Natural gas production leaks too much valuable methane into the atmosphere, hurting the bottom line as well as the climate. We know how to stop it. It's cheap to do, and it can pay for itself.
Natural gas production in the United States has been booming -- and is expected to keep growing. Already, there are more than 500,000 wells and 300,000 miles of pipeline in place. In 2012, U.S. producers brought more than 25 trillion cubic feet of natural gas to market. And, by 2020, the United States is projected to be a net exporter of natural gas.
Natural gas is here to stay. Its low price is spurring investment and jobs, and increasing energy security. But it's important to get it right.
Much of the growth is driven by hydraulic fracturing, or "fracking," a process in which producers can drill more than one mile down and one mile across to access gas in rock formations. While shale gas has been an economic boon, the process can contaminate water supplies, cause air pollution, and have other disruptive impacts on the land and communities.
Without methane leakage, natural gas would create only about half the greenhouse gases per unit of energy as coal. Yet, methane is 72 times more potent than carbon dioxide measured over 20 years, which is particularly important given that climate change is happening even more quickly than many models have predicted. (Methane has around 25 times more warming potential than carbon dioxide over a 100-year timeframe.) At around three percent leakage, natural gas becomes more harmful than coal in the near-term.
What We Know About Fugitive Methane
According to the most recent estimate from the U.S. Environmental Protection Agency (EPA), more than 6 million metric tons of fugitive methane leaked from U.S. natural gas systems in 2011. In terms of climate impacts, that's equivalent to 432 million metric tons of carbon dioxide per year over a 20-year time horizon -- that's more than carbon dioxide emissions from all sources in Australia in 2011. It's also more greenhouse gases than from all U.S. petroleum refining, iron and steel, cement, and aluminum manufacturing facilities combined.
Methane leaks are estimated to be around two to three percent of total production -- though there is troubling uncertainty around the total. The biggest source of emissions is from new wells. Starting up a new gas well is like popping a Champagne bottle: it releases gas under pressure quickly and with force. Emissions can also leak out through the production process, if proper safeguards are not in place.
Shale gas is not only expanding in the United States, it's on the rise around the globe. Large natural gas reserves have been found in China, South Africa, Turkey, Poland, the United Kingdom, and elsewhere. According to official Chinese estimates, the country may have 886 trillion cubic feet of shale gas -- or nearly three times the United States. Reaching the shale potential in China will take additional technology and consume huge water resources -- significant challenges to be overcome.
Some countries are moving more cautiously. South Africa has just recently lifted a ban on hydraulic fracturing, which had been imposed due to water and air pollution concerns. France currently has a ban. And the European Union is developing a regulatory framework to responsibly address the risks.
The good news is that we have the technologies and know the policies to rein in these emissions. In 2012, the EPA passed emissions standards for the oil and gas industry. According to the World Resources Institute, these will cut the greenhouse gas emissions from natural gas -- mostly methane -- by 13 percent by 2015 and up to 25 percent by 2035.
The EPA can also take action under its existing authority to reduce emissions by directly addressing methane. Together, these steps can help ensure that methane leakage stays below one percent of total production, keeping the climate impacts of natural gas lower than coal and diesel fuel.
Curtailing methane emissions makes good sense from both an economic and climate perspective. Many of the investments in emissions reduction technologies can be paid back in less than three years. Indeed, reducing leakage could save industry more than a billion dollars in lost methane.
Some companies and environmental groups, including major players like Shell and the Environmental Defense Fund, are working together to create best practices. By demonstrating that cost-effective technologies are available and will get more methane to its destination, other companies will hopefully decide to follow.
But we cannot depend on voluntary industry actions and market structures alone. Like investments in energy efficiency, which can pay for themselves quickly but are often not acted upon, there are a number of barriers to action. For example, service companies, processing plants, and pipeline companies don't own the gas and therefore lack economic incentives to invest in equipment to reduce leakage.
With more than 6,000 natural gas producers in the United States alone, it's important to have smart policies -- both cost-effective and flexible -- to ensure that industry has incentives to limit methane emissions.
Shale gas isn't a low-emissions fuel source yet. But by putting the right policies and technologies in place, it could be headed that way.
This post originally appeared on Bloomberg.com.