’s program.

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“At a time when API is aggressively putting its full weight into tearing down federal methane rules, this weak initiative does little to show that API is serious about tackling the methane problem,” Matt Watson, associate vice president for climate and energy at EDF, said in a statement last December.

During the panel discussion, Jennifer Stewart, senior vice president of government and regulatory affairs for Southwestern Energy, a leading natural gas producer in the United States, touted her company’s efforts to reduce methane emissions from its drilling operations. For several years, EDF has partnered with Southwestern Energy to address climate issues.

Not every oil and gas company takes the methane emissions problem as seriously as Southwestern Energy, according to Stewart, who called on banks to stop handing out loans to these bad actors in the industry.

“One thing that would really change things,” she said, “is if banks refuse to lend to operators that didn’t produce hydrocarbons responsibly and if investors did not invest in those companies that did not produce hydrocarbons responsibly.”