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Oil and natural gas producers have made great strides in
reducing methane emissions produced by upstream activity, but
doubts linger in the minds of environmental groups and some
government regulators about the accuracy of the reporting of such
pollution.
Transparency is becoming a greater part of the demands placed on
the oil and gas industry, and a new satellite that will be launched
in 2022 by the Environmental Defense Fund (EDF) will bring greater
transparency than ever before to answering any questions, Fred
Krupp, EDF president, said during a Q&A session at the CERAWeek
by IHS Markit conference 2 March.
Methane is responsible for a quarter of all the warming the
planet is experiencing, Krupp said, due to presenting 84 times the
global warming potential of carbon dioxide. "We have called for -
and the International Energy Agency believes it's practical - a 50%
reduction in the next few years and 75% by 2030," he said.
EDF has invested $100 million raised from donors in a new
satellite that will provide greater methane tracking than ever
before, and possibly answer that question, Krupp said. It is being
built by Raytheon and Ball Aerospace and will be launched next
year.
"It will for the first time … give us concentrations for all the
major oil facilities on land - we can't promise it will detect
offshore platforms," he said.
The new satellite will provide what he called "precise
measurements … down to 2 parts per billion," and can measure
methane across a path of 200 kilometers (about 125 miles).
Importantly as well, it will be the first satellite able to detect
fluctuation rates -- how much is being emitted -- not just
concentrations.
"So, [this could solve the] problem we have discussed before
that companies have been estimating emissions … and those have been
wildly understated. There's now going to be transparency coming to
every citizen, company, and government," Krupp said.
Armed with this information, Krupp said that regulation of
methane could advance quickly, "and offer great rewards for those
who have cleaned up, and motivation for those who haven't."
25 years of history
Krupp was questioned during his session by Lord John Browne,
former chief executive of BP, who observed at the start of their
discussion that he and Krupp first talked about emissions and
climate change more than 25 years ago.
When asked what's changed since then, Krupp talked about
recognition of the urgency of the problem, as well as equity issues
in addressing it.
"Back then, when we met [25 years ago], it was still possible
for politicians and business leaders to deny climate science and
still be respectable. Today that's impossible," Krupp said. "Large
majorities in the United States and Europe and other nations as
well want their governments to act … and want oil and gas companies
to do their share."
As for equity, Krupp said, "2020 has been a wakeup call…. It
should have been recognized a long time ago, including by me. We
didn't get it, but we now do," Krupp said. "If you invest billions
to make a chemical facility carbon neutral, but you don't address
the pollution at the fenceline, you are failing."
Some investors have been alert to the issue for a relatively
long time, but Krupp said he detects "a tectonic shift" in their
expectations and demands. "Big mainstream investors are putting
pressure on global oil and gas companies to think boldly to make a
transition ... The role of global asset managers and banks — I
[did] not anticipate it back then," he said.
Societal issue
At this point, Browne observed, the matter of carbon reduction
has shifted from a technology solution to a "societal problem." In
other words, technology is available, but the question is whether
society has the will to implement it — and to do so in
integrated, comprehensive, equitable ways. "Now, we need to get the
right incentives in place, as well as the right principles and
societal pressure and financial pressure in place," he said.
Krupp said that technology needs to continue to improve, but
he's been "pleasantly surprised" by developments such as electric
vehicles. "The 20th Century was the 'age of oil,' and the 21st
might prove to be the 'age of batteries,'" he declared.
Technological innovation comes from added demand and production,
Brown said. "The more you manufacture, the cheaper it becomes," he
said. "Sometimes, [it] needs the kickstart of incentives, but some
of it just happens."
With expectations on the rise, Krupp said he's seen companies
jumping on the environmental, social, and governance bandwagon,
such as with net-zero commitments. "There is the possibility that
for many of these companies … it's just green cover, not coupled
with plans and metrics," he said. "But I'm sure for many companies
it's more than that."
This is why investors and stakeholders need to take a step back
and look at whether companies have concrete plans, whether their
reporting is transparent, and if they have metrics by which they
can be judged, he said. Importantly, the metrics have to include
interim targets so that current management is held accountable. "In
the oil and gas industry, the average CEO lasts a few years, so it
could be five or six CEOs between now and 2050," he said.
And it's where methane detection comes into play, too, Browne
observed. "Maybe that methane problem may be [revealed to be]
bigger than we think," he said, thus making it even harder to meet
net-zero targets.
Browne said that he believes oil and gas producers or regulators
should compare land-based methane detection done close to
operations with the data from the new EDF satellite. "And when you
see something go wrong [with high levels of emissions], you must do
something about it immediately, not wait a week or a month, or wait
for someone to tell you to do it," he said.
But Browne said that it's not solely an oil and gas problem, as
he believes countries will come to the Conference of the Parties 26
climate meeting in Glasgow, Scotland, in November with plans to
reduce methane pollution from agriculture and livestock operations
as well. "Nobody [can] use the excuse that we do not have the tools
and techniques to solve the problem in front of us," he said.
