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Cheniere unveils partnership to track emissions from LNG value chain

15 June 2021 William Fleeson

Cheniere Energy, the largest LNG producer and exporter in the US, will lead a research partnership to report and reduce GHG emissions from its natural gas production value chain.

The system is meant to advance Cheniere's existing efforts at quantifying, monitoring, reporting, and verifying GHGs from LNG. That set of processes is also known by the shorthand QMRV, and it's indicative of the scaling-up of decarbonization efforts across the global LNG industry.

The project enlists gas companies, technology firms, and universities in an effort to follow and eventually reduce the GHGs emitted in Cheniere's gas value chain. The work will "identify opportunities to reduce emissions," the company said.

Cheniere's QMRV plan will rely on a system of measuring GHGs at the level of individual LNG-tanker shipment, delivering a certification, or cargo emissions "tag" (CE tag) to the company's customers.

"This collaboration reinforces our data-driven environmental transparency, supports our CE tags, and enhances our efforts with natural gas suppliers," said Jack Fusco, Cheniere CEO. Fusco sees the effort as a means to "maximize the climate benefits" of the company's LNG.

Cheniere has 45 million mt/year of LNG production operating or under construction.

CE tags will be ready for customers starting in 2022, Cheniere said in a 10 June announcement. The QMRV collaboration builds on a previously-announced CE tags plan, which Cheniere unveiled in February.

The types of GHGs tracked will include CO2 and volumes of methane that are deliberately or accidentally released during normal operations of oil and gas production. The leaks are known as "vented" and "fugitive" emissions. The accounting will likewise include flared volumes, or gas that is intentionally burned as waste—rather than simply being vented into the air—by an operator.

Monitoring the upstream stage of production will allow for lower-GHG volumes of LNG once the gas is chilled and loaded onto tankers, then shipped to gas buyers.

Jason DuPaul, a senior analyst at IHS Markit, tracks carbon-neutral LNG deals, which are transactions that achieve a net-zero carbon balance, often for a single cargo, by using carbon credits and other offsetting instruments. He identified emissions reporting as a key challenge in the industry's larger shift to deeper environmental transparency.

"Providing emissions statements with cargoes would make the process of utilizing offsets to convert a cargo to a carbon-neutral LNG cargo more transparent, if desired," he said.

Interest growing for carbon-neutral LNG

The trend of carbon-neutral LNG cargoes is growing, DuPaul said, with 15 deals confirmed globally so far by IHS Markit.

Cheniere has inked one carbon-neutral LNG deal, announced last month with the oil major Shell.

Cheniere's emissions reporting concept was more than a year in the making, Cheniere senior director of climate and sustainability Fiji George told Net-Zero Business Daily. The QMRV design captures data from about 100 wells across four US basins—the Haynesville, Marcellus, Permian, and Utica—for some 360 Mcf/d in total volume, George said.

The technologies used to track emissions run the spectrum of what is available, including ground-based sensors, aerial and drone measurement, and satellite imagery from outer space.

Cheniere hinted at a larger scope for the project in its announcement, suggesting the collaboration will help assess "scalability" of a "robust QMRV program," ostensibly beyond the limits of the just-announced effort.

Cheniere's QMRV project and the preceding CE tag effort underscore broader trends in US and global LNG toward decarbonization and the transition to low-GHG energy systems. The LNG business has introduced greater emissions reporting standards in addition to the growing practice of carbon-neutral LNG deliveries.

Early adopters of carbon-neutral LNG include some of the most prominent names in the energy sector, from major oil and gas producers and large utilities to traders and diversified industrial groups. Chevron, Gazprom, JERA, Mitsui, Shell, TotalEnergies, and Vitol have each announced participation in carbon-neutral LNG deals since the start of the year. The Carbon-Neutral LNG Buyers Alliance, a cohort of 15 Japanese companies, came together in March.

When asked if the QMRV and CE tag initiatives were a proactive move to maintain LNG sector leadership, or a reactive measure to customer demands, Cheniere's answer was: "both."

"We're trying to lead, and we're a customer-focused business," Cheniere told Net-Zero Business Daily. The QMRV and CE tag efforts correspond to Cheniere's vision to be "rigorous, responsible, responsive," the company said.

Such flexibility is important as the energy transition reveals differences in attitudes—and in climate priorities—across international hydrocarbon markets. Those differences can surface between climate-forward gas buyers in Europe and some more traditionally-minded gas sellers in North America.

Cheniere's gas industry partners for the QMRV project total five for now: Aethon Energy, Ascent Resources, EQT, Indigo Natural Resources, and Pioneer Natural Resources.

The project's academic collaborators are the Payne Institute think-tank at the Colorado School of Mines and Harrisburg University of Science and Technology. Technical partners include the consultancy SLR International, as well as specialist emissions technology providers Montrose Environmental, SeekOps, Bridger Photonics, and GHGSat.

The QMRV project's findings will be "invaluable" to participants and observers, said Morgan Bazilian, the Payne Institute's director.

Posted 15 June 2021 by William Fleeson, Senior research analyst for Executive Briefings, IHS Markit

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