1 00:00:00,320 --> 00:00:03,320 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,600 --> 00:00:07,880 Speaker 1: the BNAF podcast, and today we talk about methane leaks 3 00:00:07,880 --> 00:00:10,799 Speaker 1: and how to find them. Methane is a potent greenhouse 4 00:00:10,840 --> 00:00:13,800 Speaker 1: gas with a shorter half life than carbon dioxide, but 5 00:00:14,280 --> 00:00:17,880 Speaker 1: with more global warming potential in that shorter life. So 6 00:00:17,960 --> 00:00:21,400 Speaker 1: while methane might be the simplest hydrocarbon with just one 7 00:00:21,480 --> 00:00:25,160 Speaker 1: carbon and four hydrogen atoms, it is a complex problem. 8 00:00:25,280 --> 00:00:29,040 Speaker 1: Today we welcome Maria Olivia Porce from our oil team. 9 00:00:29,360 --> 00:00:32,720 Speaker 1: While there's plenty of methane coming from agriculture, she's actually 10 00:00:32,760 --> 00:00:35,280 Speaker 1: going to share how methane is being monitored in the 11 00:00:35,320 --> 00:00:38,600 Speaker 1: oil and gas industry. Satellites have changed the way we 12 00:00:38,680 --> 00:00:42,960 Speaker 1: detect leaks, illuminating just how flawed previous monitoring and reporting 13 00:00:43,000 --> 00:00:45,919 Speaker 1: were in addition to the leaks themselves. But what are 14 00:00:45,920 --> 00:00:49,160 Speaker 1: oil companies doing with this better information? B and EF 15 00:00:49,200 --> 00:00:52,839 Speaker 1: subscribers will be able to access several research notes on methane, 16 00:00:52,880 --> 00:00:55,200 Speaker 1: and I recommend taking a look at the oil and 17 00:00:55,240 --> 00:00:59,160 Speaker 1: gas methane monitor super emitters in the US as well 18 00:00:59,200 --> 00:01:02,520 Speaker 1: as oil and a methane fixed more likely with growing 19 00:01:02,640 --> 00:01:06,600 Speaker 1: un group and the methane bill facing US oil and gas. 20 00:01:06,920 --> 00:01:10,319 Speaker 1: These can be found at BNEF dot com and at 21 00:01:10,319 --> 00:01:13,679 Speaker 1: BNF go on the Bloomberg terminal. If you like this show, 22 00:01:13,920 --> 00:01:16,600 Speaker 1: give us a review or subscribe, and it will help 23 00:01:16,640 --> 00:01:20,600 Speaker 1: make us more discoverable by other listeners like you. Right now, 24 00:01:20,760 --> 00:01:34,240 Speaker 1: let's get to talking about methane. Maria, thank you very 25 00:01:34,319 --> 00:01:35,720 Speaker 1: much for joining today. 26 00:01:35,560 --> 00:01:36,520 Speaker 2: Thank you for having me. 27 00:01:36,720 --> 00:01:40,039 Speaker 1: So we're going to spend this entire show talking about methane, 28 00:01:40,400 --> 00:01:43,039 Speaker 1: which we often talk about in carbon equivalence. But let's 29 00:01:43,040 --> 00:01:46,480 Speaker 1: start by just talking about methane as methane, not as 30 00:01:46,480 --> 00:01:50,280 Speaker 1: an equivalent to anything. Why for those people who are 31 00:01:50,760 --> 00:01:54,600 Speaker 1: focused on climate change and interested in limiting the effects 32 00:01:54,640 --> 00:01:59,160 Speaker 1: of climate change, whether paras aligned or otherwise, why should 33 00:01:59,480 --> 00:02:01,120 Speaker 1: we care about methane? 34 00:02:01,320 --> 00:02:05,120 Speaker 2: Sure? So, methane is the main constituent of natural gas, 35 00:02:05,160 --> 00:02:07,960 Speaker 2: so that's gas of fossil origin, and it makes up 36 00:02:08,000 --> 00:02:11,320 Speaker 2: about seventy to ninety or even slightly over in ninety 37 00:02:11,360 --> 00:02:15,800 Speaker 2: percent of the gas composition. It is colorless and odorless, 38 00:02:15,919 --> 00:02:19,800 Speaker 2: which means that it's virtually invisible to the naked dye. However, 39 00:02:20,000 --> 00:02:23,840 Speaker 2: methane is a very potent greenhouse gas. So what that 40 00:02:23,960 --> 00:02:27,880 Speaker 2: means is that over a twenty year period, methane traps 41 00:02:27,919 --> 00:02:32,080 Speaker 2: eighty two point five times more heat than carbon dioxide. 42 00:02:32,120 --> 00:02:35,720 Speaker 2: And here I'm referencing the twenty year figure because methane 43 00:02:35,760 --> 00:02:40,240 Speaker 2: has a very short atmospheric lifespan of about twelve years 44 00:02:40,280 --> 00:02:44,440 Speaker 2: before it gets oxidized and converted to carbon dioxide. However, 45 00:02:44,680 --> 00:02:49,360 Speaker 2: methane is the second largest contributor to climate change, so 46 00:02:49,400 --> 00:02:52,680 Speaker 2: it means that if we're able to reduce methane emissions 47 00:02:52,680 --> 00:02:55,639 Speaker 2: in the short term, we will be able to limit 48 00:02:55,680 --> 00:02:57,760 Speaker 2: the global rise in temperatures. 49 00:02:57,880 --> 00:03:00,560 Speaker 1: So when we're talking about methane methane and depending on 50 00:03:00,600 --> 00:03:02,720 Speaker 1: how you pronounce in what part of the world you're from, 51 00:03:03,120 --> 00:03:05,280 Speaker 1: this is a greenhouse gas that is really important that 52 00:03:05,320 --> 00:03:10,320 Speaker 1: we think about intervening on right now. So this zero 53 00:03:10,440 --> 00:03:12,720 Speaker 1: point in the future when we talk about carbon emissions 54 00:03:12,760 --> 00:03:15,760 Speaker 1: being out in twenty fifty, is potentially much more urgent 55 00:03:15,800 --> 00:03:18,400 Speaker 1: when it comes to methane and we're thinking about warming 56 00:03:18,560 --> 00:03:21,440 Speaker 1: and the effects that it could have immediately. So let's 57 00:03:21,480 --> 00:03:23,600 Speaker 1: talk about where it comes from. So I know, first 58 00:03:23,600 --> 00:03:26,880 Speaker 1: of all that it comes from cows, and there's a 59 00:03:26,880 --> 00:03:29,760 Speaker 1: lot of discussion around that part of the agricultural system. 60 00:03:29,760 --> 00:03:32,000 Speaker 1: But where are some of the other places and potentially 61 00:03:32,040 --> 00:03:34,040 Speaker 1: what we're going to talk about a little bit more 62 00:03:34,040 --> 00:03:35,400 Speaker 1: detail on the show today. 63 00:03:35,600 --> 00:03:39,480 Speaker 2: Sure, you're absolutely correct. Agriculture is in fact the largest 64 00:03:39,480 --> 00:03:42,680 Speaker 2: source of methane emissions, so about forty percent, followed by 65 00:03:42,800 --> 00:03:45,880 Speaker 2: oil and gas, and depending on the inventory, oil and 66 00:03:45,960 --> 00:03:49,880 Speaker 2: gas would be between twenty to something like thirty percent. So, 67 00:03:49,960 --> 00:03:53,280 Speaker 2: because it is a natural gas, it is a very 68 00:03:53,760 --> 00:03:57,960 Speaker 2: common product in oil and gas production and operation, so 69 00:03:58,440 --> 00:04:02,720 Speaker 2: there it can leak at various points across the supply 70 00:04:02,840 --> 00:04:05,760 Speaker 2: chain and that's how it ends up in the atmosphere. 71 00:04:05,800 --> 00:04:07,880 Speaker 1: Well, so let's talk about that within the oil and 72 00:04:07,960 --> 00:04:10,920 Speaker 1: gas universe. Some of this must come from extraction and 73 00:04:10,920 --> 00:04:14,440 Speaker 1: then transportation and then actual use. So can you break 74 00:04:14,480 --> 00:04:17,320 Speaker 1: down the different sources within oil and gas where there 75 00:04:17,320 --> 00:04:18,480 Speaker 1: are methane leaks? 76 00:04:18,880 --> 00:04:21,760 Speaker 2: Sure, so the sector where most of these emissions are 77 00:04:21,760 --> 00:04:25,320 Speaker 2: coming from is actually the sectors are the upstream and midstream. 78 00:04:25,400 --> 00:04:28,599 Speaker 2: There isn't that much on the end you side, just 79 00:04:28,640 --> 00:04:31,400 Speaker 2: because it is combusted. So when you combust it it 80 00:04:31,400 --> 00:04:34,240 Speaker 2: turns into CO two. But if we think about upstream 81 00:04:34,360 --> 00:04:38,800 Speaker 2: and midstream, we can break it into three different main sources. 82 00:04:38,839 --> 00:04:41,119 Speaker 2: So we can think about equipment we can think about 83 00:04:41,160 --> 00:04:44,880 Speaker 2: operations and we can think about the economics. So if 84 00:04:44,920 --> 00:04:47,880 Speaker 2: it's to do with equipment, these can include things such 85 00:04:47,920 --> 00:04:51,760 Speaker 2: as faulty equipment, so devices that are not working properly, 86 00:04:52,040 --> 00:04:54,880 Speaker 2: or devices that have been designed to function in a 87 00:04:54,960 --> 00:04:58,760 Speaker 2: way such that they release natural gas when they need 88 00:04:58,800 --> 00:05:03,320 Speaker 2: to carry out and processes, whether it's regulating pressure, temperature, 89 00:05:03,440 --> 00:05:07,480 Speaker 2: And here I'm describing something that's called pneumatic devices, which 90 00:05:07,600 --> 00:05:10,720 Speaker 2: in the US, according to data that company is self 91 00:05:10,760 --> 00:05:14,080 Speaker 2: report to the Environmental Protection Agency or the EPA, they 92 00:05:14,279 --> 00:05:20,279 Speaker 2: represent the largest source of emissions for operations. In some cases, 93 00:05:20,520 --> 00:05:23,440 Speaker 2: they're designed in such a way that they can be 94 00:05:23,520 --> 00:05:26,760 Speaker 2: improved so that you can limit the amount of gas 95 00:05:26,800 --> 00:05:30,440 Speaker 2: that escapes from various processes. And then with economics, so 96 00:05:30,760 --> 00:05:34,279 Speaker 2: it could be because, for instance, the amount of gas 97 00:05:34,360 --> 00:05:37,279 Speaker 2: that is being produced is very small, so that it 98 00:05:37,320 --> 00:05:40,320 Speaker 2: doesn't make economic sense to treat and transport that gas. 99 00:05:40,360 --> 00:05:42,600 Speaker 2: And this would be very common where gas is an 100 00:05:42,600 --> 00:05:47,040 Speaker 2: associated product, in other words, where a well produces primarily 101 00:05:47,040 --> 00:05:49,600 Speaker 2: oil and some gas, So that would be the case 102 00:05:49,640 --> 00:05:52,120 Speaker 2: where the volumes are quite small, or it could be 103 00:05:52,200 --> 00:05:55,800 Speaker 2: that there isn't enough spare capacity in the pipeline, so 104 00:05:55,920 --> 00:05:58,760 Speaker 2: that the operator may not have the option to store 105 00:05:58,760 --> 00:06:01,640 Speaker 2: the gas and reuse it for instances fuel on site, 106 00:06:01,680 --> 00:06:03,120 Speaker 2: and they have to dispose of it. 107 00:06:03,520 --> 00:06:06,679 Speaker 1: So we know where it comes from various sources, actually 108 00:06:06,800 --> 00:06:08,400 Speaker 1: lots of places that it comes from. We know where 109 00:06:08,400 --> 00:06:10,160 Speaker 1: it comes from, and we know why we should care 110 00:06:10,200 --> 00:06:12,359 Speaker 1: about it as a greenhouse gas. When you go to 111 00:06:12,440 --> 00:06:16,120 Speaker 1: analyze something, it always starts with a data set and 112 00:06:16,440 --> 00:06:18,800 Speaker 1: where are you getting the information from that you are 113 00:06:18,839 --> 00:06:22,160 Speaker 1: analyzing when you're looking at current state of play with 114 00:06:22,279 --> 00:06:25,240 Speaker 1: methane leaks, and really the beginning of how we fix 115 00:06:25,279 --> 00:06:27,520 Speaker 1: the problem, how do you find the problem? 116 00:06:27,839 --> 00:06:31,080 Speaker 2: So we think that we should make use of all 117 00:06:31,120 --> 00:06:34,560 Speaker 2: the available data that we have now rather than wait 118 00:06:34,640 --> 00:06:38,000 Speaker 2: for perfect data. And we can start with inventories. So 119 00:06:38,120 --> 00:06:41,760 Speaker 2: this could be whether it's a country level inventory, which 120 00:06:41,800 --> 00:06:44,720 Speaker 2: wouldn't be too granular. We could look at data that 121 00:06:44,839 --> 00:06:47,880 Speaker 2: companies self report to the agencies, like the one that 122 00:06:47,920 --> 00:06:51,320 Speaker 2: I mentioned from the us EPA. But we have been 123 00:06:51,400 --> 00:06:54,440 Speaker 2: quite lucky in the past and we've had a number 124 00:06:54,560 --> 00:06:58,480 Speaker 2: of satellites that are able to observe methane emissions from space, 125 00:06:58,520 --> 00:07:01,200 Speaker 2: so we've been able to interg rate data that is 126 00:07:01,240 --> 00:07:05,159 Speaker 2: now measured rather than being estimated. A problem that we 127 00:07:05,279 --> 00:07:09,480 Speaker 2: have with these inventories is that they tend to underestimate. 128 00:07:09,640 --> 00:07:12,840 Speaker 2: So from studies that have been done again, the figure 129 00:07:12,880 --> 00:07:15,840 Speaker 2: in the US that we've seen is that these methane 130 00:07:15,840 --> 00:07:18,640 Speaker 2: emissions from oil and gas could be under reported by 131 00:07:18,800 --> 00:07:22,480 Speaker 2: sixty percent, which is quite a lot. So that's when 132 00:07:22,520 --> 00:07:25,920 Speaker 2: we turn to measure data in order to understand or 133 00:07:26,040 --> 00:07:28,120 Speaker 2: to fill in these discrepancies. 134 00:07:28,520 --> 00:07:31,720 Speaker 1: Okay, so you've established that we now know that the 135 00:07:31,760 --> 00:07:34,800 Speaker 1: information that's coming to us from the companies that are 136 00:07:34,840 --> 00:07:39,560 Speaker 1: reporting their methane emissions is dramatically underreported. So then we 137 00:07:39,600 --> 00:07:42,400 Speaker 1: turn to this satellite information. Talk to me a little 138 00:07:42,440 --> 00:07:44,960 Speaker 1: bit about the benefit of the satellite data and then 139 00:07:45,040 --> 00:07:47,920 Speaker 1: some of the areas where maybe that satellite data is 140 00:07:47,960 --> 00:07:49,960 Speaker 1: a little bit less reliable and why this is a 141 00:07:50,000 --> 00:07:52,000 Speaker 1: really tricky area to analyze. 142 00:07:52,160 --> 00:07:55,080 Speaker 2: Sure, first of all, let me just briefly explain how 143 00:07:55,160 --> 00:07:57,000 Speaker 2: satellites actually measure methane. 144 00:07:57,040 --> 00:07:57,760 Speaker 1: That'd be great. 145 00:07:58,600 --> 00:08:01,920 Speaker 2: So satellites use. Most of the satellites that are observing 146 00:08:01,960 --> 00:08:06,280 Speaker 2: methane currently, they rely on a principle called backscattering, so 147 00:08:06,320 --> 00:08:09,840 Speaker 2: they use incoming sunlight which is then reflected from the 148 00:08:09,880 --> 00:08:13,440 Speaker 2: Earth's surface, and as it travels through the atmosphere, it 149 00:08:13,520 --> 00:08:16,240 Speaker 2: will be absorbed and re emitted by the gases that 150 00:08:16,280 --> 00:08:20,760 Speaker 2: it encounters, and those gases will leave a distinctive fingerprint 151 00:08:20,960 --> 00:08:25,400 Speaker 2: in the incoming sunlight. That which is the satellite spectrometer. 152 00:08:25,680 --> 00:08:30,080 Speaker 2: So that's simply a device that splits light into different components. 153 00:08:30,160 --> 00:08:32,920 Speaker 2: So the incoming light which is the satellite and is 154 00:08:32,960 --> 00:08:36,760 Speaker 2: being analyzed for the methane wavelengths in other parts is 155 00:08:36,840 --> 00:08:40,360 Speaker 2: looking for the methane signature. What we didn't do because 156 00:08:40,440 --> 00:08:44,480 Speaker 2: that would be the concentration of methane. We didn't need 157 00:08:44,520 --> 00:08:47,800 Speaker 2: to do further processing to turn that into aliqu rates. 158 00:08:47,800 --> 00:08:50,920 Speaker 2: So how many kilograms or tons of methane per hour? 159 00:08:51,160 --> 00:08:55,080 Speaker 2: And you're correct in pointing out satellites do have limitations. 160 00:08:55,120 --> 00:08:58,360 Speaker 2: So although they don't work very well in areas of 161 00:08:58,440 --> 00:09:03,080 Speaker 2: high latitude, also limited by atmospheric conditions where you have 162 00:09:03,360 --> 00:09:07,120 Speaker 2: a very high cloud cover, they obviously can't really see 163 00:09:07,240 --> 00:09:11,360 Speaker 2: very well. And also offshore they tend to although that 164 00:09:11,480 --> 00:09:15,120 Speaker 2: space is changing now and there have been progresses made. 165 00:09:15,440 --> 00:09:19,959 Speaker 2: So satellites do struggle offshore because the sea absorbs most 166 00:09:19,960 --> 00:09:24,520 Speaker 2: of the sunlight so that it cannot reach the satellite spectrometer. 167 00:09:24,679 --> 00:09:29,000 Speaker 2: To overcome these challenges, companies have looked at aligning the 168 00:09:29,040 --> 00:09:31,840 Speaker 2: satellite in such a way that then the sea surface 169 00:09:32,000 --> 00:09:34,720 Speaker 2: essentially acts as a mirror and it can reflect most 170 00:09:34,720 --> 00:09:38,360 Speaker 2: of the sunlight and the satellite can analyze that for 171 00:09:38,440 --> 00:09:42,840 Speaker 2: the methane fingerprint. But the huge benefit of having satellite 172 00:09:42,880 --> 00:09:48,120 Speaker 2: observing the Earth is that it's essentially remote observations. We 173 00:09:48,240 --> 00:09:52,000 Speaker 2: are measuring it rather than relying on imperfect and less 174 00:09:52,000 --> 00:09:57,120 Speaker 2: optimal methods that are calculating methane. And when you're doing that, 175 00:09:57,160 --> 00:10:02,199 Speaker 2: you're adding another layer of t cosparency. It's data that's 176 00:10:02,320 --> 00:10:07,120 Speaker 2: independently measured, so it's getting us closer to the actual 177 00:10:07,240 --> 00:10:11,200 Speaker 2: numbers when it comes to understanding methane emissions. The other 178 00:10:11,720 --> 00:10:14,600 Speaker 2: I'm not sure if I wouldn't necessarily call it a limitation, 179 00:10:14,720 --> 00:10:17,360 Speaker 2: but is something to be aware of. So different satellites 180 00:10:17,400 --> 00:10:21,400 Speaker 2: they would have different resolutions, So what this means is 181 00:10:21,440 --> 00:10:25,000 Speaker 2: that when they're observing the Earth, for instance, they could 182 00:10:25,040 --> 00:10:29,480 Speaker 2: see essentially two distinct emissions event appear as one just 183 00:10:29,520 --> 00:10:33,079 Speaker 2: because they're not able to resolve at a very fine resolution. 184 00:10:33,240 --> 00:10:37,120 Speaker 2: And that becomes important when we're talking about superimeters. For instance, 185 00:10:37,360 --> 00:10:41,520 Speaker 2: but again the space has been fairly exciting. In the 186 00:10:41,559 --> 00:10:44,439 Speaker 2: past year alone, we've had two satellites being launched, so 187 00:10:44,480 --> 00:10:49,559 Speaker 2: that's the Environmental Defense Funds Methane AT and Carbon Mappers 188 00:10:49,720 --> 00:10:54,200 Speaker 2: TANAGER one. So whilst methinks that will be focused on methane, 189 00:10:54,320 --> 00:10:57,120 Speaker 2: the Carbon Mapper satellite will be looking at methane as 190 00:10:57,120 --> 00:10:58,920 Speaker 2: well as carbon dioxide blooms. 191 00:10:59,120 --> 00:11:02,960 Speaker 1: So to what a stent are the mirrors of methane? 192 00:11:03,120 --> 00:11:05,880 Speaker 1: You're also utilizing this data or is it largely being 193 00:11:05,920 --> 00:11:09,240 Speaker 1: embraced by third parties like ourselves and by like the 194 00:11:09,320 --> 00:11:10,440 Speaker 1: Environmental Defense Fund. 195 00:11:10,679 --> 00:11:14,080 Speaker 2: Yes, so, apart from the academics that are using this 196 00:11:14,280 --> 00:11:19,240 Speaker 2: data to better understand where methane emissions are coming from, 197 00:11:19,360 --> 00:11:23,079 Speaker 2: there are third party organizations. So one of them would 198 00:11:23,080 --> 00:11:28,480 Speaker 2: be the International Methane Emissions Observatory or IMEO, which is 199 00:11:28,520 --> 00:11:32,880 Speaker 2: a United Nations initiative. And what they do they collect 200 00:11:33,000 --> 00:11:36,920 Speaker 2: data from a number of satellites and they made these 201 00:11:37,040 --> 00:11:41,920 Speaker 2: observations publicly available. Did you disaggregate the data by sector only? 202 00:11:42,040 --> 00:11:46,160 Speaker 2: So oil and gas, coal and waste, But there isn't 203 00:11:46,240 --> 00:11:49,640 Speaker 2: any further granularity beyond that. 204 00:11:50,000 --> 00:11:51,920 Speaker 1: So for anyone who wants to look at this data, 205 00:11:51,920 --> 00:11:54,480 Speaker 1: set though, the IMEO has that available right now, I 206 00:11:54,480 --> 00:11:56,520 Speaker 1: can Google search it and there it is. I can 207 00:11:56,520 --> 00:11:59,480 Speaker 1: see bisector where this methane is coming from globally. 208 00:11:59,679 --> 00:12:02,920 Speaker 2: Yeah, that's correct. You'll be able to see the plumes 209 00:12:02,960 --> 00:12:05,360 Speaker 2: on a map, and you'll be able to know what 210 00:12:05,920 --> 00:12:09,880 Speaker 2: rate they're associated with, so how much methane they leaked, 211 00:12:10,080 --> 00:12:11,800 Speaker 2: and you'll be able to see the sector. 212 00:12:12,080 --> 00:12:14,760 Speaker 1: But the data that you looked at was much more granular. 213 00:12:14,880 --> 00:12:17,280 Speaker 1: So what were some of the key takeaways from your 214 00:12:17,320 --> 00:12:19,680 Speaker 1: analysis when you did look a little bit deeper into 215 00:12:19,679 --> 00:12:20,240 Speaker 1: this data. 216 00:12:20,280 --> 00:12:24,160 Speaker 2: You're right, So we actually used the Imeo data, but 217 00:12:24,400 --> 00:12:28,160 Speaker 2: because of the issue of the sector level granularity that 218 00:12:28,559 --> 00:12:31,200 Speaker 2: I mentioned, we thought that our research could fill in 219 00:12:31,280 --> 00:12:34,640 Speaker 2: this gap for more transparency, and we really wanted to 220 00:12:34,679 --> 00:12:38,560 Speaker 2: add more context around you know, where these methane plumes 221 00:12:38,640 --> 00:12:41,800 Speaker 2: are coming from, so what are the emitting facilities? Who 222 00:12:41,800 --> 00:12:46,480 Speaker 2: are their operators? So we analyzed about three hundred methane 223 00:12:46,480 --> 00:12:50,960 Speaker 2: plumes in the US that occurred between January last year 224 00:12:51,080 --> 00:12:54,360 Speaker 2: and Apro this year. But yeah, all the data came 225 00:12:54,400 --> 00:12:57,240 Speaker 2: from from Imeo. What we did differently was that we 226 00:12:57,640 --> 00:13:01,880 Speaker 2: looked for the nearest oil and facility to a plum 227 00:13:01,960 --> 00:13:04,439 Speaker 2: and we try to map those so that we were 228 00:13:04,480 --> 00:13:09,760 Speaker 2: then able to understand again facilities and operators, how difficult 229 00:13:10,160 --> 00:13:10,600 Speaker 2: is it. 230 00:13:10,840 --> 00:13:14,560 Speaker 1: To reduce the amount of mething being emitted. 231 00:13:15,000 --> 00:13:18,920 Speaker 2: So for oil and gas, it's actually the sector where 232 00:13:19,440 --> 00:13:23,239 Speaker 2: you have the highest potential for the fastest and relatively 233 00:13:23,280 --> 00:13:27,559 Speaker 2: inexpensive large methink reductions, because as we were talking earlier, 234 00:13:27,760 --> 00:13:32,559 Speaker 2: is really about fixing leaks. So it could be optimizing processes, 235 00:13:32,720 --> 00:13:36,959 Speaker 2: or it could be replacing equipment, but generally these reductions 236 00:13:37,000 --> 00:13:40,280 Speaker 2: they do come at a relatively inexpensive cost. 237 00:13:40,679 --> 00:13:44,000 Speaker 1: Presumably one of the challenges with addressing these leaks is 238 00:13:44,040 --> 00:13:47,319 Speaker 1: finding them. But as this satellite data is becoming much 239 00:13:47,400 --> 00:13:50,040 Speaker 1: more prevalent, you'll be able to find them even better. 240 00:13:50,080 --> 00:13:52,199 Speaker 1: And some of these companies are actually able to then 241 00:13:52,360 --> 00:13:56,120 Speaker 1: locate leaks and sometimes very remote areas. So this is 242 00:13:56,320 --> 00:13:59,160 Speaker 1: certainly a tool that were a lot of people are 243 00:13:59,160 --> 00:14:02,480 Speaker 1: embracing at moment, whether on the third party side like 244 00:14:02,520 --> 00:14:05,359 Speaker 1: we are, or within these oil and gas companies themselves 245 00:14:05,559 --> 00:14:10,000 Speaker 1: now the IOSes, so the international oil companies, many of 246 00:14:10,000 --> 00:14:14,360 Speaker 1: them are reporting and including their environmental, social and governance 247 00:14:14,480 --> 00:14:18,000 Speaker 1: data and making it available because they are publicly listed 248 00:14:18,000 --> 00:14:20,840 Speaker 1: in their investors but the national oil companies do not 249 00:14:21,080 --> 00:14:25,480 Speaker 1: have this reporting imperative our national oil companies also looking 250 00:14:25,520 --> 00:14:28,920 Speaker 1: at this data. Are we really then still talking about 251 00:14:29,120 --> 00:14:32,480 Speaker 1: the listed companies when it comes down to targeting this 252 00:14:33,120 --> 00:14:34,360 Speaker 1: source of emissions. 253 00:14:34,680 --> 00:14:39,400 Speaker 2: So there has been a lot of traction among different operators, 254 00:14:39,480 --> 00:14:43,720 Speaker 2: whether IOSS or national when it comes to methin I 255 00:14:43,800 --> 00:14:46,040 Speaker 2: just wanted to flag that some have for instance, and 256 00:14:46,080 --> 00:14:49,800 Speaker 2: I'm referring to the ioces here, some have started fairly 257 00:14:49,840 --> 00:14:54,400 Speaker 2: early and their mitigation METHA mitigation programs have involved things 258 00:14:54,480 --> 00:14:58,280 Speaker 2: such as working with third party detection technologies, whether it's 259 00:14:58,320 --> 00:15:02,200 Speaker 2: to develop drones to sensor, So there has been a 260 00:15:02,240 --> 00:15:05,840 Speaker 2: lot that has happened in that field. When it comes 261 00:15:05,880 --> 00:15:10,960 Speaker 2: to THENCS in all fairness, iconing one that has done 262 00:15:11,040 --> 00:15:14,080 Speaker 2: to the same level that an IOC has done. 263 00:15:14,280 --> 00:15:18,080 Speaker 1: So there's the pressure coming from investors, which impacts some companies. 264 00:15:18,120 --> 00:15:21,320 Speaker 1: But then there's policy, and there's international policy, and one 265 00:15:21,400 --> 00:15:24,560 Speaker 1: of the places where countries come together and talk about 266 00:15:24,560 --> 00:15:28,120 Speaker 1: climate is at the COP meetings. So last year COP 267 00:15:28,120 --> 00:15:31,720 Speaker 1: twenty eight in Dubai, methane featured quite heavily and this 268 00:15:31,920 --> 00:15:35,800 Speaker 1: certainly could be a place where targets and methane emission 269 00:15:35,800 --> 00:15:40,200 Speaker 1: reductions would really come from at a national oil company level. 270 00:15:40,360 --> 00:15:43,640 Speaker 1: Can you talk a bit about what those discussions were 271 00:15:43,880 --> 00:15:47,680 Speaker 1: last year at cop when in regard to methane specifically. 272 00:15:47,280 --> 00:15:51,000 Speaker 2: Sure you are correct, methane was really in the spotlight 273 00:15:51,120 --> 00:15:54,680 Speaker 2: at last year's COP and just to recap a couple 274 00:15:54,680 --> 00:15:57,360 Speaker 2: of the things that were agreed and happened there when 275 00:15:57,360 --> 00:16:00,480 Speaker 2: it comes to methane. So we had the Global Methane Pledge, 276 00:16:00,680 --> 00:16:04,720 Speaker 2: which increased the number of countries that are now adhering 277 00:16:04,800 --> 00:16:07,440 Speaker 2: to that. So the last time I checked that was 278 00:16:07,600 --> 00:16:10,400 Speaker 2: one hundred and fifty eight and the Global Methane Pledge 279 00:16:10,480 --> 00:16:14,680 Speaker 2: they are aiming for reducing methane across all emitting sectors 280 00:16:14,720 --> 00:16:17,720 Speaker 2: by thirty percent by twenty thirty and the countries that 281 00:16:19,040 --> 00:16:22,960 Speaker 2: signed the pledge they agreed to have more transparent policies 282 00:16:23,480 --> 00:16:27,320 Speaker 2: and to pursue methane reduction efforts. We also had the 283 00:16:27,400 --> 00:16:30,640 Speaker 2: launch of the Oil and Gas Decarbonization Charter, which is 284 00:16:30,680 --> 00:16:34,880 Speaker 2: a company led initiative, and we also heard about progress 285 00:16:34,920 --> 00:16:40,000 Speaker 2: in terms of financing, so the Methane Finance Sprint that 286 00:16:40,160 --> 00:16:43,480 Speaker 2: was an initiative that was launched by the US government 287 00:16:43,520 --> 00:16:47,119 Speaker 2: and then invited other governments as well as financial institutions 288 00:16:47,160 --> 00:16:51,080 Speaker 2: and the private sector to contribute in we've heard that, 289 00:16:51,360 --> 00:16:56,000 Speaker 2: but by COP twenty they've raised one billion in in funding. 290 00:16:55,840 --> 00:17:01,360 Speaker 1: Specifically to address methane emissions and missions more on the 291 00:17:01,400 --> 00:17:03,880 Speaker 1: oil and gas side and targeting these leaks or across 292 00:17:03,920 --> 00:17:05,240 Speaker 1: everything including agriculture. 293 00:17:05,440 --> 00:17:08,120 Speaker 2: This was across all sectors. You are correct, But one 294 00:17:08,119 --> 00:17:11,720 Speaker 2: thing I would also like to highlight. Despite this figure, 295 00:17:11,800 --> 00:17:16,360 Speaker 2: which to me seems large, We've seen analysis done by 296 00:17:16,440 --> 00:17:20,399 Speaker 2: the Climate Policy Initiative, and their analysis has shown that 297 00:17:20,480 --> 00:17:23,840 Speaker 2: in order to reach fossil fuel methane abatement, we need 298 00:17:23,880 --> 00:17:27,160 Speaker 2: to invest about eleven point two billion a year. 299 00:17:27,320 --> 00:17:29,640 Speaker 1: So this reminds me a bit of Austin Powers, where 300 00:17:29,640 --> 00:17:32,920 Speaker 1: even the originally says one million dollars and everyone kind 301 00:17:32,920 --> 00:17:35,159 Speaker 1: of chuckles because it's not quite enough money. So just 302 00:17:35,240 --> 00:17:38,240 Speaker 1: now you said one billion dollars and I'm quite impressed, 303 00:17:38,240 --> 00:17:40,320 Speaker 1: and then you're telling me it needs to be eleven 304 00:17:40,359 --> 00:17:44,320 Speaker 1: billion dollars, So maybe I should temper my exuberance over 305 00:17:44,359 --> 00:17:47,000 Speaker 1: that amount of money, which then leads us to then 306 00:17:47,119 --> 00:17:49,320 Speaker 1: there are these targets, there's money being raised, there are 307 00:17:49,320 --> 00:17:52,199 Speaker 1: things being done, perhaps not quickly, enough in order to 308 00:17:52,560 --> 00:17:54,840 Speaker 1: reach some of these targets. Can you talk a little 309 00:17:54,880 --> 00:17:59,520 Speaker 1: bit about how one goes about tracking progress in this 310 00:17:59,680 --> 00:18:01,840 Speaker 1: space and whether or not this is something that's going 311 00:18:01,880 --> 00:18:04,639 Speaker 1: to come up repeatedly at cop or if there is 312 00:18:04,840 --> 00:18:10,119 Speaker 1: another forum for the pressure in progress to continue on 313 00:18:10,560 --> 00:18:11,320 Speaker 1: methane reduction. 314 00:18:11,800 --> 00:18:15,119 Speaker 2: Sure. So again, for the past year, there have been 315 00:18:15,160 --> 00:18:19,680 Speaker 2: a number of events that have focused on methane specifically. 316 00:18:19,760 --> 00:18:21,879 Speaker 2: So we also had a forum in Geneva that was 317 00:18:21,920 --> 00:18:26,400 Speaker 2: looking at specifically add methane from these three main emitting sectors, 318 00:18:26,400 --> 00:18:30,359 Speaker 2: so oil and gas, coll energy, and agriculture. I think 319 00:18:30,560 --> 00:18:33,840 Speaker 2: progress is something that at a very high level might 320 00:18:33,880 --> 00:18:37,359 Speaker 2: be it would be where more work needs to be done. 321 00:18:37,440 --> 00:18:39,600 Speaker 2: So we know, you know, for the companies, like we said, 322 00:18:39,640 --> 00:18:44,040 Speaker 2: they had targets, they have shareholder responsibility and they do 323 00:18:44,359 --> 00:18:48,160 Speaker 2: report year after year how they've done against those targets. 324 00:18:48,160 --> 00:18:52,000 Speaker 2: But if we're talking more collectively, I think because we've 325 00:18:52,040 --> 00:18:55,160 Speaker 2: only had you know, more and more pressure and more 326 00:18:55,160 --> 00:18:58,080 Speaker 2: countries joining the methane Pledge last year, were yet to 327 00:18:58,160 --> 00:19:01,800 Speaker 2: see how things have evolved. But there is there are 328 00:19:02,119 --> 00:19:06,760 Speaker 2: standardized frameworks that are available to oil and gas companies 329 00:19:06,760 --> 00:19:09,879 Speaker 2: for them to voluntarily join those and that would be 330 00:19:10,040 --> 00:19:12,680 Speaker 2: a way, for instance, show progress. So one of these 331 00:19:13,520 --> 00:19:16,080 Speaker 2: frameworks that I'm referring to is the Oil and Gas 332 00:19:16,080 --> 00:19:20,160 Speaker 2: Methane Partnership two point zero, and that is a standardized 333 00:19:20,200 --> 00:19:24,080 Speaker 2: reporting framework for methane emissions from oil and gas assets. 334 00:19:24,320 --> 00:19:28,400 Speaker 2: The beauty of OGMP so they do have five reporting levels, 335 00:19:28,520 --> 00:19:30,520 Speaker 2: and the beauty of that is that a company can 336 00:19:30,640 --> 00:19:33,080 Speaker 2: join at any level, so they don't really five is 337 00:19:33,119 --> 00:19:35,000 Speaker 2: the highest, but they don't have to start at one 338 00:19:35,080 --> 00:19:37,680 Speaker 2: and work their way up although to five. They can 339 00:19:37,760 --> 00:19:42,280 Speaker 2: start at whatever level fits best with the company's understanding 340 00:19:42,400 --> 00:19:46,280 Speaker 2: of operational emissions. So these levels they start off as 341 00:19:46,359 --> 00:19:50,399 Speaker 2: being very you know, aggregated reporting, and then by level 342 00:19:50,520 --> 00:19:53,960 Speaker 2: four they already need to measure source level emissions. A 343 00:19:54,040 --> 00:19:56,280 Speaker 2: level five they will need to do a site level 344 00:19:56,560 --> 00:20:00,919 Speaker 2: measurement of their emissions and carry out what's called reconciliation, 345 00:20:01,160 --> 00:20:04,199 Speaker 2: so that is comparing the site level measurement with the 346 00:20:04,240 --> 00:20:07,359 Speaker 2: sum of all the source level measurements and understand whether 347 00:20:07,600 --> 00:20:11,200 Speaker 2: there are any discrepancies and explain why those discrepancies appear. 348 00:20:11,440 --> 00:20:14,359 Speaker 2: Another nice thing about the OGMP is that they're not 349 00:20:14,800 --> 00:20:18,760 Speaker 2: technology restrictive in any way, so companies do have plenty 350 00:20:18,760 --> 00:20:21,199 Speaker 2: of options to choose when it comes to detection technology, 351 00:20:21,240 --> 00:20:23,679 Speaker 2: and they can even use satellites provided that they have 352 00:20:23,800 --> 00:20:25,320 Speaker 2: the right resolution. 353 00:20:25,640 --> 00:20:28,639 Speaker 1: So has the OGMP been popular? In effect? Who's in 354 00:20:28,640 --> 00:20:29,240 Speaker 1: the OGMP? 355 00:20:29,600 --> 00:20:33,000 Speaker 2: So the OGMP has attracted companies that make up about 356 00:20:33,040 --> 00:20:36,879 Speaker 2: forty percent of the world's oil and gas production. But 357 00:20:37,200 --> 00:20:41,560 Speaker 2: I would have to say that some important names are 358 00:20:41,920 --> 00:20:44,920 Speaker 2: still missing from the list of companies. So it's mostly 359 00:20:44,960 --> 00:20:49,840 Speaker 2: the upstream producers and quite a lot actually of midstream producers. 360 00:20:49,880 --> 00:20:52,720 Speaker 2: But like I was saying, we're yet to see companies 361 00:20:52,800 --> 00:20:56,080 Speaker 2: like Saudi Aramco or Petro China joining the OGMP two 362 00:20:56,119 --> 00:20:59,760 Speaker 2: point zero. And these companies they're important to the global 363 00:20:59,800 --> 00:21:05,440 Speaker 2: gas market. For instance, Aramco is the largest supplier in 364 00:21:05,480 --> 00:21:07,840 Speaker 2: the Kingdom and they do have a target to increase 365 00:21:07,880 --> 00:21:11,359 Speaker 2: their gas sells by sixty percent by twenty thirty. So 366 00:21:11,840 --> 00:21:13,760 Speaker 2: I think in order to stay relevant, they'll need to 367 00:21:13,760 --> 00:21:17,040 Speaker 2: attract more of the of other large companies. 368 00:21:17,320 --> 00:21:20,760 Speaker 1: So what is the OGMP really in effect doing. Is 369 00:21:20,800 --> 00:21:24,200 Speaker 1: it just reporting of data so that we can track 370 00:21:24,320 --> 00:21:28,480 Speaker 1: progress or are they helping these companies actually achieve their goals? 371 00:21:28,840 --> 00:21:31,960 Speaker 2: So the ODMP data will be used in conjunction with 372 00:21:32,200 --> 00:21:35,119 Speaker 2: IMEO when there will be they'll be releasing this quite 373 00:21:35,160 --> 00:21:38,560 Speaker 2: soon and but it won't be anything by asset, so 374 00:21:38,960 --> 00:21:41,120 Speaker 2: you would know that they're reporting and maybe the number 375 00:21:41,160 --> 00:21:43,800 Speaker 2: of emissions, but it won't be anything more transparent than 376 00:21:43,880 --> 00:21:47,040 Speaker 2: that unless the company opts in for it. Now with OGMP, 377 00:21:47,320 --> 00:21:50,440 Speaker 2: when they reach the level five, that's quite important for 378 00:21:50,480 --> 00:21:54,120 Speaker 2: the EU regulations because level five OGMP is already compliant 379 00:21:54,119 --> 00:21:57,920 Speaker 2: with what the EU is saying about methane regulations for importers. 380 00:21:58,000 --> 00:22:00,000 Speaker 2: So if you have level five, you're kind of fine. 381 00:22:00,200 --> 00:22:02,760 Speaker 2: You can still continue to import to the EU after 382 00:22:02,800 --> 00:22:05,159 Speaker 2: the rules kick in, and you don't have if a 383 00:22:05,200 --> 00:22:07,480 Speaker 2: member state wants to buy gas from you don't have 384 00:22:07,560 --> 00:22:10,040 Speaker 2: to pay a fine. And the other thing with them, 385 00:22:10,359 --> 00:22:13,040 Speaker 2: apart from the EU import, is that the level five 386 00:22:13,160 --> 00:22:16,480 Speaker 2: also gives you responsibly sourced gas attributes, so you can 387 00:22:16,480 --> 00:22:19,359 Speaker 2: trade that, so they're kind of beyond the just like 388 00:22:19,440 --> 00:22:20,560 Speaker 2: the reporting. 389 00:22:20,840 --> 00:22:23,119 Speaker 1: So you had just noted the standards that the EU 390 00:22:23,240 --> 00:22:27,520 Speaker 1: has for any imported oil products. Would this be the 391 00:22:27,560 --> 00:22:29,720 Speaker 1: most stringent standard that we find globally? 392 00:22:30,119 --> 00:22:34,560 Speaker 2: So you are correct. The EU has adopted methane regulations 393 00:22:34,600 --> 00:22:38,760 Speaker 2: and in quite a unique move they're targeting not only 394 00:22:38,840 --> 00:22:42,560 Speaker 2: the domestic production, but they're also targeting importers. So by 395 00:22:42,640 --> 00:22:46,320 Speaker 2: twenty twenty seven, the European Union has the aim of 396 00:22:46,400 --> 00:22:50,080 Speaker 2: building a methane transparency database. So what that means is 397 00:22:50,119 --> 00:22:53,359 Speaker 2: that sellers looking to export the gas to the European 398 00:22:53,480 --> 00:22:56,320 Speaker 2: Union they will have to disclose their methane intensity and 399 00:22:56,320 --> 00:22:58,840 Speaker 2: they'll also have to disclose the methods that they've used 400 00:22:58,840 --> 00:23:01,960 Speaker 2: to measure their intent city. So it's all about transparency. 401 00:23:02,040 --> 00:23:06,800 Speaker 2: And this is quite stringent because at the moment, you know, 402 00:23:06,920 --> 00:23:09,360 Speaker 2: most of the rules, whether it's been in the US 403 00:23:09,920 --> 00:23:13,280 Speaker 2: in Canada that they've been focused on the domestic production. 404 00:23:13,800 --> 00:23:15,760 Speaker 1: So now that we've started to talk about this in 405 00:23:15,840 --> 00:23:18,760 Speaker 1: terms of geography and we've established the EU has the 406 00:23:18,800 --> 00:23:22,720 Speaker 1: most stringent import rules, where are the sources of the 407 00:23:22,960 --> 00:23:26,240 Speaker 1: missions globally? Is this really something that's happening all over 408 00:23:26,280 --> 00:23:28,639 Speaker 1: the world and is going to take quite a united 409 00:23:28,680 --> 00:23:31,280 Speaker 1: effort or are there are really a few countries or 410 00:23:31,280 --> 00:23:35,040 Speaker 1: continents that have the vast majority of the methane emissions? 411 00:23:35,240 --> 00:23:38,639 Speaker 2: Sure? So, there have been actually a couple of recent 412 00:23:38,720 --> 00:23:43,760 Speaker 2: studies where they've compared the number of emissions that countries 413 00:23:43,800 --> 00:23:48,040 Speaker 2: we poured with what the satellites have observed. So although 414 00:23:48,480 --> 00:23:52,040 Speaker 2: we've spoken about the inventories being imperfect, so we do 415 00:23:52,160 --> 00:23:57,720 Speaker 2: have countries like the US, Russia, Venezuela, and Turkmenistan when 416 00:23:57,760 --> 00:24:01,160 Speaker 2: it comes specifically to methane and look looking at the 417 00:24:01,200 --> 00:24:06,000 Speaker 2: satellite data, Turkmenistan has had quite a staggering number of 418 00:24:06,080 --> 00:24:09,720 Speaker 2: plumes over the past years, over one thousand and these 419 00:24:09,760 --> 00:24:13,040 Speaker 2: are the sort of hot spots, so as you can see, 420 00:24:13,040 --> 00:24:16,080 Speaker 2: they tend to be oil and gas producing nations. 421 00:24:16,400 --> 00:24:18,879 Speaker 1: One of those oil and gas producing nations is the 422 00:24:18,960 --> 00:24:22,840 Speaker 1: United States, who is a net exporter of natural gas 423 00:24:22,960 --> 00:24:25,040 Speaker 1: or LNG around the world. Where do they fit in 424 00:24:25,080 --> 00:24:27,200 Speaker 1: this and how stringent is the US when it comes 425 00:24:27,240 --> 00:24:29,080 Speaker 1: to trying to tackle this problem. 426 00:24:29,480 --> 00:24:32,160 Speaker 2: Well, the Inflation Reduction Act in the US has really 427 00:24:32,240 --> 00:24:35,440 Speaker 2: been the springboard when it comes to methane legislation. So 428 00:24:35,600 --> 00:24:38,879 Speaker 2: when the IRA was passed, we had the Methane Emissions 429 00:24:38,920 --> 00:24:43,320 Speaker 2: Reduction Program, and that mandates the EPA to impose a 430 00:24:43,359 --> 00:24:47,800 Speaker 2: fee on the excess emissions of methane from oil and 431 00:24:47,800 --> 00:24:51,720 Speaker 2: gas operations. So they set a threshold based on activity, 432 00:24:51,840 --> 00:24:55,720 Speaker 2: So whether you're active in the exploration and production, gathering 433 00:24:55,800 --> 00:24:58,560 Speaker 2: and processing. You'd have different thresholds, and to give you 434 00:24:58,600 --> 00:25:02,520 Speaker 2: an example, so if you are emitting below zero point 435 00:25:02,600 --> 00:25:06,440 Speaker 2: two percent of the natural gas that you're selling, you're 436 00:25:06,480 --> 00:25:08,399 Speaker 2: not going to pay any fee. But if it's above 437 00:25:08,480 --> 00:25:11,880 Speaker 2: that threshold, that's liable to a fee. And the fee 438 00:25:11,920 --> 00:25:15,359 Speaker 2: starts at nine hundred dollars per ton this year and 439 00:25:15,440 --> 00:25:19,160 Speaker 2: it increases to fifteen hundred by twenty twenty six. So 440 00:25:19,520 --> 00:25:22,880 Speaker 2: the US is where it all really started in terms 441 00:25:22,920 --> 00:25:26,200 Speaker 2: of regulation, and it's not really just the fee. So 442 00:25:26,359 --> 00:25:32,280 Speaker 2: the EPA is working on different ways to tackle methane 443 00:25:32,400 --> 00:25:34,800 Speaker 2: or at least to address methane. So this year we 444 00:25:34,920 --> 00:25:38,080 Speaker 2: also had the amendments to the Cleaner Act coming into 445 00:25:38,119 --> 00:25:41,800 Speaker 2: a fource, So those are regulations that are affecting new 446 00:25:41,920 --> 00:25:45,520 Speaker 2: source as well as existing source. And apart from the 447 00:25:46,520 --> 00:25:50,400 Speaker 2: Cleaner Act amendments the emissions charge, the US is also 448 00:25:50,560 --> 00:25:55,440 Speaker 2: looking at revising their reporting program, also formerly known as SUBPARW. 449 00:25:56,000 --> 00:25:58,560 Speaker 2: So there has been a lot of momentum in the US. 450 00:25:58,680 --> 00:26:00,640 Speaker 2: On top of this, I would also like to mention 451 00:26:00,760 --> 00:26:03,840 Speaker 2: that the US now has a program called the Supermeter program, 452 00:26:03,880 --> 00:26:08,120 Speaker 2: whereby they work with third party detection providers that inform 453 00:26:08,240 --> 00:26:10,960 Speaker 2: the EPA of detections that they make, and then the 454 00:26:11,000 --> 00:26:15,040 Speaker 2: EPA work in turn with operators that they identify as 455 00:26:15,119 --> 00:26:18,399 Speaker 2: responsible to figure out where their emissions came from. And 456 00:26:18,440 --> 00:26:21,240 Speaker 2: they're really using this in order to learn whether there 457 00:26:21,280 --> 00:26:25,280 Speaker 2: are other sources not covered by the current legislation. So 458 00:26:25,480 --> 00:26:28,000 Speaker 2: again a lot of momentum in the US. 459 00:26:28,240 --> 00:26:30,919 Speaker 1: So this fee essentially functions as a tax. It's not 460 00:26:31,040 --> 00:26:33,720 Speaker 1: going to be a market like a carbon market, but 461 00:26:33,760 --> 00:26:37,280 Speaker 1: for methane it's a flat tax that is per ton 462 00:26:37,440 --> 00:26:39,840 Speaker 1: and has been set and could change in the future, 463 00:26:39,880 --> 00:26:43,040 Speaker 1: but isn't fluctuating. Yes, you are correct, and when they 464 00:26:43,560 --> 00:26:46,120 Speaker 1: collect this money they're using it to find new sources. 465 00:26:46,119 --> 00:26:49,520 Speaker 1: Are they also using it to in any way subsidizer 466 00:26:49,640 --> 00:26:52,760 Speaker 1: directly tackle some of the sources of emissions or that 467 00:26:52,800 --> 00:26:55,240 Speaker 1: really left to the companies themselves, and it's an issue 468 00:26:55,240 --> 00:26:57,080 Speaker 1: of highlighting where those emissions are. 469 00:26:57,359 --> 00:27:01,040 Speaker 2: So with the tax, I think the tension there was 470 00:27:01,160 --> 00:27:04,320 Speaker 2: to try and bring in line as many operators as 471 00:27:04,320 --> 00:27:09,159 Speaker 2: possible to reduce their emissions. The government has announced a 472 00:27:09,240 --> 00:27:12,639 Speaker 2: number of grants and a number of financing pots to 473 00:27:12,760 --> 00:27:15,840 Speaker 2: help operators reduce their emissions. So we had a program 474 00:27:15,920 --> 00:27:19,440 Speaker 2: for small producing wells which have been found to be 475 00:27:19,520 --> 00:27:23,120 Speaker 2: quite a significant source of emissions. And we've had other 476 00:27:23,200 --> 00:27:27,479 Speaker 2: grants that were encouraging detection technology providers to come up 477 00:27:27,480 --> 00:27:31,359 Speaker 2: with solutions for the As far as like I understand 478 00:27:31,440 --> 00:27:35,199 Speaker 2: the money that they will collect from this tax, I mean, 479 00:27:35,240 --> 00:27:38,120 Speaker 2: I'm not sure if it goes back into like methane mitigation. 480 00:27:38,280 --> 00:27:41,119 Speaker 2: I think it's used for for the overall budget. The 481 00:27:41,160 --> 00:27:44,000 Speaker 2: goal is that most of these companies they won't have 482 00:27:44,040 --> 00:27:46,359 Speaker 2: to pay a lot. Basically, they will try to limit 483 00:27:46,359 --> 00:27:48,520 Speaker 2: their excess emissions so that they don't have to pay 484 00:27:49,040 --> 00:27:51,320 Speaker 2: because the tax is quite high. It is quite high. 485 00:27:51,359 --> 00:27:54,439 Speaker 2: But what they've also done, they've allowed for something called netting. 486 00:27:54,640 --> 00:27:56,800 Speaker 2: So this is where you can use a better performing 487 00:27:56,960 --> 00:28:00,399 Speaker 2: and this is for operators that have facilities and they're commonership. 488 00:28:00,440 --> 00:28:02,840 Speaker 2: So if you have several assets in the SPASIN and 489 00:28:02,880 --> 00:28:05,600 Speaker 2: several assets in that basin, but if you have an 490 00:28:05,600 --> 00:28:09,359 Speaker 2: asset that's performing really well in terms of emissions, because 491 00:28:09,400 --> 00:28:11,760 Speaker 2: you're netting git out, you can use that to offset 492 00:28:11,920 --> 00:28:15,400 Speaker 2: maybe a poorly performing asset, So that really brings down 493 00:28:15,440 --> 00:28:17,880 Speaker 2: the tax that you are going to have to pay. 494 00:28:18,000 --> 00:28:20,800 Speaker 2: And I don't think this was again meant to be 495 00:28:20,920 --> 00:28:25,520 Speaker 2: very punitive, hence the netting. Hence everything is more to. 496 00:28:25,720 --> 00:28:29,919 Speaker 1: Encourage action, encourage driving down emissions across an entire portfolio 497 00:28:30,000 --> 00:28:34,560 Speaker 1: for a company, but not target specific assets. Yeah yeah, correct, 498 00:28:34,920 --> 00:28:37,440 Speaker 1: but moving in the right direction. So presumably there will 499 00:28:37,520 --> 00:28:40,360 Speaker 1: in the future we will see potentially some ratcheting up 500 00:28:40,440 --> 00:28:43,560 Speaker 1: as these goals become more attainable. But fair enough, that 501 00:28:43,680 --> 00:28:46,520 Speaker 1: is conjecture on my part, which is not how it 502 00:28:46,560 --> 00:28:49,160 Speaker 1: currently functions. And the Inflation Reduction Act is only a 503 00:28:49,200 --> 00:28:51,240 Speaker 1: few years old. It's still just a baby, and it's 504 00:28:51,400 --> 00:28:54,280 Speaker 1: making its way through these various sources of emissions in 505 00:28:54,320 --> 00:28:58,600 Speaker 1: the economy. So we've established that there are third party 506 00:28:58,640 --> 00:29:02,960 Speaker 1: groups where information is being shared and companies are voluntarily 507 00:29:03,000 --> 00:29:06,680 Speaker 1: signing up to better understand and declare their sources of 508 00:29:06,680 --> 00:29:08,680 Speaker 1: emissions so that we can tackle the problem that the 509 00:29:08,680 --> 00:29:11,800 Speaker 1: EU has stringent standards for imports, that the US is 510 00:29:12,160 --> 00:29:14,560 Speaker 1: as a part of the Inflation Reduction Act, is really 511 00:29:14,600 --> 00:29:17,560 Speaker 1: taking an active role in looking at how they do 512 00:29:17,640 --> 00:29:21,040 Speaker 1: this also through fees or taxes. Now, with all of 513 00:29:21,480 --> 00:29:25,840 Speaker 1: these initiatives taking place, and with this conversation coming up, 514 00:29:25,880 --> 00:29:28,480 Speaker 1: I'm sure every year at COP in some respect on 515 00:29:28,600 --> 00:29:31,280 Speaker 1: trying to see whether or not it's making progress. What 516 00:29:31,400 --> 00:29:35,360 Speaker 1: are some of the ways that a company can verify 517 00:29:35,520 --> 00:29:39,840 Speaker 1: that they're actually achieving these targets? And really, I mean, 518 00:29:39,920 --> 00:29:42,640 Speaker 1: what's the piece of paper that they're able to electronically 519 00:29:42,720 --> 00:29:45,960 Speaker 1: or otherwise push forward and certify that they're actually making 520 00:29:46,040 --> 00:29:47,440 Speaker 1: progress to the outside world. 521 00:29:47,720 --> 00:29:50,720 Speaker 2: Sure, So we have seen over the past few years 522 00:29:50,760 --> 00:29:55,760 Speaker 2: the emergence of responsibly sourced gas or producer certified gas. 523 00:29:55,800 --> 00:29:59,960 Speaker 2: So what this really means is that you get essentially 524 00:30:00,160 --> 00:30:03,520 Speaker 2: a label that says you have produced your natural gas 525 00:30:03,560 --> 00:30:08,440 Speaker 2: in accordance to various environmental, social and governance principles. But 526 00:30:08,920 --> 00:30:11,520 Speaker 2: it is usually about the methane intensity of the gas. 527 00:30:11,560 --> 00:30:15,600 Speaker 2: So there have been different providers in the space, and 528 00:30:15,880 --> 00:30:18,640 Speaker 2: although there is no common standard when it comes to 529 00:30:18,640 --> 00:30:22,840 Speaker 2: what represents responsibly sourced gas, these providers they do have 530 00:30:23,400 --> 00:30:27,800 Speaker 2: a fairly comprehensive set of rules that a producer would 531 00:30:27,840 --> 00:30:30,840 Speaker 2: have to abide by in order to get the label. 532 00:30:31,080 --> 00:30:35,840 Speaker 2: So the responsibly sourced gas has already unlocked a market 533 00:30:35,960 --> 00:30:38,720 Speaker 2: whereby you have a premium that's being paid based on 534 00:30:38,800 --> 00:30:43,040 Speaker 2: the intensity of the fossil fuel. So the gas can 535 00:30:43,120 --> 00:30:48,680 Speaker 2: trade either bundled or unbundled from what it's called environmental attributes. 536 00:30:48,720 --> 00:30:51,520 Speaker 2: So these could be the methane intensity, for instance, and 537 00:30:51,960 --> 00:30:56,960 Speaker 2: that's currently happening. We've done an analysis and although premiums 538 00:30:57,000 --> 00:31:00,640 Speaker 2: were quite muted earlier in the air end, as you'd expect, 539 00:31:00,640 --> 00:31:03,760 Speaker 2: refluctorate with the price of natural gas. Many producers see 540 00:31:03,800 --> 00:31:08,120 Speaker 2: this as a way to prove to their investors and 541 00:31:08,160 --> 00:31:10,440 Speaker 2: as a way to communicate to the market that they've 542 00:31:10,440 --> 00:31:14,320 Speaker 2: been producing it in a way that has minimized methane vikage, 543 00:31:14,320 --> 00:31:14,920 Speaker 2: for instance. 544 00:31:15,320 --> 00:31:18,280 Speaker 1: So, Maria, now that you've taken a look at all 545 00:31:18,320 --> 00:31:21,280 Speaker 1: of this collectively, how would you say we're doing And 546 00:31:21,840 --> 00:31:26,640 Speaker 1: is methane gaining momentum in terms of reduction? I suppose 547 00:31:26,640 --> 00:31:29,440 Speaker 1: that's the wrong way to phrase it. But are you 548 00:31:29,560 --> 00:31:33,560 Speaker 1: seeing signs that the oil and gas industry is essentially 549 00:31:33,680 --> 00:31:37,720 Speaker 1: embracing the reduction of methane or is it really more 550 00:31:37,840 --> 00:31:41,480 Speaker 1: at a compliance level doing what needs to be done 551 00:31:41,800 --> 00:31:45,160 Speaker 1: from a regulatory standpoint, but not really at the front 552 00:31:45,160 --> 00:31:48,360 Speaker 1: and center is a priority yet. 553 00:31:48,080 --> 00:31:50,480 Speaker 2: I think it has become a priority for most of 554 00:31:50,520 --> 00:31:53,680 Speaker 2: the industry. And although you know, methane emissions are not 555 00:31:53,760 --> 00:31:57,800 Speaker 2: really a new problem, they've been having been an industry. 556 00:31:58,040 --> 00:32:01,080 Speaker 2: They have been around since, you know, the very beginnings. 557 00:32:01,240 --> 00:32:05,360 Speaker 2: It's just it has received more and more attention recently 558 00:32:05,520 --> 00:32:09,360 Speaker 2: as we understand what drives climate change better, and undoubtedly 559 00:32:09,520 --> 00:32:12,000 Speaker 2: methane is a large contributor to that. But I think 560 00:32:12,080 --> 00:32:16,320 Speaker 2: it's not uniform. So you do have places companies that 561 00:32:16,480 --> 00:32:20,400 Speaker 2: are taking this perhaps more serious than the others. But 562 00:32:20,520 --> 00:32:22,800 Speaker 2: I think there have been a lot of encouraging things 563 00:32:22,840 --> 00:32:25,360 Speaker 2: that have happened, from the pledges that have been signed, 564 00:32:25,520 --> 00:32:29,720 Speaker 2: to the investment and the financing that has gone into this, 565 00:32:30,160 --> 00:32:34,040 Speaker 2: and in fact the banks they've also acknowledged that there 566 00:32:34,080 --> 00:32:36,440 Speaker 2: is an opportunity when it comes to methane, and we 567 00:32:36,520 --> 00:32:39,520 Speaker 2: saw last year, just ahead of cop JP Morgan putting 568 00:32:39,560 --> 00:32:42,000 Speaker 2: out a white paper on the methane opportunity and saying 569 00:32:42,000 --> 00:32:45,600 Speaker 2: that they will support their customers in this journey of 570 00:32:45,680 --> 00:32:49,320 Speaker 2: driving down emissions. So I think there has been indeed 571 00:32:49,360 --> 00:32:52,040 Speaker 2: a lot of action, although it hasn't happened at the 572 00:32:52,040 --> 00:32:55,120 Speaker 2: same pace, and it's probably difficult to happen at the 573 00:32:55,160 --> 00:32:58,800 Speaker 2: same pace everywhere, but the signs are very encouraging that 574 00:32:59,360 --> 00:33:02,680 Speaker 2: more and more operators are taking this more seriously and 575 00:33:02,920 --> 00:33:05,360 Speaker 2: are working on driving down their emissions. 576 00:33:05,640 --> 00:33:07,960 Speaker 1: And so how often are you looking at this data 577 00:33:08,000 --> 00:33:09,080 Speaker 1: and keeping an eye on it? 578 00:33:09,440 --> 00:33:12,960 Speaker 2: So we're actually looking very often. The report that we 579 00:33:13,000 --> 00:33:15,760 Speaker 2: put out where we analyze the Imeo data was our 580 00:33:15,800 --> 00:33:19,040 Speaker 2: first iteration. We will be updating that now on a 581 00:33:19,120 --> 00:33:22,120 Speaker 2: quarterly basis, and we're only excited about, you know, the 582 00:33:22,240 --> 00:33:25,040 Speaker 2: launch of new satellites and of more data that will 583 00:33:25,080 --> 00:33:29,480 Speaker 2: become publicly available. So this wave of new data, I 584 00:33:29,520 --> 00:33:31,520 Speaker 2: think it will be it will be great to add 585 00:33:31,520 --> 00:33:35,120 Speaker 2: more transparency and understand where where emissions are coming from. 586 00:33:35,240 --> 00:33:38,000 Speaker 2: And ultimately we want this to drive action. 587 00:33:38,400 --> 00:33:40,840 Speaker 1: So as the transparency increases, I'm sure we'll have you 588 00:33:40,920 --> 00:33:42,640 Speaker 1: back on the show to tell us even more. And 589 00:33:42,680 --> 00:33:44,880 Speaker 1: hopefully by that point I'll have decided whether or not 590 00:33:44,960 --> 00:33:47,280 Speaker 1: I'm going to refer to it as methane or methane, 591 00:33:47,320 --> 00:33:50,680 Speaker 1: given that I'm an American living in the UK and 592 00:33:50,720 --> 00:33:53,920 Speaker 1: seem to be adapting both pronunciations today, Maria, thank you 593 00:33:53,960 --> 00:34:05,320 Speaker 1: so much for joining, Thank you for having me. Today's 594 00:34:05,360 --> 00:34:08,319 Speaker 1: episode of Switched On was produced by Cam Gray with 595 00:34:08,440 --> 00:34:12,280 Speaker 1: production assistance from Kamala Shelling. Bloomberg NEIF is a service 596 00:34:12,320 --> 00:34:15,600 Speaker 1: provided by Bloomberg Finance LP and its affiliates. 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