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Shale Revolution: Substantial Climate Benefits, Even Larger Climate Opportunity

The predictions in Daniel Raimi’s new analysis of potential emissions trends from the oil and natural gas industry are already generating some doomsday headlines about climate impacts. Based on several scenarios and assumptions about oil and natural gas production, Raimi sees methane emissions going up over the next decade.

But it’s crucial for those covering this report from environmental think tank Resources for the Future to consider some of the limitations inherent in making such predictions (which Raimi himself transparently discusses) and several impactful trends that he did not explore.

Here are three things to keep in mind:

#1 Overall oil and natural gas methane emissions have decreased in recent decades, and shorter-term increases that have occurred are far below the growth of production.

The Environmental Protection Agency’s most recent greenhouse gas inventory (GHGI) shows that combined methane emissions from petroleum and natural systems increase 0.4 percent from 2005 to 2016. Raimi describes an emissions increase as “well below the growth in oil and gas production,” which increased 70 and 47 percent, respectively, over the same time period.

Even more significant is the  14 percent decrease in methane emissions from 1990 to 2016 when natural gas and oil production increased 50 and 21 percent, respectively.

Further, the most recent EPA Greenhouse Gas Reporting Program data reveal that these emissions declined from 2016 to 2017, as the following chart shows:

As Raimi explained in a separate September 2018 issue brief on “The Shale Revolution and Climate Change”:

“[T]he shale revolution has created substantial climate benefits in the near term, and provided an even larger climate opportunity in the long term.”

#2 The report assumes a fixed rate of methane emissions, which is unrealistic, especially given commitments for voluntary reductions and improving technology.

To his credit, Raimi acknowledges a key limitation of his analysis of several predicted trends:

“Each of these scenarios makes the simplifying assumption that the ratio of methane emissions per unit of energy produced remains constant over time.” (emphasis added)

As he further explains, “changes in technology and policy could alter these trends,” and these changes coupled with the voluntary commitment by U.S. oil and natural gas companies to reduce emissions “have the potential to substantially reduce methane emissions below current levels.” This was echoed in a recent report from the Environmental Defense Fund – a group that is hardly an industry supporter –that explained:

“The deployment and adoption of digital technologies across the oil and gas value chain could help scale the impact of industry’s methane reduction efforts.”

Realistically, detection and reduction measures already are, and will continue to be, an important priority for oil and natural gas development.

While leak detection and reduction (LDAR) has been a strategic focus for at least the past three decades – and it shows in the significant emissions decreases since the 1990s – over the past five to 10 years, these efforts have ramped up. In 2016, new federal regulations for LDAR, commonly referred to as Quad-O, went into effect that “expanded the number of affected facilities and equipment types subject to the regulation, as well as new methane emissions standards, LDAR requirements, and additional reporting obligations.”

Notably, the results of these new standards would not yet have been fully realized in the EPA’s available 2016 dataset that Raimi used.

Additionally, as Raimi acknowledges, oil and natural gas companies have made emissions reductions a top priority in their operations. For perspective on just how impactful these voluntary measures can be, in May 2018 ExxonMobil announced the implementation of its plan that is “expected to lead to significant improvements in emissions performance by 2020, including a 15 percent decrease in methane emissions and a 25 percent reduction in flaring.” The company further detailed how its efforts had already reduced methane emissions by 2 percent in the past year at its production and midstream sites.

And that’s just one company – albeit one with significant operations.

#3 Liquefied natural gas  could be a game-changer for global emissions.

Raimi’s analysis focuses primarily on upstream and midstream operations and does not get into how downstream distribution could also impact global emissions reductions, particularly LNG.

The International Energy Agency predicts global natural gas demand will grow 1.6 percent through 2023. Much of the increased consumption will occur in Asian countries – a third of the demand increase will come from China alone – thanks to “the strong drive to improve air quality.”

The United States is poised to meet that increased demand. As the Energy Information Administration’s lead economist Victoria Zaretskaya said in December:

“U.S. liquefied natural gas export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world behind Australia and Qatar.” (emphasis added)

The important role this increased U.S. natural gas supply can have in helping to reduce global emissions as more countries turn to this resource is one that shouldn’t be ignored. As the Washington Times recently reported:

“The U.S. has boasted the world’s largest emissions reductions nine times this century, said American Enterprise Institute scholar Mark J. Perry.

“For that impressive ‘greening’ of America, we can thank the underground oceans of America’s natural gas that are now accessible because of the revolutionary, advanced drilling and extraction technologies of hydraulic fracturing and horizontal/directional drilling…”

Conclusion

Methane emissions, and all greenhouse gas emissions, are an issue that the oil and natural gas industry is making great strides in tackling. This work is far from over in the United States and across the globe, but thanks to an abundance of U.S. natural gas and increasing export capacity, it is a challenge that has realistic and tangible solutions.

The post Shale Revolution: Substantial Climate Benefits, Even Larger Climate Opportunity appeared first on EID Climate – A Project of IPAA.

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