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The $60 Billion Opportunity & Why Pipeline Methane Leaks Are Key

Updated: Oct 2

Fugitive methane costs the global energy sector up to an estimated $60 billion a year in revenue. Over the last decade, methane leaks from natural gas pipelines have contributed to accelerated global warming, triggered climate tipping points and the creation of dangerous health hazards for communities near pipelines. The short and long term economic impact of methane emissions cost the global economic hundreds of billions of dollars. These leaks are notoriously undetected and unreported, with methane emissions from the energy sector estimated to be 70% higher than official figures. In the U.S. alone (where there are half a million natural gas wells and over 2 million miles in pipelines), the EDF estimates natural gas leaks to be 60% higher than the official EPA estimates. The missing piece, however, for many in the industry is that these leaks are quite literally hundreds of billions of dollars evaporating into thin air — representing lost opportunities with an array of significant economic consequences. With tightening regulation, emerging carbon markets and new detection technologies, the energy sector simply can’t afford to ignore pipeline leaks. Lost Revenue Every natural gas company faces the issue of unaccounted or “lost” gas. For example, if a company distributes 100 cubic feet of gas and in the end only 98 arrives at the end of the distribution cycle, 2 cubic feet are “lost and unaccounted for”, there is a loss rate of 2%. Different gas companies report varying loss rates.

These losses, however, are rarely seriously quantified in terms of revenue loss.

A first-of-its-kind study commissioned by the Environmental Defense Fund and published earlier this year on oil and gas companies operating on public lands in the U.S. gives us a window into the massive losses companies are ignoring. The study found that the energy sector wasted over $500 million worth of natural gas in venting, flaring and pipeline leaks— including 163 billion cubic feet of lost methane — in 2019, the most recent year of data available. And this is only on federal and tribal lands. Another recent analysis commissioned by the EDF, including non-federal lands, found oil and gas companies across North Dakota alone wasted over $680 million worth of natural gas in the same year. Of which were 226 billion cubic feet of methane wasted from North Dakota’s 17,600 active wells. Rethinking Pipelines

Most efforts to tackle wasted methane in the industry focus on flaring and venting — hands down the leading cause of lost and wasted methane. It’s time to rethink our approach to pipelines.

The EDF’s 2023 Methane Emissions From U.S. Gas Pipeline Leaks reports that only 7% of nearly 500,000 miles of oil and gas pipelines in the US are subject to leak inspections. According to their findings, there are between 1.25 - 2.6 million tons of methane being emitted annually from pipelines. A 2020 study from the American Chemical Society conservatively estimated that there are 630,000 leaks in U.S. natural gas distribution pipelines, resulting in a methane emissions mean of 0.69 Tg/year (1 Tg = 1 million tons), 4.8 times the EPA estimate for the same time periods. One ton of natural gas is equal to 52.4 mmbtu (as per IEC data book). At recent natural gas prices of $2.6/MMBtu, 690,000 tons of methane is just over $94 million in lost revenue annually. And based on the EDF’s numbers, 2.6 million tons at the same prices is a whopping $354 million.

That’s hundreds of millions dollars simply evaporating from pipelines across the U.S. every year.

The Regulatory Price Tag Increasing regulations further compound these losses.

PHMSA’s recommendations for regulatory amendments to the implementation of 2020 Pipes Act (Protecting our Infrastructure of Pipelines and Enhancing Safety Act) include further requirements for all pipeline facilities with maintenance and inspection procedures to fugitive emissions.

These include expanding quarterly and annual surveys of pipelines, instituting new reporting and recordkeeping procedures, and an intensified push for advanced technologies to find and fix leaks.

In addition, the methane fines in the IRA (Inflation Reduction Act) — $900 per metric ton of methane starting 1 Jan 2024 — make the price tag of fugitive methane even higher.

Given that the energy sector is emitting between 690,000 to 2.6 million tons of methane from pipelines annually, if these pipeline emissions were actually accurately monitored and reported they would potentially represent between $621 million and $2.3 billion in regulatory fines.

Closing the Gaps With Emissions Intelligence

Pipeline emissions not only exacerbate global warming and endanger public health, they’re lost revenue that the energy sector increasingly can’t ignore.

They represent a key opportunity in our fight against global warming and an easy win for the energy sector to cut revenue losses and avoid regulatory fines.

The solution is knowing where, when and at what rate pipelines are leaking methane so that the leaks can be efficiently dealt with and monitored.

And this needs to be possible over massive geographic areas.

Which is exactly what we do. Momentick’s advanced emissions intelligence is the way forward. By harnessing multi-satellite imagery, our technology provides the essential data the energy sector needs to keep methane in the pipe.

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