Creating credible, transparent emissions profiles to differentiate natural gas supply has come a long way from the “responsibly sourced” days, as decarbonization as a service, or DaaS, moves beyond a nice-to-have for operators to a must-have to gain customers, according to experts.
Natural gas heavies EQT Corp. and Williams have been at the forefront of the deep dive into measuring data for carbon intensity. Digging into every layer of where carbon is emitted and by how much is giving companies asset grade data (AGD), making compliance more reliable – offering transparency for customers, including for LNG.
EQT, the largest natural gas producer in the United States, has moved beyond “checkerboard type certifications,” as the company wanted to move to a broader wellhead-to-end user picture, according to Executive Vice President (EVP) Rob Wingo, who oversees Corporate Ventures.
Initial certification methods mostly failed to accurately measure emissions from wells and infrastructure. Tracking gas as it is transported to a utility or a liquefied natural gas export facility is possible too.
Putting the combined emissions data together by scrutinizing every asset, though, offers a clear picture of how efficient an operation is and specifically its carbon intensity across the value chain.
That’s what EQT management was looking for, Wingo told NGI last month. The Pittsburgh independent wants to quantify the “absolute output” of emissions. To that end, EQT is using the DaaS platform of Boston-based Context Labs to verify carbon intensities.
The Context platform acquires direct measurements from multiple detection sources, from the wellhead to the end user. It is able to deliver a digital representation of asset operation performance, as well as the ambient environmental impact. The resulting carbon intensity measurements are then independently verified by third parties, such as KPMG US.
“That’s how you can compare to other products,” Wingo said. The carbon intensity figure used to show gas buyers detailed emissions data “needs to be transparent. It needs to be verifiable. And we believe that’s going to be really important.”
Carbon intensity generally is defined by the number of grams of carbon dioxide released to produce a kilowatt hour of electricity.
A company with a carbon intensity of 6% is likely “super inefficient,” Context’s Rebeca Quintanilla told NGI. She previously directed North American business development for Mercuria Energy Trading and spent a decade at Louis Dreyfus Commodities.
A high carbon intensity could be a turnoff for lenders and investors, Quintanilla said. She is senior vice president, Global Head of Origination. “The inverse of that is companies that have a very low methane and carbon intensity can prove that they have clean operations.”
There has been substantial work over the past several years to enable more reliable emissions testing. Not only is it expected to be useful in regulatory reporting, but it can give sellers a competitive edge with global LNG buyers.
MiQ, one of the early verifiers of certified gas supply, last year partnered with Highwood Emissions Management on a methane intensity index to provide another way to benchmark regulatory and financial risks. The initial index represented more than 300,000 top-down measurements from half a dozen Lower 48 oil and gas basins.
Similar to carbon intensity indexes, the methane data offers “transparency, reproducibility and systematic metrics,” the sponsors said. And as more top-down measurements are collected, the data could be leveraged to update baseline calculations.
MiQ CEO Georges Tijbosch told NGI that verifying emissions from gas “has to be independent for it to be credible.” It has to be more than “responsible,” too, he said, as that's “quite a subjective term…That’s the last thing we need in doing climate change. There are too many words like ‘greenwashing’ that are used in this industry that are not helpful.”
‘Mounds Of Data’
Context, in a collaborative agreement with Microsoft to host the solutions on Azure Cloud, leverages artificial intelligence (AI) and digital technology for its deep carbon dive. AGD offers assurance on several fronts, Quintanilla said, as it is composed of “data whose origin has context,” which explains the name of the company.
“Our view is, if data doesn’t have context – who, what, where, when – then how is this data collected? It cannot be trusted. We're surrounded by mounds of data and statements about emissions performance that have no context.” Companies “need to understand where the data came from and under what conditions.” With AGD in hand, their customers are getting a full picture of what they are buying.
To verify an operation’s entire carbon intensity, the DaaS platform ingests “disparate, disconnected data” from satellites, airborne drones, ground sensors and supervisory control/data acquisition, Quintanilla told NGI.
Near real-time information also is ingested. For example, the platform is able to track how the weather on a certain day may send emissions higher or lower. Context’s platform accesses the National Oceanic and Atmospheric Administration to detail that information.
“Imagine a company now has an inventory, if you will, of asset grade data that tells the story of their operations, of their assets,” Quintanilla explained. “With this data, we can do myriad things. But we know that as a starting point, the data that we're dealing with can be trusted. From there, we can run all sorts of analytics to create insight.”
Gaining An Edge
Computational AI is used to “derive relationships that we didn't even know existed,” Quintanilla said. “We can overlay all kinds of new parameters to give us and to give our customers…an edge into understanding what's going on with their assets. It also informs the customer.”
Management teams need to “have a sense of where, when and how emissions are occurring, and then reduce or eliminate those emissions,” Quintanilla said. “Then you have a carbon intensity that becomes an operating variable.”
Like EQT, Williams is pushing “really hard on the evolution of the natural gas solution, in those next-generation technologies,” EVP Chad Zamarin who oversees Corporate Strategic Development, told NGI last month.
Williams markets its “next-gen gas” to give customers insight into the “end-to-end emissions reduction and certification on the natural gas value chain.”
Context is working with Williams to quantify not only the carbon intensity, but also the efficiency of its massive U.S. natural gas pipeline system and 700-plus compression, treating and processing facilities.
The Oklahoma City-based midstream giant also is using the platform to identify and repair infrastructure that is leaking methane to further reduce the carbon intensity and improve energy efficiency.
In late 2022, Williams also partnered with Lower 48 independent Coterra Energy Inc. and utility giant Dominion Energy Inc. to establish the first next-gen gas certification process “across all segments of the value chain, from production through gathering and transmission.”
And through the Sequent Energy Management trading unit, Williams is building a marketing platform to sell the next-gen gas to utilities and LNG export facilities.
Creating AGD is not only for the biggest gas operators. Denver-based independent Jonah Energy LLC is working with Context and its partners to track emissions across its Wyoming gas production assets and central delivery points.
“It’s critical that utilities, regulators and ultimately customers trust their energy supply,” Jonah’s Howard Dieter said. He is vice president of Environmental, Health & Safety and Strategic Energy Initiatives. Adopting Context’s platform “promises to take our efforts to the next level, furthering our ability to credibly validate the methane and carbon intensity of our operations.”
‘Climate Intelligence’
Of the Jonah deal, Context CEO Dan Harple said, “The certifiable emissions reductions demanded by lawmakers and regulators are central to the efforts to combat climate change, but businesses can’t hope to meet them if they cannot reliably represent their own digitally quantified and verified emissions profile.
“Climate intelligence,” though, offers “detailed, real-time emissions insights they need to stay compliant and maintain access to relevant markets.”
According to executives with Context, the “global natural gas markets are trending toward a world where buyers and regulators will hold companies accountable for improving their environmental performance and increasingly demand proof to support their claims.”
Delivering “certified-carbon-intensity products” offer a “distinct competitive advantage.”
Look no further than legislative, regulatory and stakeholder pressure to compel companies to use verifiable methods to track emissions from end to end.
Context’s Chris Rezendes, chief business officer, said companies generally are tracking their “climate performance” because of regulatory requirements. In a recent podcast with Foley & Lardner LLP, he said company executives may track emissions because they feel “compelled,” and because of competitive pressure.
There also are customers, like European LNG buyers, that need to comply with regulations that may be more stringent than U.S. environmental rules.
Other U.S. companies are working to get ahead of the game too, as more regulators and legislators scrutinize the integrity of emissions data.
It is more than conjecture.
A group of U.S. senators in February urged the Federal Trade Commission (FTC) to crack down on “greenwashing,” noting there have been “misleading environmental claims by fossil fuel companies and gas certification programs.”
The effort is led by Democratic Sens. Edward J. Markey (MA), Jeff Merkley (OR), Sheldon Whitehouse (RI), Richard Blumenthal (CT), Elizabeth Warren (MA) and Cory Booker (NJ), along with Independent Bernie Sanders (VT).
“Gas producers sometimes publicly describe their product as ‘certified,’ ‘responsible’ or ‘differentiated’ and market it as a climate-friendly fossil fuel,” the FTC letter stated. “But too often these green claims are false or misleading, as the methodology underlying them is opaque, the technology supporting them is unreliable, and the downstream climate effects of gas combustion are ignored…
“Many utilities are using so-called ‘certified’ gas to falsely burnish their climate bona fides, and some charge premiums for gas bearing these frequently meaningless designations.”
The U.S. Securities and Exchange Commission also has regulations in the works that could require greenhouse gas emissions and other climate-related risks to be disclosed to investors.
