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Appalachian Gas Companies Launch Collective Effort to Rein In Methane

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A trio of large natural gas companies this week launched the Appalachian Methane Initiative (AMI) to provide "transparent, publicly available reporting" to help reduce regional emissions — and potentially clear the way for approval of needed pipeline capacity in the region.

AMI is not the first industry coalition to address methane emissions — the ONE Future coalition consists of about 50 US gas companies — but unlike AMI, it only addresses the emissions of its own members rather than taking a basin-wide approach.

“Applying a basin-wide, sector-agnostic approach to methane monitoring will not only allow accountability for methane emissions from all emitters," said Toby Rice, CEO of producer EQT, which is a founding member along with Chesapeake Energy and transmission and storage operator Equitrans. "We believe it will eliminate any doubt — whether from policymakers, customers, or the general public — that Appalachian natural gas is the cleanest form of traditional energy in the world.”

It's important for industry players to team up on methane leak and emission reduction as "a collective action issue,” Ken Medlock, fellow in energy and resource economics and senior director of the Center for Energy Studies at Rice University’s Baker Institute, told Energy Intelligence. “Given that resources co-mingle as they exit a basin on long-haul transport (pipes and perhaps even LNG), if a group of large producers in the region can collectively demonstrate they are exercising best-in-class practices through certification, it removes a barrier to long-term offtake.”

That collaboration "also removes a potential impediment to permitting and investment in pipeline infrastructure, which ultimately aggregates production, by directly addressing environmental concerns that have entered into the decision-making process for permitting and investment, especially in the Appalachian basin,” Medlock said. “In a sense, the collective action should result in ‘scale economies’ in addressing an environmental concern that individual actions may not be able to reveal by themselves.”

Awaiting MVP's Completion

One project that producers hope will benefit from AMI's efforts is the 303-mile Mountain Valley Pipeline (MVP), of which Equitrans is one of the joint-venture partners. It would ferry gas south from Bradshaw, West Virginia, to interconnect with Transcontinental Gas Pipeline in Pittsylvania County, Virginia, enabling Appalachian producers to serve growing markets in the Southeast.

The 2 billion cubic foot per day pipe, which is 94% complete, has been repeatedly delayed by regulatory and legal challenges and its cost has ballooned. Permitting reform legislation pushed by Sen. Joe Manchin (D-West Virginia), which would have helped clear a path for the MVP's completion late this year, fizzled in the last Congress.

Permitting reform remains among the oil and gas industry’s top priorities, but it’s unclear whether legislation will clear a divided Congress this year.

During the American Petroleum Institute’s (API) annual State of American Energy event in Washington this week, API CEO Mike Sommers told reporters he sees the next year as the critical window for trying to hash out a compromise on energy permitting reform.

“Once you get out of 2023, it becomes another political issue,” he said, noting that attention will be focused on the 2024 presidential election, which conventional wisdom suggests will diminish any momentum for major legislative compromises.

Eyeing Global Markets

Creation of the AMI is the latest in a series of steps its founding companies have taken toward establishing a foothold in a globalizing gas market that is increasingly demanding cleaner approaches.

Earlier this month, EQT — the producer leading the call for the US gas industry to grow LNG exports to 50 Bcf/d by 2030 — announced it completed a $28 million project to retrofit all of its nearly 9,000 natural gas-powered pneumatic devices from its production operations. That enables it to reduce its methane emissions by 70% and lowering its annual carbon footprint by 305,614 metric tons of CO2-equivalent.

Chesapeake said in November that it had installed more than 2,000 continuous methane-emission monitoring devices and retrofitted more than 18,000 pneumatic devices across its operations since 2021.

Both producers are also working toward responsibly sourced gas (RSG) certification for their production. Chesapeake said last fall it was on track to have all of its 6 Bcf/d of production certified as RSG by the end of the 2022. At the start of the year, EQT had certified 66% of its production.

The AMI’s launch signals more collaboration on those efforts. “The coalition will seek to coordinate and share best practices in mitigating methane emissions from natural gas operations … and collaborate on activities and monitor results through transparent, publicly available reporting,” the companies said in a joint statement.

This year AMI will develop and implement a pilot monitoring program “to cover select areas of interest within the major operating footprints of the Appalachian Basin.” The coalition’s goal is to roll out a basin-wide monitoring program in 2024.

Topics:
Methane Emissions, Policy and Regulation, Gas Pipelines
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