Author Archives: Richard Meyer

Richard Meyer Understanding Updates to the EPA Inventory of Greenhouse Gas Emissions from Natural Gas Systems

Understanding Updates to EPA Inventory of GHG EmissionsThis month, I released an update to my report on the Environmental Protection Agency (EPA) Inventory of Greenhouse Gas Emissions and Sinks and what it says about methane emissions from natural gas systems. In this post, I’ll cover some of its conclusions and the role gas utility distribution systems play in the emissions story.

The increasing prominence of natural gas in the U.S. energy economy has focused public and academic attention on the role of methane emissions in shaping our understanding of the environmental benefits of natural gas. We can only do this through good science, solid measurements, and quality data.

Importantly, the Inventory is continuously updated. The EPA routinely incorporates new data from field studies of natural gas systems and industry data to help refine our understanding of emissions in the sector. Each iteration gives us a new yet evolving insight into the industry’s greenhouse gas emissions.

What did we find this year? The Inventory shows, once again, that natural gas systems have low methane emissions shaped by a declining trend.

Industry-wide Emissions Have Declined

The U.S. natural gas industry is made up of thousands of wells and drilling rigs, well completion equipment, gathering systems, processing facilities, underground gas storage formations, LNG terminals and storage, and a 2.5 million mile transmission and distribution network. The natural gas “industry” is in reality at least nine separate sub-industries, all with distinct processes and markets.

The EPA inventory simplifies this picture. Adhering to protocols from the United Nations Framework Convention on Climate Change, the natural gas industry is often reported as one major category, though the EPA divides it into four distinct stages: field production, processing, transmission and storage, and distribution.Natural Gas Delivery System Playbook 2016The Inventory shows that annual methane emissions from natural gas systems have fallen 15 percent since 1990, driven in part by large declines from the processing, transmission, storage and distribution stages.

Methane Emissions from Natural Gas Systems

Industry wide, the natural gas emissions as a rate of production (the “leakage rate”) is now 1.2 percent—a level still well below even the most stringent thresholds for immediate climate benefits achieved through coal to natural gas switching.

Field production accounts for two-thirds of system-wide emissions. Despite annual emissions from this stage having grown since 1990, methane released field production activities has been largely flat during the past decade even as gross withdrawals of natural gas climbed by more than 40 percent.

These trends reflect improved efficiency of how natural gas is produced, processed and transported to consumers. The amount of methane emissions per unit of natural gas produced has declined continuously since 1990, having dropped 46 percent during that time.Methane Emissions per Mcf of Gas Produced

Flat emissions and growing production coincide with the rise of shale gas production. Consequently, new wells have been drilled with improved equipment that emits less, better practices, and increased efficiency as operators compete to develop lower-cost supplies.

Distribution Systems Methane Emissions Have Dropped. A Lot.

The natural gas distribution stage, which is owned and operated by natural gas utilities, exist at the end of the entire gas system. This sector serves most customers, predominantly households and businesses, and was responsible for 58 percent of all natural gas delivered in 2015. It’s comprised of 2.2 million miles of pipeline, compressor stations, meter and regulating facilities, customer meters and other equipment.

These systems combined emit only 0.1 percent of annually produced natural gas. In other words, distribution systems have a small impact on methane emissions.

The long-term trend shows that methane released from distribution systems has declined significantly during the past two decades. Annual emissions from systems owned and operated by natural gas utilities have declined 75 percent since 1990, a stunning drop that is the direct consequence of infrastructure replacement programs, better operating practices and voluntary measures.

Methane Emissions from Natural Gas Distribution Systems

These emissions reductions took place even as the system itself has grown 35 percent. More than 19 million more customers enjoy natural gas service today than in 1990—bringing the total to 73  million customers across residential, commercial, and industrial sectors. To serve these homes and businesses, natural gas utilities have expanded infrastructure. Companies have placed more than 600,000 miles of new pipeline into operation during the past 25 years.

Even as the system has expanded, the existing infrastructure has been modernized. Older pipeline materials such as cast iron bare steel have been upgraded to protected steel and state-of-the-art polyethylene (plastic).

This exceptional record is the result of safety and modernization programs implemented by natural gas utilities that continue to be vigilant and committed to upgrading infrastructure through risk-based integrity management programs. As of May 2017, there are 40 states and the District of Columbia that have a program in place to accelerate the replacement of natural gas infrastructure

The industry also engages in voluntary practices. Natural gas utilities reduce methane emissions each year through voluntary measures reported to the EPA Natural Gas Star Program. In March 2016, 41 natural gas companies pledged support as founding partners for EPA’s Methane Challenge Program to achieve emissions reductions through a voluntary best management practice commitment framework. I anticipate that control technologies for methane emissions will continue to improve and proliferate over time.

Conclusion

Natural gas distribution systems have low methane emissions and have been on a declining trend for decades. Similarly, the natural gas industry has decreased annual methane emissions and has a shrinking emissions footprint. As new wells are drilled and pipelines are replaced the industry has a natural tendency toward adopting new technology and better practices, all of which contributes to lower emissions.

Finally, the EPA Inventory is a work in progress. New information offers the industry, the public, and policymakers a chance to understand better industry performance and identify cost-effective and pragmatic opportunities to reduce emissions. The Inventory is one component of a broader suite of tools that includes better science, new technologies, and industry engagement that helps lay the foundation for natural gas as a critical component of the energy mix for years to come.

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Richard Meyer Natural Gas Market Indicators: May 26, 2017

Edition No. 300

Year-to-date natural gas demand for the power, industrial, and small volume residential and commercial sectors is down by more than 4 Bcf per day compared with 2016. A warm first quarter in most parts of the country reduced home heating loads and the winter-related peaks to gas-fired power generation.

These domestic demand declines have been largely offset by exports though. The consumption deficit compared to last year would be even larger if liquefied natural gas (LNG) exports and pipeline gas to Mexico were not running more than 2 Bcf per day ahead of the 2016 pace.

As noted at the top of this blog article, this is the 300th edition of the Natural Gas Market Indicators. This marks more than 12 years of information and observations regarding natural gas markets by the AGA Energy Analysis team, as well as your interest. Thank you for your readership and including this publication as a resource as you develop your understanding of energy markets in the United States.

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: April 28, 2017

Futures prices for natural gas have reliably stayed above $3 per MMBtu for the past month. Elevated pricing support comes amid the third largest amount of natural gas left in storage in the past 10 years, suggesting traders still see some market tightening as the summer approaches.

Demand from exports has provided some of this support, and expectations for additional liquefied natural gas (LNG) export capacity from Sabine followed by Cove Point later this year are likely factors. But natural gas is not the only commodity defining price stability or not. Oil prices had remained reliably above $50 for months until just recently when West Texas Intermediate crude slipped below. Both commodities, oil and natural gas, are priced at a level that appears to be attractive to producers.

Oil and gas rigs are now more than double the count from their respective lows established last year. The question, at least to this analyst, is how well the natural gas market is pricing in the expected future flows from new production? Will the market continue to tighten? Or will new production volumes surprise us all?

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: February 15, 2017

In North America, natural gas prices have slid below $3.00 per MMBtu with what is turning into another less-than-bitter winter for the lower-48 states. Without strong traditional sector demand—heating loads in homes and businesses—the market has instead found incremental demand and year-on-year growth from pipeline exports to Mexico and LNG shipments from Sabine Pass. Current National Weather Service forecasts point to warmer conditions for most of the country through the balance of the current winter heating season.

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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