Natural gas companies are facing growing pressure from investors and customers to demonstrate their fuel is cleaner than competitors as the industry looks to overcome doubts that it can continue to play a role in addressing climate change.
But the industry has long struggled to collect and provide accurate data to prove claims of clean gas.
A new range of third-party data providers aims to change that by helping companies measure their emissions and certify gas as being clean.
Denver-based startup Project Canary, launched in 2019, scores oil and gas operators based on factors including methane emissions intensity, the level of emissions per unit of economic activity.
The company also provides producers solar-powered devices for continuously monitoring methane emissions that can be installed across the oil and gas supply chain.
Based on the data it helps collect, Project Canary will certify producers as providing “Responsibly Sourced Gas,” a branding that could give operators a leg up in the marketplace.
“Think of it as a credit score,” Project Canary co-founder and CEO Chris Romer told the Washington Examiner. “We are like the Moody and S&P of climate ratings.”
Oil and gas producers are especially trying to collect reliable data on releases of methane, a greenhouse gas more potent than carbon, and demonstrate they can reduce these emissions over time.
A boom in natural gas from the advent of fracking has helped the United States reduce emissions over the last 15 years by replacing coal, which produces double the amount of carbon.
But as the world struggles to meet emissions reductions goals set in the Paris climate change agreement, the natural gas industry is getting more scrutiny over its biggest problem: methane leaks.
Methane, the main component in natural gas, traps more heat and has a more immediate effect on warming than carbon, although its emissions are relatively short-lived in the atmosphere.
Environmental groups say methane leaks, which can happen purposely or accidentally during the production and transmission of gas through a pipeline, belie the industry’s attempt to sell gas as a “fuel of the future” rather than one that is phased out over coming decades.
In a prominent hit to the industry’s reputation, a French power company, Engie, last year pulled out of a $7 billion deal to import U.S. liquefied natural gas over concerns that West Texas producers supplying the fuel for export emit too much methane.
Romer and many experts consider better-controlling methane leaks to be the “low-hanging fruit” of easy emission reduction efforts since it could have a quicker impact, given its higher warming potential in the short term.
A new study published on Aug. 9 by United Nations-backed scientists calls for significantly reducing methane emissions in the next 10 years if the world is to meet its climate goals. Methane accounts for at least 25% of the warming we are experiencing, according to the Environmental Defense Fund, known for its technological research to detect leaks better.
But methane leaks are invisible to the naked eye and notoriously hard to detect. In addition, critics consider estimates on methane from the Environmental Protection Agency to be overly conservative as the underlying data isn’t based on continuous measurements.
Romer, a self-described fiscal conservative who was a Democratic state senator in Colorado, says oil and gas companies must be able to provide trustworthy data to have a social license to operate.
He likens efforts to reduce methane absent good data to his own interest in losing the 10 pounds he gained during the coronavirus pandemic without tracking his progress.
“Losing my ‘COVID 10’ without getting on a scale is like the industry trying to reduce methane without knowing their numbers,” said Romer, 62, who was previously a finance consultant at JPMorgan Chase. “They aren’t going to get their methane reduced unless they measure it all the time. When you measure things with accuracy, it allows people to make annual progress.”
Andrew Baxter, the Environmental Defense Fund’s director of energy strategy, said he appreciates the value of third-party certifiers, including Project Canary, in installing ground-based sensors that can continuously monitor methane at oil and gas sites. That can help stop “super emitting” events or large-scale leaks that occur when no one is watching and responsible for a disproportionately high share of methane emissions.
“We know methane emissions from oil and gas tend to be dominated by randomly occurring, difficult-to-predict events,” Baxter told the Washington Examiner. “Project Canary’s technology is extremely valuable for catching those.”
But Baxter said he’s concerned that certifications of “Responsibly Sourced Gas” provided by Project Canary’s cannot be independently audited. He questioned whether Project Canary represents a conflict of interest by leasing its detection equipment to producers while also certifying their gas as low emissions.
“Data quality is the elephant in the room,” Baxter said. “It’s anyone’s guess how accurate their emissions estimates are. There is a total lack of transparency in methodology and no clear way to verify their claims.”
Romer countered that operators “have no ability to corrupt our data.”
“It would be a conflict of interest if the companies owned us,” he said.
Baxter notes that prominent investors are becoming savvier about evaluating data quality involving methane emissions.
For example, JPMorgan Chase released a methodology in May showing how it intends to align its financing with the goals of the Paris Agreement. In recent years, JPMorgan, one of the largest oil and gas investors, said it is looking for a 75% reduction in methane emissions across its portfolio.
But JPMorgan, in its methodology, flags a problem of “inconsistencies in measurement, management, and reporting of data across the industry, as well as the lack of reliable and standardized techniques for measurement.”
“Companies are making sincere efforts, but there is no established way of doing this yet,” Baxter said.
Romer is sensitive to the perception that Project Canary is enabling oil and gas companies to “greenwash.”
“This industry has gotten an enormously bad image,” Romer said.
Romer, however, said he hopes to be recognized as playing an “honest” role in being able to help companies credibly demonstrate that they produce low emissions gas and better inform investors and customers evaluating operators on those grounds.
He claimed Project Canary’s phones have been “ringing off the hook” since BlackRock and Vanguard, the two largest investors in oil and gas giant Exxon Mobil, led a stunning successful shareholder revolt in May. Shareholders voted to install climate activist members to the board who want the company to reduce emissions faster.
Romer said Project Canary’s sensors are now linked to more than 500 well pads across the country.
“We are helping the industry get real on methane emissions,” he said.
