Natural gas producer EQT backs Biden’s methane crackdown

EQT, America’s largest natural gas producer, is backing a push from Congressional Democrats and the Biden administration to crack down on methane pollution as the US natural gas industry’s emissions come under increasing scrutiny from investors and potential buyers.

The company said it supports resolutions introduced by House and Senate Democrats last week, backed by the White House, that would quickly reverse a 2020 Trump administration rollback of Obama-era restrictions on emissions of methane, a potent greenhouse gas.

“There will be some small costs we incur,” Toby Rice, EQT’s chief executive, told the Financial Times. “But we look at the big picture, building public sentiment, saying that we’re going to do things the right way and then taking positions and actions that align with that”.

The Trump administration argued that cutting those regulations would slash costs and spur industry growth.

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But some big oil and gas producers, including EQT, ExxonMobil and BP opposed the rollback, arguing it would set back efforts to clean up oil and gas operations and bruise the industry’s reputation with investors and the public.

Natural gas producers have touted the fact that the fuel emits about half as much carbon dioxide as coal when burnt, and surging production has helped displace coal in the power mix and drive down CO2 emissions.

But rampant methane pollution from the industry has undermined its green pitch.

The Environmental Defense Fund estimates US oil and gas operators pumped more than 16m tons of methane into the atmosphere in 2019, which it argues “inflicted more near-term climate damage than every coal-fired power plant in the country put together”.

Methane dissipates in the atmosphere more quickly than CO2, but has around 80 times the warming potential over a 20-year period. This has put it in the spotlight as international climate talks increasingly focus on ways to slow warming over the next decade.

EQT also said it had signed on to have most of its natural gas production independently certified as “responsibly” sourced by a pair of non-profit groups, which includes having third-party equipment installed at its wells to monitor methane and other emissions.

It is part of an emerging effort from a handful of US producers to set their output apart from others as some buyers more closely scrutinise the emissions from their supply chains.

Rice compared it to creating an “organic” branded natural gas that could be sold at a premium in the market.

He said that it added “a few cents” to production costs, or around 1 per cent to 2 per cent of current natural gas prices, but the market would “dictate ultimately what they’re willing to pay for responsibly sourced gas,”

Chesapeake Energy, another leading gas producer, which recently emerged from bankruptcy, struck a similar deal last weak with Project Canary, another non-profit group that independently monitors and certifies emissions.

Rice said that a decision last year from the French government to intervene and call off a potential $7bn liquefied natural gas import deal with a US supplier had spurred the industry into action.

NextDecade, the US LNG project developer involved in the deal, said last month it had changed the plans for its proposed export plant to now include equipment that would capture and store its carbon emissions, a first of its kind in the US.

It also said that it would seek to supply “responsibly” sourced natural gas to help lure buyers looking for lower-emission gas supplies.

While companies are promising to rein in emissions, recent data from prolific Permian oil and gas basin in Texas showed methane levels quickly returned to pre-pandemic levels after a brief drop last year as drilling activity has picked up on higher prices.

Cutting those emissions, Rice said, is “going to be key to allowing natural gas to continue to play a leading role in our energy transition.”

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