Two Perspectives On Fossil Fuels & Emissions — The Methane Problem

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Last week, Exxon CEO Darren Woods told CNBC in an interview that carbon capture was going to be the next big thing in the effort to keep the Earth from overheating and that making hydrogen from methane would provide much of the world with an abundant source of clean fuels. Careful readers will note that both give Exxon a license to keep on doing what it has always done — extract hydrocarbons from beneath the Earth and sell them at a profit.

The carbon capture thing is a dangerous illusion. Not only does the technology not work, even if it did, it would cost far more than simply transitioning to renewable energy sources and eliminating carbon emissions in the first place.

The “blue” hydrogen scheme is equally dangerous. Transforming methane into hydrogen creates massive carbon dioxide emissions to the point where doing so would make the Earth’s excess carbon problem worse rather than better. The only benefit it would have is creating a revenue stream for Exxon shareholders and executives.

There’s another problem with the “blue” hydrogen plan. The methane and carbon dioxide emissions that escape into the atmosphere at drilling sites, storage sites, and from pipelines are enormous.

RMI, formerly the Rocky Mountain Institute, has created an Oil Climate Index plus Gas (OCI+) web tool that tracks oil and gas producing resources around the world. In its latest report released last week, it ranks 135 of them — which together account for half of the world’s supplies of oil and gas — based on a full lifecycle analysis of their 2020 emissions.

The results show Russia’s Astrakhanskoye natural gas field has the biggest footprint across its supply chain because of prolific leaks on pipelines and other infrastructure “downstream.” Russia, of course, cares not one whit about emissions and has no intention to limit them in any way.

Turkmenistan’s South Caspian basin ranks second and the Permian Basin in West Texas — which Darren Woods points to with pride as an example of how good things can be — ranks third.  The majority of emissions from the South Caspian and Permian basins occur “upstream” during production.

Upstream is defined as related to production or wellhead emissions; midstream as related to refining; downstream as related to transport and end use (i.e. combustion). The dirtiest fields emit more than 10 times as much carbon dioxide equivalent as the least emissions intensive sites, the RMI report finds.

 Methane & Oil

The world is focused on carbon emissions, but methane is actually a far more powerful greenhouse gas. Where there is oil in the ground there is also methane, but many oil producers consider it a nuisance so they make no effort to trap it. They just let it float into the atmosphere instead. When governments try to crack down on methane emissions, they scream about energy independence, national defense, and how it is just too damned expensive to capture the stuff.

Created by researchers at RMI, Stanford University, the University of Calgary, and Koomey Analytics, the OCI+ tool and the accompanying report conclude that significant fossil fuel emissions occur not just at the point of combustion but directly at the wellhead and during processing, refining, and transportation, according to Bloomberg. RMI estimates that the US Environmental Protection Agency’s greenhouse gas reporting program undercounts oil and gas industry emissions by a factor of two.

Methane accounts for more than half of operational emissions at sites worldwide. Curbing the flaring and venting of the gas and ensuring that oil-field equipment is working properly can help significantly reduce upstream emissions, the report says, calling methane reductions “the highest priority for the oil and gas sector.”

The RMI initiative draws on years of research by academics and nonprofit institutions, public data, and satellite images. It boils down to two questions: “Who has the worst barrel, and who are the suckers buying the bad stuff?” says Deborah Gordon, senior principal of climate intelligence at RMI. That’s where the spotlight needs to be to combat climate change, she adds.

The report recommends buying fuel locally as much as possible to save on transportation related emissions. For Europe, even before the Putin inspired war on Ukraine began, sourcing methane from Russia is “horrid” because of leaks, according to Gordon. On the OCI+ map, Russia’s pipeline system jumps out in bright yellow and orange due to concentrated methane emissions.

For decades, government policies have targeted reducing emissions from cars and power plants, which puts the responsibility on the consumer with little transparency on emissions from producers themselves, Gordon clams. “Conventional wisdom is that the consumer is responsible for 86% of the emissions from the barrel.” But the research shows that’s not the case for the most polluting oil and gas fields, she points out.

A Price On Carbon

Darren Woods told CNBC that Exxon does not oppose putting a price on carbon, but does not say how much that price should be. The researchers and RMI are not that shy, however. They claim OCI+ data shows accounting for total lifecycle emissions — well to wheel, for instance — would add more than $50 per barrel for the highest emitting sites. If a fee reflecting the social cost to carbon were imposed today, the production-weighted average cost for the 135 fields would be $7 per barrel of oil equivalent, less than $1 for refiners and $4 for shippers, according to the analysis. The values are based on a cost of $56 per metric ton that was modeled by the US government. Whether that is the correct cost to the Earth and humanity for a ton of carbon dioxide is a separate — and vitally important — question.

Aging oil and gas fields become more GHG-intensive as more energy and water are needed to extract the fuel from underground. The average emissions of a typical large oil field will double over 25 years, according to past research. Two prime candidates for decommissioning are the Minas field in Indonesia and Wilmington in California, since they already require large injections, Gordon says.

The OCI+ web tool also breaks out the share of a site’s emissions from flaring, or burning off excess natural gas. This practice is notoriously common in the Permian Basin, where oil is the most profitable fuel and natural gas is a nuisance byproduct.

“The Permian looks terrible,” Gordon tells Bloomberg, but “if Texas cleans up its act and really focuses on not leaking methane and not flaring its gas, it will be there right at the top” of the lowest-emitting areas.

The Takeaway

Exxon CEO Darren Woods is pretty confident his company will still be relevant — and profitable — in 20 years. There are lots of people who are cheering him on, who want to just keep on sucking hydrocarbons out from beneath the Earth’s crust in perpetuity so the merry-go-round of modern life can go on. The illusion that we are masters of our own fate is strong. We assume we can blithely continue to do what we have always done.

We are distracted by the latest song or internet meme or Superbowl halftime show and have no time to imagine that life should ever be any different. We hear there are billions of humans living in poverty and starving but we really don’t see that as a problem for our way of life in the industrialized world.

A dying planet is not as easy to visualize as someone with a bullet in the head leaking brain matter onto the pavement. We can’t see carbon dioxide or methane and so it’s easy to ignore them and just party on. We do not see that we are living in a cesspool of our own creation and that one day — quite soon in fact — we will drown in it, up to our ears in the detritus of own existence.

There is only one way to save ourselves. Stop extracting and burning fossil fuels. The universe will not care that some corporation had an unbroken record of stock dividends for decades or that some person accumulated more wealth than anyone else in history. We will be erased from the cosmic record just as the dinosaurs were erased unless we act and act quickly.

Words like “existential crisis” hold no terror for us. We have heard it all before and yet the sun still rises every day and will continue to do so for billions of years. But soon there will be no humans left on Earth to see it happen. We will be gone, extinct, no more. That we are so willing to rush into that long night will be the enduring mystery of the human race.