Cutting methane emissions from oil and gas makes basic business sense

July 1, 2015, 6:00 PM UTC
Northeast Debates Benefits And Dangers Of Hydrofracking
SPRINGVILLE, PA - JANUARY 17: A Cabot Oil and Gas natural gas drill is viewed at a hydraulic fracturing site on January 17, 2012 in Springville, Pennsylvania. Hydraulic fracturing, also known as fracking, stimulates gas production by injecting wells with high volumes of chemical-laced water in order to free-up pockets of natural gas below. The process is controversial with critics saying it could poison water supplies, while the natural-gas industry says it's been used safely for decades. While New York State has yet to decide whether to allow fracking, economically struggling Binghamton has passed a drilling ban which prohibits any exploration or extraction of natural gas in the city for the next two years. The Marcellus Shale Gas Feld extends through parts of New York State, Pennsylvania, Ohio and West Virginia and could hold up to 500 trillion cubic feet of natural gas. (Photo by Spencer Platt/Getty Images)
Photograph by Spencer Platt — Getty Images

A group of investors that have interests in oil and gas companies are vocally supporting the Obama administration’s goal to reduce methane emissions, a harmful greenhouse gas, from the oil and gas industries.

The investment group includes the pension giant California Public Employees Retirement System, the endowment of Amherst College, the offices of both New York City and New York state. The investors say they collectively represent $1.5 trillion in assets under management.

Methane is the main component of natural gas, the clean-burning fossil fuel that has boomed in the U.S. in recent years thanks to shale and fracking. But during the production of both natural gas and oil, methane is often unintentionally and intentionally leaked into the atmosphere.

Aging equipment and loose standards for the gas and oil sectors mean methane is routinely emitted during the production and transportation process by accident. And companies sometimes release methane on purpose to relieve pressure on equipment.

Northeast Debates Benefits And Dangers Of Hydrofracking
Men with Cabot Oil and Gas work on a natural gas valve at a hydraulic fracturing site in South Montrose, Penn.Photo by Spencer Platt — Getty Images
Photo by Spencer Platt — Getty Images

The natural gas and oil industries account for about a third of U.S. methane emissions, according to the Environmental Protection Agency. Other common sources of methane are landfills, coal mining and the agriculture industry.

The problem is that methane is a harmful greenhouse gas, and only second to carbon emissions in its prevalence in the atmosphere. And it’s actually more potent than carbon emissions in terms of its effect on the warming of the planet.

But for the investors that own gas and oil holdings, it just makes good business sense to make the gas and oil industries more efficient and less harmful to the environment.

Methane that doesn’t leak into the atmosphere can be used for energy production. The Obama administration says efficiency standards for gas and oil in the future could save “180 billion cubic feet of natural gas in 2025, enough to heat more than 2 million homes for a year.”

In January the Obama administration drafted a goal to cut methane emissions from oil and gas by 40% to 45% from 2012 levels by 2025. The plan will focus on efficiency upgrades for equipment, agreements on best practices, deployment of leak sensing technologies, and more.

Setting specific standards for methane emissions reductions also provides clarity for investors. In addition, lowering greenhouse gas emissions from the gas and oil sectors could help the sectors weather any long term shift that might occur toward emissions-free power production.