Author Archives: Richard Meyer

Richard Meyer Natural Gas Market Indicators: May 26, 2016

Energy policy and related environmental issues are very likely to be key elements of the upcoming presidential race, which follows the party conventions this summer. Defining a lower carbon energy future for the country within the context of macro-economic realities and consumer choices may be served back and forth like a tennis ball at Wimbledon as the candidates outline their positions.

While that is happening, gas market events such as the trends in production, availability of underground storage to accept daily injections, the price relationship between coal and natural gas, demand for gas in power generation, and many other potential factors may influence the short-term market and preparations for the 2016–17 winter heating season. While you are watching the bouncing political ball, we will keep our eye on these other things.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer Natural Gas Market Indicators: May 13, 2016

Early May means the beginning of cooling degree day accounting for the weather service and AGA. Not surprisingly, data showed the week ending May 7, 2016 to be 14.3 percent cooler than normal (meaning fewer cooling degree days than normal). So, what will the late spring and summer bring? Some weather analysts see the present El Nino shifting to La Nina in the Pacific by early fall, which normally means more rain for portions of the country and cooler temperatures. What will the hurricane season deliver for the market to digest June – November 2016 and, of course, will demand for natural gas into power generation be weak or robust for the coming summer? With all of the models available and the predictions that ensue you would think the future is well understood. Well, let’s see what Mother Nature puts on the table.

Despite the fact that EIA reported monthly production records for February, now only three months later, dry gas production volumes are beginning to taper downward. This should come as no surprise. Drilling activity has yielded to persistently low commodity prices. The Henry Hub spot price has struggled to close above $2 but is beginning to show some life in that regard and the already-low count of gas rigs dropped another 22 percent since that time, also.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer Science, Like Fashion, is Never Finished

New knowledge sharpens our understanding of natural gas system emissions

The facts on methane are evolving. They are also complicated, and sometimes contradictory.

The questions around methane—how much, and from what sources—help clarify how the use of natural gas may achieve greater environmental benefits.

Prior work has shown that natural gas systems have a small methane footprint shaped by a declining trend. During the past few years, a number of efforts were launched to study and better understand the magnitude and location of methane emissions from the natural gas and other industries.

Two analyses were released in April 2016 that summarize and synthesize a growing body of work to date on methane. These studies are important because they help refine our understanding of emissions from natural gas systems and the implications for the greenhouse gas (GHG) profile of natural gas.

The first is the annual Inventory of U.S. Greenhouse Gases and Sinks from the U.S. Environmental Protection Agency (EPA).  It’s the most comprehensive assessment of natural gas system methane emissions available.

This year’s edition featured significant revisions to its methodology and data sources for estimating methane released from natural gas industry operations. It incorporated data from EPA’s GHG Reporting Program, to which many natural gas companies across the U.S. are required to report. This dataset includes information on equipment counts and other “activities” or emissions sources.

In addition, the new Inventory integrates recent peer-reviewed studies that measured emissions from different components of the natural gas industry. New studies offer more recent and accurate data relative to prior editions.

For example, in this study a research team from Washington State University went into the field and measured emissions from natural gas distribution systems in 13 cities. They found that emissions from pipeline leaks and other gas utility systems were 36 to 70 percent lower than what EPA had been showing. These measurements formed the basis for new “emission factors,” which is a kind of average emissions per source that is used in EPA’s estimation methods

With all these changes, the Inventory reveals once again that natural gas system emissions have declined since 1990. The bottom-line total shows that total methane released from all natural gas systems declined 15 percent from 1990 to 2014.rmchart1

Furthermore, emissions from gas utility distribution systems in particular are now a small fraction of what they were two decades ago—down 74 percent since 1990—even as the system expanded more than 30 percent in terms of miles of pipe installed and numbers of customers served. The chart below illustrates the estimates for emissions from distribution mains alongside the growth in the miles of those pipelines. You can see the simultaneous decline in emissions and growth in the miles of main installed.

rmchart2This exceptional record can be traced to safety as the top priority for gas utilities who continue to systematically upgrade infrastructure. Today, there is a growing effort to accelerate the replacement of pipelines. Thirty-nine states and the District of Columbia have some form of accelerated infrastructure replacement program or policy, which is helping reduce emissions. It is because of these continuing efforts to modernize infrastructure and to enhance pipeline safety that natural gas emissions from distribution are expected to continue to decline.

In this year’s Inventory, EPA also expanded its universe of sources for the field production stage, which in turn revised emissions upward by 31 percent. The level of emissions may be higher than before—again due to accounting for gathering and boosting infrastructure that was not included in earlier inventories—but the trend is largely flat for the last decade. Field production emissions have been level since 2005 even as production increased 34 percent.

In all, the methane emissions rate of production—the so-called “leakage rate”— is now 1.4 percent. This is a level well below even the most stringent thresholds for immediate climate benefits achieved through coal-to-gas switching.

This exceptional record can be traced to safety as the top priority for gas utilities who continue to systematically upgrade infrastructure. Today, there is a growing effort to accelerate the replacement of pipelines. Thirty-nine states and the District of Columbia have some form of accelerated infrastructure replacement program or policy, which is helping reduce emissions. It is because of these continuing efforts to modernize infrastructure and to enhance pipeline safety that natural gas emissions from distribution are expected to continue to decline.

In this year’s Inventory, EPA also expanded its universe of sources for the field production stage, which in turn revised emissions upward by 31 percent. The level of emissions may be higher than before—again due to accounting for gathering and boosting infrastructure that was not included in earlier inventories—but the trend is largely flat for the last decade. Field production emissions have been level since 2005 even as production increased 34 percent.

In all, the methane emissions rate of production—the so-called “leakage rate”— is now 1.4 percent. This is a level well below even the most stringent thresholds for immediate climate benefits achieved through coal-to-gas switching.

More on the recent Inventory and changes to its methodology can be found in a white paper analysis I published titled, “New Science, New Facts: Understanding Updates to the EPA Inventory of Greenhouse Gases.”

The second analysis released in April is a comprehensive summary of the current literature. Titled Finding the Facts on Methane Emissions: A Guide to the Literature, ICF International examined 75 different studies to provide context for their respective conclusions. The consulting firm also evaluated the different kinds of sources of methane emissions in the natural gas industry, reviewed recent data on emissions (including the EPA Inventory), and discussed efforts for reductions.

Among its findings, ICF confirms a number of environmental attributes of natural gas:

  • Natural gas combustion releases significantly less carbon dioxide and criteria pollutants such as sulfur dioxide, nitrogen oxides, particulate matter (soot) and mercury compared with other fossil fuels.
  • U.S. carbon dioxide emissions are near 20-year lows.
  • The most detailed life-cycle analyses show that emissions of natural gas are 40-50 percent lower than coal on a 100-year basis.
  • The use of natural gas for power generation enables greater penetration of clean, renewable energy sources that are intermittent.

It concludes from its “meta-analysis” of 75 different studies on methane emissions that:

  • Direct measurement studies of emissions from natural gas operations show lower emissions than the factors used in the EPA Inventory, but a small number of sources inflate the emissions profile.
  • Ambient air measurement studies show a range of results and are affected by a variety of uncertainties.
  • Additional support that life-cycle analyses of natural gas show significantly lower emissions compared with coal.

Science, like fashion, is never finished, and ICF rightly notes that there’s more work to be done in this space. Similarly, the EPA Inventory is an iterative process with annual updates to its data and methodology. We should expect additional changes to estimates from natural gas systems next year.

Importantly too is that the natural gas system itself is constantly improving. I mentioned the 39 states (and DC) with pipeline replacement programs, which have contributed to reductions in emissions from gas utility systems. In addition, 41 companies have pledged support as founding partners for the EPA Methane Challenge Program, which launched in March 2016 and is designed to encourage companies to follow certain best practices to mitigate methane. And currently EPA regulations to reduce volatile organic compounds from natural gas production went into effect in 2015 and are helping to reduce emissions.

We should expect more work in terms of technology, science around emissions, and collaborations between companies and regulators that will further improve upon the already low emissions profile of natural gas systems. These analyses underscore the role that natural gas can play in helping to reduce overall GHG emissions.

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Richard Meyer Natural Gas Market Indicators: April 28, 2016

Slowing production could be met with higher demand if temperatures rise this summer, which would bring some support to a persistently soft pricing environment. A bullish scenario is far from guaranteed though. Inventories from drilled but uncompleted (or completed but unconnected) wells are being brought to market, offsetting production declines from the low rig count. Eventually though even this inventory will dissipate. Many indicators appear to suggest a supply-demand balance tightening this year or next. It’s the how and importantly the when that are up for debate.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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