PA Environment Digest Blog: Senate Committee Briefing Finds No Definition Or Standard For ‘Responsibly Sourced’ Natural Gas; PA Producers Already Below One RS Threshold

On October 17, the Senate Environmental Resources and Energy Committee held an informational briefing on Project Canary, a company that measures, analyzes and reports on methane emissions from natural gas production and distribution infrastructure.

Project Canary and other similar companies have been part of what’s called the differentiated gas market that is attempting to help define what “responsibly sourced” or low methane emission natural gas production is.

One early objective of the “responsibly sourced” movement was to create a label that made it seem like natural gas production can be more environmentally friendly so producers can charge more for this “differentiated” product in the marketplace.

While that may have been the early objective of the “responsibly sourced” movement, Project Canary provided a description of how they and the concept have evolved in response to the development of more federal and state regulations that limit methane emissions from natural gas facilities.

Key Takeaways

Here are five key takeaways from the briefing from Project Canary--

-- Assessments Not Certification: Project Canary, as a company, is moving away from “certification” of “responsibly sourced” gas to making “assessments” of how well natural gas producers are controlling methane emissions in line with the change in strategy the new company CEO announced at the end of August. [Read more here]

-- New Methane Regulations: New EPA regulations to be finalized in the near future and many new state regulations require natural gas infrastructure operators to do detailed monitoring, assessments and make methane reductions; states will have to adopt and enforce regulations compatible with federal requirements.

-- PA Producers Already Below One Definition: Pennsylvania natural gas producers are already below what many consider “responsibly sourced” emissions with a methane “intensity” of 0.08%-- well below the RS “intensity” threshold of 0.2%-- so RS doesn’t automatically mean emission improvements here.

-- Not Necessarily A Premium: Utilities, including in Pennsylvania, are starting to use their considerable buying power to purchase “responsibly sourced” natural gas, finding the premium associated with the responsibly sourced label is very small or non-existent.

-- New European Union Standards: The European Union is likely to soon adopt supply chain methane emissions standards to apply to all LNG natural gas imported into their countries. [Read more here]

Project Canary Overview

Michelle Moorman Applegate, Senior Director of Policy at Project Canary, provided an overview of the kinds of assessments, monitoring and analysis the company does for operators of natural gas infrastructure.

She also provided a brief summary of new federal and state regulations requiring methane emissions assessments and reductions by the natural gas industry.

“Project Canary is a climate technology company, and we effectively build enterprise-wide emission data platforms, so that operators in the energy space can understand what's going on.

“They can measure emissions on their platforms, they can understand it, and they can take action.

“And the goal here is to really drive down emissions across the entire energy supply chain.

“So we are a technology and data company, and we believe that data and transparency are a fundamental component to reducing emissions and making a sustainable energy transition.”

“We support operators in three different ways. We do have our own sensors, we partner with others as well, and we'll talk a little bit about those in a minute.

“Our sensors are designed to be continuous emissions monitoring sensors or stationary sensors that are on physical well pads.

“We also offer a software platform that can ingest data not only from our sensors, but other technologies so that it really gives operators the ability to visualize and understand how their emissions are moving across a well pad, but also to quantify emissions. And we believe that quantification is really important moving forward.

“And third, we offer environmental assessments. And so environmental assessments used to be called certifications. [Read more here]

“We are calling them assessments now, and we offer two. We offer what's called our Trust Well rating, and we offer a low methane rating.

“Our Trust Well rating is an assessment that effectively says, "okay, what control measures are in place by the operator?" So that's internal processes.

“And then what local factors exist? So that's maybe the inherent risks of the location or the geology or the geography of a property. And we map those two together to identify threats and then also the likelihood that those threats could occur.

“So a score comes out of that.

“There's also a low methane rating, which is really designed to evaluate methane emissions on operations, both at a site and a facility level.

“And all of these components are really critical when it comes to things like regulatory compliance, future compliance, and the market.”

Applegate noted the U.S. Environmental Protection Agency is in the middle of adopting rulemakings under the federal Clean Air Act that will require natural gas infrastructure operators to more carefully monitor methane emissions and develop plans to meet new emission limits.

[Read more here- supplemental EPA rule. Read more here- Inflation Reduction rule. Read more here- reducing emissions from conventional gas wells]

“The other piece to that is that a state would be required to implement this new plan within 36 months of the due date,” she explained.

“But the good news is that Pennsylvania is already a tremendous leader in this space.

“The way we look at an operator is based on a methane intensity. So a methane intensity is the amount of methane that is released over the amount of methane produced.

“And the standard that people are gathering around is that a methane intensity of 0.2% is considered responsibly sourced.

“Based on 2020 data the average across Pennsylvania was 0.08%, so Pennsylvania is already in this space.

“The top five producers in Pennsylvania are actively engaged in the idea of responsibly sourced gas, whether it through us or other companies, and there is a lot of dialogue going on in your agencies already around how we can address this.”

She also noted the European Union has been discussing supply chain methane emissions standards to apply to its imports of LNG natural gas that should be finalized in the near future. [Read more here]

Sen. Carolyn Comitta (D-Chester), Minority Chair of the Committee, noted, “My understanding is that different companies like yours have different criteria even at this point and that companies are being "certified,” but there really is no regulation to determine that something is certified. So that is a concern.”

Applegate responded by saying, “Yes, absolutely. So you are correct. There's no definition or standard as to what certified gas means.

“What we tell commissioners [state officials] when they are evaluating this in their own states is that different companies will come up with their own set of criteria.

“Those criteria are public, they are reviewable, auditable. And so you can see what these companies are measuring and what operators must do to get certified and get a grade. And so that information is out there.”

“So there is no standard yet, but the industry knows this is a challenge and the proof is in the pudding, right? You can't manage what you don't measure.

“And so, we believe that by having that data that allows operators to prove what they're doing.”

Applegate noted utilities are using their purchasing power to explore the “responsibly sourced” natural gas market.

“Over the last two years we have seen a significant uptick in utilities that are seeking RFPs [Request For Proposals] for this type of gas for a “responsibly sourced” commodity.

“Pennsylvania, like many states, has a least cost provision on the books for natural gas procurement and utilities.

“So when a lot of these regulated utility laws were established the cost of the commodity is a pass through, and to protect consumers a lot of us put laws on the books that said you have to be a least cost consumer, or least cost procurer of gas, which means that we are minimizing the cost to our consumers.
“We know right now that some responsibly sourced gas is a premium, it's identified as a premium commodity. And so in spaces where you have a least cost law for utility consumption procurement, that doesn't always jive with paying a little bit more for a premium commodity.

“And so what we've seen is that states are starting to modify legislation.

“Virginia and Tennessee have already done this, and they've done this through the creation of an innovative gas technology approach.

‘So they've said if it's an innovative gas technology that can include hydrogen, that can include responsibly sourced gas or renewable gas, some commodity increase is allowed, there's a cost cap that's put into place for that scenario.”

“And so in other states what we've seen is an uptick in pilots [programs], and New York state is a great example of that. The state recognizes that a reduction in scope three emissions can count towards the utilities reduction in their greenhouse gas emissions.”

Applegate showed a list of utilities that have issued RFPs for “responsibly sourced” natural gas, including PECO and Columbia Gas in Pennsylvania.

“And I really wanted to show this to show you that the premium associated [with “responsibly sourced” natural gas] is quite small compared to the cost of gas.

“One third of these situations have no premium, and so they're simply paying the standard commodity cost for that gas that has a lower methane emission.”

“And so that is a very high level overview of what we're trying to accomplish. But really, the goal, as the Chair referenced at the beginning, is to reduce emissions in our upstream energy production.

“We believe that we can make a meaningful impact now during this energy transition that will allow us to make some amends while we are going through this transition.

“And we think we can do that by giving operators the information and allowing them to act to really stop fugitive and operational methane emissions on their production.”

Summary Comments

Sen. Gene Yaw (R-Lycoming), Majority Chair of the Committee, said at the end of the briefing, “From what you have said, and all the projects you're involved in, and various states and everything, is that business must be pretty good for Project Canary.

“And I take that as a compliment, because I take it that, because your business is good, means that a lot of companies in the industry that you work in are concerned and willing to use your services. And, I assume, other companies that do the same thing.

“So with that, I think that that's very encouraging.”

Sen. Carolyn Comitta (D-Chester), Minority Chair, said, “As we work to decarbonize our energy sector and reduce our emissions, some of the technology is quite complex.

“I welcome these conversations and I come to the table with an open mind.

“If we can effectively mitigate methane emissions, that's something that we need to look at.

“Still I remain concerned that in greening the fossil fuel industry, we are missing out on opportunities to invest in renewables. Of course, net-zero is not going to happen overnight, and I support a balanced approach.

“I think it's important that we keep in mind that Pennsylvania accounts for about one percent of the world's carbon emissions, which is more than some countries, and [it’s] important to remember that the fossil fuel industry remains the leading source of global methane pollution.

“Methane, the largest component of natural gas, traps up to 80 times as much heat as carbon dioxide in our atmosphere.

“Any effort to monitor methane emissions must be reliable, effective, and verifiable, and we need to do everything we can to reduce methane emissions today, and moving forward.”

Click Here to watch a video of the briefing and for a link to the Project Canary presentation [when posted]

Sen. Gene Yaw (R-Lycoming) serves as Majority Chair of the Senate Environmental Committee and can be contacted by calling 717-787-3280 or sending email to: gyaw@pasen.gov. Sen. Carolyn Comitta (D-Chester) serves as Minority Chair and can be contacted by calling 717-787-5709 or sending email to: senatorcomitta@pasenate.com.

(Photos: top- Aerial photo of shale gas well pad and coal mine methane emissions from DEP study; FLIR camera photo of methane emissions from compressor station; bottom- methane emissions from compressor station; methane emissions from conventional gas well.)

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