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Methane is a more potent greenhouse gas (GHG) than carbon
dioxide (CO2). Understanding methane's role in GHG
emissions and climate change is critical for regulators,
stakeholders, and global investors seeking to understand the
challenges and opportunities posed by the energy transition.
Methane emissions account for about 17% of total GHG
emissions—the second-largest source after CO2.
Methane traps 84 times the heat of CO2 in the first
20 years that it is emitted. In other words, a reduction in methane
emissions can have 84 times the impact of similar reductions in
CO2 over two decades. Because methane has a shorter life
in the atmosphere than CO2, reducing methane emissions
reducing methane emissions can have an impactful effect on the rate
of global warming.
In oil and gas extraction, methane emissions result from
venting or fugitive releases of natural gas or produced gas. Gas is
primarily made up of methane. Unlike CO2, which occurs
primarily as a result of combustion, in the oil and gas value chain
methane emissions are often unintentional and are not necessarily
correlated with combustion (or other emissions). This fact can make
methane difficult to assess for many plays globally.
There is increasing pressure from governments and regulators to
find and measure methane emissions. This is part of IHS Markit
current work to develop best practices for GHG accounting over the
full life cycle of hydrocarbons from extraction through end use of
refined products.
There is more to it than "carbon"
The majority of anthropogenic greenhouse gas (GHG) emissions,
those generated as a result of human activity, are from burning
fossil fuels. As shown in Figure 1, 75% of GHG emissions are carbon
dioxide (CO2). Fossil fuel combustion in the energy
sector is the primary source of CO2 emissions; however,
other sources include land use change and forestry as well as
industrial process. Methane (CH4) is the next-largest
source of emissions, contributing about 17%. Approximately 40% of
methane emissions stem from activities in the agricultural sector,
followed closely by the energy sector at more than 35%.*
Nitrous oxide (N2O), responsible for about 6% of
total emissions, is predominately emitted in the agricultural
sector but is also a product of combusting fossil fuels. There are
also a variety of other GHGs including various HFCs and PFCs, as
well as SF6 shown as F-gases in Figure 1. **
For governments and companies to realize the net zero emissions
targets many have put forward over the past 18 months, action to
reduce all GHGs is expected.
Why methane is important in the short term
GHGs emitted into the atmosphere trap heat from the sun and
contribute to a rise in global temperatures. Once in the
atmosphere, various GHGs can interact with the environment
differently and contribute to varying degrees of global warming.
This concept is known as Global Warming Potential (GWP). GHG
emissions are often expressed in units of mass of carbon dioxide
equivalent (CO2e), with GWPs being used to convert
different gases into this comparative basis.
Despite being the largest contributor to overall GHG emissions,
CO2 does not tell the whole story. Methane emissions
contribute meaningfully to the overall GHG emissions levels and
impacts. Compared with CO2, methane is a more potent
GHG. Different GWP values apply to methane depending on the time
period considered (e.g., a 20-year time horizon versus a 100-year
time horizon). Over 20 years, methane will trap 84 times the heat
of the same amount of CO2. Over 100 years, methane traps
28 times more. ***
The different values for the 20- and 100-year time horizons are
a result of methane having a relatively short life in the
atmosphere (approximately 12 years), after which the molecule
breaks down. Conversely, CO2 can remain in the
atmosphere for hundreds of years.****
This fact underscores the importance of focusing on emissions of
methane in the near term to slow the rate of global warming as
actions taken to reduce methane emissions can have 84 times the
impact of similar reductions in CO2 in the next 20
years.
Methane matters in GHG emissions accounting
When trying to understand the relative GHG competitiveness of
oil and gas assets or plays, methane can be particularly critical.
In oil and gas extraction, methane emissions are the result of
venting or fugitive releases of natural gas or produced gas, which
is primarily made up of methane. Unlike CO2, which
occurs primarily as a result of combustion, in the oil and gas
value chain methane emissions are often unintentional and are not
necessarily correlated with combustion (or other emissions). This
fact can make methane difficult to assess for many plays globally.
Yet, methane is material to understanding the footprint of oil and
gas extraction. Figure 2 shows a comparison of the GHG intensities
of four distinct offshore oil and gas plays, ordered from highest
to lowest in terms of CO2 emissions intensity. What is
very clear is that the relative rank of these plays using GHG
emissions intensity does not align with a result using
CO2 only. The primary driver of these differences is
methane.
As exhibited in Figure 2, the impact of methane on the emissions
profile can vary widely between plays. This variation can be a
result of many factors including but not limited to the extraction
technique, the age of the play, the design and age of the asset,
access to supporting infrastructure such as pipelines to transport
associated gas, the ratio of gas to oil production, and regulatory
requirements. In addition to variance between plays, IHS Markit has
found there can be considerable variation within plays as well. In
undertaking a comprehensive analysis of key plays—modeling all
operating assets in the play—IHS Markit has found a high degree
of variability within each play.
Methane - a key uncertainty in oil and gas GHG
emissions
While methane can improve our understanding of the total GHG
emissions intensity of oil and gas assets, it also presents a
challenge. This result is in part because many methane releases are
unintentional—often referred to as fugitive emissions—which
implies they are unknown. Complicating estimating emissions of
methane is that these emissions can occur at low rates from many
dispersed point sources (e.g., small leaks). There is increasing
pressure from governments and regulators to find and measure
methane emissions as well as expanding efforts by third-party
stakeholders to detect emissions from oil and gas operations via
remote "beyond the fence" means such as mobile cameras and
satellites and other airborne technologies (e.g., drones,
balloons). Leading oil companies are in turn beginning to change
how they approach the detection and mitigation of unintended
methane releases from their assets, shifting from periodic,
regulatory-required inspections to nearly continuous monitoring via
a network of complementary technologies such as fixed cameras,
drone- and airplane-deployed sensors, and satellite measurements.
However, in the interim, for those seeking to understand oil and
gas emissions, and the competitive dynamics between plays, methane
emissions may remain a key source of uncertainty.
IHS Markit is developing best practices for GHG accounting over
the full life cycle of hydrocarbons from extraction through end use
of refined products.
More on global warming potentials
The Intergovernmental Panel on Climate Change (IPCC) has
published the GWPs of different GHGs for decades, and the values
have changed. These changes are a result of the scientific
community continuing to assess and adjust the values as more data
and information become available and the understanding of the
impact of these gases improves. Two recent sets of GWP values
include one set from 2007 and one set from 2013. Table 1 includes
values from the Fourth Assessment Report (AR4) published by the
IPCC in 2007 and values from the Fifth Assessment Report (AR5)
published by the IPCC in 2013. This situation begs the question of
which GWP value is right. The answer is that, although the
100-year GWPs are most used, the different GWP values are all
valid. The key is understanding which GWP values are applied and
ensuring consistency when drawing comparisons between different GHG
intensities.
** The F-gases tend to be part of closed systems, acting as
refrigerants or electrical insulators, and are therefore generally
released unintentionally and sporadically in small
quantities
***The 100-year GWP values tend to be the basis for
consideration for policy-focused conversations.
