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DALL·E generated image of a pipeline leaking a gray cloud of gas in a green field, digital art
DALL·E generated image of a pipeline leaking a gray cloud of gas in a green field, digital art

Carbon Pricing

Methane Is A Big Greenhouse Gas Problem & We Leak A Lot Of It Before It Gets Anywhere Near End Uses

So many different places where a bad greenhouse gas can leak in natural gas systems. So little incentive for the industry to fix it.

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The world has a methane gas problem. We love to burn natural gas, which is mostly methane, to make electricity and heat. Our agricultural and food systems leave a lot of biomass lying around where a lot of it turns into methane and enters the atmosphere. And methane is over 80 times worse for forcing global heating over 20 years than its greenhouse gas sibling, carbon dioxide.

I’ve addressed at least most of the human-causes of biological methane, which is slightly better than fossil-fuel derived methane because the carbon dioxide it turns into after a dozen years or so comes from the current atmosphere originally. Direct heating forcing by biological methane is still over 70 times worse than carbon dioxide over twenty years.

What about the fossil-derived natural gas we extract from wells, process, compress, and pipe sometimes thousands of kilometers to where it is put into distribution systems and ends up in generation facilities, factories, buildings, and people’s homes where it provides heat for electricity, industrial processes, or our creature comforts? The leakiness of all of the extraction, processing, and transmission has been a hot topic for the past few years, so it’s worth looking at all the places where leaks occur.

Methane leakage sources from natural gas extraction, processing and transmission

Methane leakage sources from natural gas extraction, processing, and transmission (generated by Show Me ChatGPT plugin).

System boundaries matter. I spend a lot of my time trying to understand where the boundaries of a system should be drawn in order to determine what matters and what doesn’t and what needs to be counted and what doesn’t.

And with something as problematic as climate change, you can understand why a lot of legacy industries are working really hard to draw systems boundaries in their favor. For an example, every fossil-fuel exporting country in the world doesn’t have its exported fossil fuels counted in its national contributions to climate change. Canada, my home country, is actually 2% of the global problem if our oil, gas, and coal exports were added, but instead, it’s the countries which burn them which get the hit. This makes Canada, Norway, and Australia, for example, look much less like problems.

And in upstream methane leakage emissions, it’s the name of the game. There’s a lot of national and international effort being put into where the systems boundaries start and stop. I’m strongly on the include-it-all side of the equation, as our grandchildren don’t really care about the systems boundaries, they care about having a climate, environment, and economy that they can thrive in.

With the EU–Canadian upstream methane emissions dialogue process I’m engaged in, my focus from the beginning has been to ensure that the system boundaries get set correctly, and that no fugitive emissions slip through cracks between different solutions. Hence this stroll through the components of natural gas extraction, processing, and transmission to see where the concerns are. Quantifications are hard, but perhaps I’ll get there. There certainly is a claim from the industry to focus on the biggest emissions concerns, a claim I suspect comes with some misdirects.

Let’s start with wellheads. Do they leak? Why, yes they do.

“Three types of leakage are distinguished: ‘surface casing vent flow’ (SCVF), ‘outside the surface casing leakage’ (OSCL), and ‘cap leakage’ (CL). In British Columbia (BC), the majority of reported incidents involve SCVF of gases, which does not pose a risk of aquifer contamination but does contribute to GHG emissions.”

Is a wellhead just a pipe coming out of the ground? No, it’s a lot more sophisticated than that. The casing is a large-diameter pipe that is assembled and inserted into a recently drilled section of a borehole and typically held in place with cement. It serves to strengthen the well hole, prevent collapse, and isolate water and other fluids from the oil or gas being extracted.

Tubing is a pipe through which gas is brought from the producing formations to the field surface. It is smaller in diameter than casing and fits inside the casing to transport the gas to the surface.

A packer is a device that forms a seal between the casing and the tubing. It prevents the movement of fluids between different geological formations, helping to prevent contamination and maintain the right pressure conditions.

A surface safety valve is a critical piece of safety equipment that automatically closes the flow of gas in the event of an emergency, such as a significant change in pressure.

The Christmas tree is an assembly of valves, spools, and fittings used to regulate the flow of pipes in an oil well, gas well, water injection well, water disposal well, gas injection well, condensate well and other types of wells. It gets its name from its resemblance to a decorated tree with ornaments.

Each of these components is subject to potential leakage, and as the findings of the quoted study show, sometimes natural gas just comes up the hole and goes around the entire assemblage.

Regulators determine how often wellheads must be inspected, with British Columbia, as an example, requiring at least annual inspections. That means any of leakage at the wellhead might easily persist for a year in a well-regulated region. And at least BC requires a methane ground monitor be used as part of the assessment, along with visual and bubble inspections.

But that’s for wells that are active and owned and operated by a firm that’s still in business. A very large number of natural gas wells are shut down, and a lot of them are abandoned. That’s happened for two reasons. The first is that conventional gas reserves, where a firm drills down into a bubble of gas trapped underground and it starts venting into pipes under pressure of the ground, run out after a while. A lot of the cheap early natural gas that was easily accessible is gone, and to be clear, that means that cheap natural gas from some places like southern Alberta is going away too.

But back in the 1970s during the OPEC oil crisis, the US government spent a lot of money on unconventional extraction research and development, leading to the fracking boom, especially in the USA. This along with related unconventional extraction techniques such as shale oil — fracking, but for oil instead — and enhanced oil recovery — pulling carbon dioxide out of the ground where it was naturally sequestered in one place and pumping it into tapped out oil wells to liquify and pressurize the sludge — has meant that the USA has turned from a net oil and gas importer into a net exporter.

There is a big downside to this. Fracked wells leak a lot more methane than conventional wells. 3.7% of the extracted natural gas is leaking in the Permian Basin, well above the 1.9% assumed by the EPA, and far above what Europe considers remotely reasonable, with Bauer et al’s blue hydrogen methane lifecycle assessment paper assuming 1.5% as a median, and 0.2% as best case scenario.

Fracking had the interesting side effect of stabilizing natural gas commodity prices at a relatively low price in most of the world for a couple of decades. I, along with many others, predicted the end of that era back in 2020. Why? First, even then the bloom was off of fracking. It was clear that fracked wells weren’t producing as much as promised or for as long, something true both on the oil and gas side of things. Fracking was kind of the Silicon Valley hype monster of fossil fuels extraction. Lots of overpromising, lots of underdelivering.

That had some corollaries. Financial institutions that had extended debt financing to a lot of fracking and shale oil firms found they weren’t getting debt service payments. It was so bad that they were foreclosing and taking all of the assets of firms to try to preserve cents on the dollar. Then, in 2020, Saudi Arabia and Russia opened the taps, with the intent of driving higher cost base competitors off of the market. That meant a lot more North American shale oil became non-viable, and a good deal of natural gas went with it.

All of a sudden, there were a lot more fracking and shale oil sites that were not only not operational, but entirely orphaned. A natural gas well that’s shut down by an operating company has to remove all of those wellhead components, seal the hole, and perform ongoing monitoring to ensure that it isn’t leaking. Companies that are bankrupt, or firms that sold aging wells to firms for cents on the dollar and then those firms conveniently went bankrupt, aren’t decommissioning those old wells. And those wells are leaking methane.

Are a region’s orphaned well emissions part of a specific boundary for export of LNG to Europe? It’s a sufficiently important issue that the USA’s Inflation Reduction Act includes almost US$5 billion for capping orphaned wells. It’s nowhere near the scale of the problem, but it’s a start, and hopefully it will be spent on the worst offenders. Personally, I think every active well in a region should own a portion of the leakage from orphaned wells in the region to ensure economic attention to the problem. If a region’s natural gas isn’t economically viable because the regulatory and business structures in the region abandon massive numbers of wells, that needs to be priced into the cost.

And methane emissions will be costed, by the way. Canada’s carbon price already adds US$2.50 per gigajoule to the cost of natural gas. Europe’s emissions trading scheme (ETS) excludes methane today, but will include it in 2026, and today the ETS price is double Canada’s, so that’s about US$5.00 per gigajoule. The delivered cost of a gigajoule of natural gas in western Canada right now is only about US$7.50, so these carbon pricing numbers are significant and only going up, with Canada’s carbon price in 2030 expected to be around the EU’s today.

So, that’s wellheads and abandoned wells. But that’s just the start of the journey.

When natural gas comes out of the ground, it is usually not fit for use in electrical generation or other facilities. It might have too high a water vapor content, something that was a big part of why Texas was freezing in the dark a couple of years ago when gas pipelines froze. It might have too much naturally occurring and already sequestered carbon dioxide, which is why the “most” successful carbon sequestration facility in the world, Equinor’s Sleipner facility in the North Sea, is actually just stripping off the ~8% of gas volume that is carbon dioxide it extracts and puts back underground where they find it for big tax breaks, not actually sequestering carbon.

Processing equipment can include oil-gas separators, technologies to remove sulfur, carbon dioxide removal equipment, dehydration gear, kits to extract high-value natural gas liquids like ethane and butane, and fractionation gear for the natural gas liquids. Processing starts at the wellhead in many cases, or is centralized in regions. More methane leakage occurs in processing equipment. Should methane leakage from processing equipment be inside the system boundaries? Very definitely.

Let’s move on to compressors. What are those? Mechanical devices that shove the diffuse gas into smaller volumes, tanks and pipelines. There are a wide variety of them throughout the natural gas system. Tanks at wellheads will contain compressed gas, not uncompressed gas. Feeder pipelines from a wellhead to a major high-pressure transmission pipeline will have compressors too. The high-pressure transmission pipeline will have compressors. A lot of them burn natural gas from the wellhead or pipeline to power their processes because that’s convenient and cheap for the operators. Some burn diesel, while best of breed obviously use electricity.

And every compressor includes fittings that can leak, every compressor that burns natural gas is both an opportunity for methane leakage, and every compressor that burns natural gas or diesel is emitting carbon dioxide that is part of the carbon debt of natural gas. Should those emissions be included in a full accounting for any natural gas? Yes, definitely.

Next, let’s talk about tanks full of natural gas dotting the landscape. A lot of them are at wellheads. Others are in central locations. Then there are strategic reserves, often natural underground caverns. They all have compressors, monitoring, and safety gear. Tanks come in forms that vent overpressure to the atmosphere and forms that don’t, but even the controlled tanks can leak. All of these tanks, reserves, and associated equipment are potential sources of methane leakage. Should these emissions to monitored and counted? Yes, definitely.

Then there are pneumatic devices. What the heck are those? Well, gas under pressure can be used to do work. And a bunch of things in the natural gas upstream industry need little bits of work done here and there, like gauges with needles. Every one of those devices is a potential source of emissions as well and should be counted.

Next, lets talk about the millions of kilometers of steel tubes above and below ground running around developed continents. Pipelines are great for molecules for energy — not so great for the future of energy, electricity, although natural gas turns into electricity indirectly. On the note of pipelines for energy, one assessment I did almost a year ago was about systems boundaries and hydrogen pipelines. Every study on the subject drew the system boundary arbitrarily narrowly so that moving hydrogen molecules for energy seemed like a no brainer, when the no brains were in the bad system boundary.

Regardless of that, pipelines aren’t just steel tubes running through or above the earth. They are sections that are linked together. They are tubes with points where additional compressors come into play. They are voids with sensors that penetrate the walls. They are steel that rusts and leaks. There are lots of opportunities for methane to wander off into the atmosphere and do bad things. And then there’s regular maintenance, where pipeline operators usually just vent whatever’s in them to the atmosphere, meaning more methane emissions that are completely avoidable. Should those be counted? Yes, yes they should.

Directly related to the above, hydrogen wants to wander into the atmosphere much more than methane. It’s a tinier and lighter molecule and considers narrow gaps that methane cannot pass through to be super highways. The molecule really messes with steel in pipelines and joints, embrittling the steel and messing with electronics in ways that methane doesn’t. And hydrogen, while not as directly bad as methane, is increasingly being discovered to be a heating forcer indirectly. Hydrogen requires three times the compression for the same units of energy in the same pipeline, and that means the compressor and and pipeline have to be expensively retrofitted to run hydrogen through the channel. Putting hydrogen into pipelines isn’t nearly the solution many molecules-for-energy types pretend it is.

Finally, we come to flaring and venting. Gas pressures underground and in complex systems of tanks, compressors, and pipelines under different conditions of heat can tend to build up pressure in specific spots. While flaring is more of a problem for oil wells which have unmarketable amounts of natural gas, the entire system of natural gas extraction, processing, and transmission has flare points as well.

Venting is terrible, as the methane just gets dumped into the atmosphere. But flaring is a problem too. The theory behind flaring is that the methane gets burned in the presence of oxygen, and all of that high global warming methane turns into carbon dioxide with vastly lower global warming potential. But in reality, only about 91% of the methane gets turned into carbon dioxide. Oh, and that carbon dioxide includes carbon that was sequestered millions of years ago, so it’s pretty bad too. Flaring in open air doesn’t have great combustion characteristics, but exploding facilities tend to be frowned on a lot more. Should the venting and flaring carbon dioxide and methane be counted? Yes, yes they should.

Did I say finally? There’s one more category. How do all the people who service, operate, and maintain this complex web of boreholes, wellheads, compressors, tanks, and pipelines monitor, operate, and maintain them? Well, while an increasing percentage sit at desks in home offices, coffee shops, and windowless operations centers with big screens reminding everyone how inefficient they are, a lot of it is still done by people climbing into trucks and driving to the wellheads, compressors, pipelines, and tanks and manually dragging out kit to test or fix stuff. And they mostly burn diesel to do this. Should their diesel be included? Why wouldn’t it be?

There are so many different places where a bad greenhouse gas can leak in natural gas systems. There is so little incentive for the industry to fix it.

Over the past years, I’ve been trying to triangulate on how much of the global warming problem is related just to extracting, processing, refining, transmitting, and distributing fossil fuels. The best I’ve come up with so far is that about 11% of all primary energy consumed on the planet is consumed by the fossil-fuel or fossil-adjacent industry. And most of that primary energy has absurd levels of waste associated with it. As I noted not that long ago, in an electrified USA with the same GDP and creature comforts, primary energy requirements would drop by 50%. Zero hair shirts. Same money flowing through the economy. No one freezing or frying. Different people raking in the moolah though.

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is a member of the Advisory Boards of electric aviation startup FLIMAX, Chief Strategist at TFIE Strategy and co-founder of distnc technologies. He hosts the Redefining Energy - Tech podcast ( , a part of the award-winning Redefining Energy team. He spends his time projecting scenarios for decarbonization 40-80 years into the future, and assisting executives, Boards and investors to pick wisely today. Whether it's refueling aviation, grid storage, vehicle-to-grid, or hydrogen demand, his work is based on fundamentals of physics, economics and human nature, and informed by the decarbonization requirements and innovations of multiple domains. His leadership positions in North America, Asia and Latin America enhanced his global point of view. He publishes regularly in multiple outlets on innovation, business, technology and policy. He is available for Board, strategy advisor and speaking engagements.


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