Building credibility in methane intensity reporting: key principles that should be considered

Since about mid-2019, claims of “low-emissions” gas production have become increasingly more prevalent. This has led to a significant increase in reporting and certification of asset-level methane intensity -- a particularly potent greenhouse gas.

Today, interest in the methane and carbon intensity of gas production is starting to be viewed as an important sustainability metric -- not just for the producers themselves, but also for purchasers of natural gas, traders, financial institutions and governments. Companies are also increasingly being asked to understand their scope 3 GHG emissions associated with feedstocks and fuels in their supply chains or in their portfolios.

But the proliferation of certifications, reporting schemes and ultimately claims have led some to question their credibility. How should market participants differentiate between the credibility of some of these claims?

The difficulty lies in the absence of a standardized approach to reporting methane emissions intensity. There are two main areas of divergence: reporting methodology and quantification approach.

Methodologies to calculate methane intensity differ among different reporters and certifiers. Some common areas of misalignment include emissions allocation to co-products, reporting units and boundary of which emissions are included or excluded. This problem could be improved with clear and transparent documentation of methodologies for both the reported values and benchmarking values that might be used as comparators.

The second area of divergence is how methane emissions are quantified. Fugitive emissions of methane are notoriously difficult to detect and quantify due to their often intermittent and unpredictable nature.

There is a growing array of options for estimating methane emissions: from the use of generic emission factors to equipment specific factors to reconciling measurements based upon continuous monitoring from ground sensors or intermittent satellites and flyovers. Each option has different trade-offs such as detection thresholds, resolution and frequency. These differences can result in variations in the degree of reliability in the methane estimate.

The market currently lacks the necessary trust to incorporate methane intensity, and for that matter carbon intensity, into business decisions. With methane being a particularly large source of uncertainty, here are the minimum principles that should be considered in assessing the relative credibility of reported methane intensity:

• Completeness: An operator’s complete set of assets within a given regional boundary (basin or basin/state/province sub-division) should be included in the methane emissions intensity calculation. This should include all non-producing assets as well because these can still be a source of emissions. Including only a select number of assets could underestimate the actual performance of an operator’s production from a given area which is often co-mingled and not readily distinguishable.
• Transparency: Methodology to calculate methane intensity including the formulae should be specified and published with every reported value. If any emissions allocation between co-products is being performed, it should be clearly articulated so the users of these data can understand what is being reported and how. Likewise, segments of the natural gas value chain or oil value chain that emissions have been quantified for, must be clear.
• Comparability: If methane intensity reporting is compared to a benchmark, the quantification methodology must be on the same basis as the benchmark methodology. This means that the same sources of emissions, the same scope of quantification (regional boundary and segments of the value chain represented) and the same calculation equations and allocation methodologies must be used.
• Include a longer-term average: Methane intensity varies with atmospheric conditions and leak events. Methane intensity may be recorded monthly (or even more frequently) but should also be presented on a longer-term average such as annually or on a rolling 12-month average. This will ensure that large leaks detected are not excluded from a reported methane intensity from one month to the next as sometimes one large unintended event can negate the progress that has been made in reducing emissions. Not reporting a longer-term average may lead to claims that could be challenged as not being representative of the actual operational performance of a given asset or marketed commodity.
• Communicate data quality: Various methods to monitor fugitive emissions of methane may be employed across operations. These have varying levels of effectiveness at detecting leaks and even more variance in quantifying leaks. Transparency around which methods were used to quantify emissions, the quality of the estimates and the coverage of the asset using those methods should be communicated for every methane intensity reported. Reconciliation methodology to include any measurements into datasets should also be clearly communicated.

For users of reported methane data, keeping these key principles at the forefront can support a greater understanding and interrogation of methane intensity claims. Ultimately asking questions around these principles can help drive greater transparency, accountability and ultimately trust.