Delivering responsible natural gas: The confluence of big data, technology & global markets

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In North America and beyond, natural gas has become the dominant fuel for generating electricity. As economies expand, global demand for natural gas is projected to continue to rise by 50% over the next two decades. Natural gas is widely perceived as a clean “bridge” fuel to greater adoption of renewables and ultimately a low- or net-zero-carbon economy. However, fugitive emissions of methane generated during natural gas production and transmission can negate its climate advantages.

Natural gas producers, utilities, customers, and shareholders—and in some places regulators—view natural gas as a “clean burning fuel,” but this is not always the case.

Methane, which typically comprises more than 95% of natural gas, is a powerful greenhouse gas if released to the atmosphere, approximately 85 times more potent compared to carbon dioxide (CO2) within the first 20 years. It is estimated that as little as 3.2% methane leakage at wells, storage tanks, and delivery systems to the power plant cancels the lifecycle climate benefits of natural gas relative to coal. 

Available data for U.S. oil and gas systems indicate a wide range of leak rates (60% higher than the latest U.S. EPA estimate). While not all natural gas is created equal, once in the intrastate pipeline system, natural gas produced “responsibly,” with low “upstream” methane losses, is indistinguishable from gas from higher methane emission sources.

The challenge: Distinguish and incentivise “responsible” natural gas production that minimizes or eliminates methane emissions, as well as presenting other environmental advantages, such as minimal VOC and criteria air pollutant emissions, or beneficial water re-use.

The opportunity: Enable producers to sell differentiated natural gas from responsibly operated wells, thereby monetising investments in lowering methane emissions. New techniques in gathering and processing data from environmental monitoring and digitised infrastructure and system operations, as well as the emergence of new certifications and standards, open up a new era of possibilities in marketing “branded” commodities, including natural gas from individual wells. Distributed ledger technology can now connect production systems to broadly accessible marketplaces to make this happen.

Based on these converging trends, our hypothesis is that:

  1. Utilities and energy producers will face continuing pressures for climate accountability—including measuring and controlling methane emissions from wellhead to burner tip.
  2. These pressures create incentives across the oil and gas and power sectors for responsibly produced natural gas; several recent utility solicitations for responsible natural gas validate this hypothesis.
  3. Rapid advances in digitisation and other technologies enable differentiation of natural gas, based on environmental attributes from the point of production.
  4. Energy markets—ahead of regulations—will respond by delivering a higher price for natural gas that is responsibly produced with lower upstream methane emissions.

We are closely tracking these trends and scenarios at

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