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Methane Detection Is Imperative, Say JPMorgan, and It Pays for Itself

Updated: 4 days ago

Technological breakthroughs unlock crucial data for the energy sector and regulators

In their recent report, JPMorgan Chase & Co. highlight a massive opportunity for oil and gas operators to sweeten the bottom line, improve utilization of natural gas, and meet climate goals all at once.

The key to unlocking these benefits is leveraging existing, affordable technologies to obtain high-quality data about methane emissions. 

Low quality data hampered methane emission abatement, until now

Methane is an extremely potent greenhouse gas, but also an extremely valuable natural gas. It is used for energy production, heating, chemical formulations and more. With nearly 40% of anthropogenic methane emissions attributable to the energy sector, how is it that tens of billions of dollars worth of useful natural gas slip into thin air every year? 

According to JPMorgan, a severe lack of high-quality data is to blame. In fact, the little data operators and regulators typically base their decisions on is derived from computer modeling alone, providing an unreliable, skewed snapshot of reality. Extensive studies led by the EDF reveal that desktop-based emission estimates are frequently shy by up to 60%.

One pipeline operator in North America told us: “If we can’t trust the data, how can we be sure what the baseline is, and what an anomaly looks like? Or what a normal year-over-year trend is? This makes it difficult to make decisions and ascertain what impact they’ve had.”

With recent breakthroughs in monitoring and measurement technology, say JPMorgan, O&G operators can now accurately detect and quantify emissions in an extremely cost-effective way,  unlocking the path to reduced environmental impact, increased profits, and an array of business critical gains. 

The business case for comprehensive methane intelligence

First and foremost, by detecting leaks and unsanctioned venting in a timely manner, operators can enact remediation swiftly and bring at least 75% of otherwise lost gas to sale, say JPMorgan. In delivering ~195 billion cubic meters of newly retained methane every year, the sector will also stabilize national energy security amidst shaky geopolitics and reinforce their own political stance.

“Around 80% of actions taken to reduce methane emissions can be implemented at no net cost” - IEA

The IEA has found that 80% of actions taken to avoid methane emissions can be achieved at no net cost (based on 2022 methane pricing). Satellite-based emission intelligence, for example, requires zero CAPEX investment, making it the most cost-effective way to achieve actionable data-based insights across any scale of pipeline or asset. 

From JPMorgan’s perspective, taking into account methane’s potency, looming carbon regulation and fines (e.g. $900/ton in the USA), and the relatively low cost of implementing methane detection technologies (even without the numerous grants available) - prioritizing methane abatement makes both economic and operational sense.

But that’s not all. The insurance and financial services sectors view comprehensive methane intelligence as a requirement for doing business. Chubb insurance, one of the world's largest publicly traded insurance companies, requires its clients to have programs for evidence-based leak detection as a condition for underwriting. JPMorgan’s Environmental and Social Risk teams assess their existing and prospective clients’ methane emission risk profiles as part of standard due diligence. 

Finally, but no less important, is public image. By implementing methane intelligence technologies, operators achieve corporate climate goals and solidify their ‘social license to operate.'

Satellite-based solutions outperform in cost and effectiveness

From the array of options reviewed by JPMorgan, satellite based intelligence driven by autonomous AI detection, quantification, and reporting stands out in particular.

Solutions, like those offered by Momentick, deliver precise emission locations, flow rates, and plume dispersion shapes for local assets, vast areas, and long pipelines. Together with comparative historical data, informed decision making and prioritization are finally possible. This enables effective and efficient deployment of repair and preventive measures. In addition, reliable reporting becomes simpler for ESG and compliance teams. 

Satellite based emission intelligence supports all of the eight elements JPMorgan urges O&G operators to address. For example, they recommend monitoring assets at least every quarter. Even at this relatively low frequency, significant benefits are unlocked. For operators with higher risk profiles, those who need to meet more stringent reporting needs, or who simply wish to seize the full potential, solutions that use data from multiple satellites offer almost continuous coverage. 

If the energy sector is to meet the IEA’s target of a whopping 79% reduction in methane emissions by 2030, implementing the most impactful, cost-effective solutions today is an imperative. 

Source: JPMorgan ‘Methane Emissions Opportunity’ report.



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