Oil Majors Pledge to Cut Methane Emissions

By Sarah Kent

A coalition of the world's biggest oil companies promised Monday to reduce methane emissions from natural gas extraction -- part of an effort to shore up the climate credentials of the hydrocarbon.

The Oil and Gas Climate Initiative, an industry group that counts oil giants like Exxon Mobil Corp., Royal Dutch Shell PLC and Saudi Arabia's state oil giant, Aramco, among its members, said it would target reducing methane emissions to less than 0.25% of the total natural gas the group of 13 member companies produces by 2025.

Methane is the main component of natural gas, but it also often leaks into the environment during production, transportation and processing. Even though it stays in the atmosphere for less time than carbon dioxide, methane is a much more potent greenhouse gas in the short term because it traps more heat. According to the International Energy Agency, one ton of methane is equivalent to as much as 87 tons of carbon dioxide over a 20-year time frame.

Natural gas production is growing and many big oil companies have held the fuel up as a climate-friendly alternative to coal that can help make the oil-and-gas sector more resilient in efforts to limit climate change.

A number of big companies including Exxon, Shell and BP PLC have already disclosed their own goals for reducing methane emissions. Shell, in particular, has tilted its production mix toward more gas output.

"If you're the size we are in the global gas market, one of key things is to grow the role of gas in the energy sector," said Shell's head of gas Maarten Wetselaar. "If it is to take its rightful place in the energy mix, we need to make sure methane is not something that holds it back."

There is also a strong business case: At the moment, many big companies don't have an accurate measure of the amount of gas they lose through leaks. By preventing those leaks, companies don't leave money from lost gas sales on the table.

According to an April report by the Environmental Defense Fund, a nonprofit environmental advocacy group, as much as $34 billion of global gas supply is lost each year through leaks and venting.

Last week, Shell said it would limit methane emissions from projects it operates to less than 0.2% of the total natural gas extracted by 2025. BP has also set a goal to limit its so-called methane-emission intensity to 0.2% by the middle of the next decade, while Exxon said in May that it will cut methane emissions 15% by 2020.

Write to Sarah Kent at sarah.kent@wsj.com

(END) Dow Jones Newswires

September 24, 2018 10:18 ET (14:18 GMT)

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