Natural gas is a fungible commodity by design and does not contain any distinguishing attributes depending on where or how it is produced. Market participants are increasingly calling for differentiation among natural gas which would help identify the environmental profile that each molecule of CH4 carries with it along the value chain. Much of the discussion on this topic currently focuses on differentiation of natural gas by relative “greenness” — as defined by the amount of methane emissions across the value chain.
G&A would suggest that this is only one aspect of differentiation that is likely to crop up in coming years. Methane emissions created in production and transportation through leaks or venting are certainly a black eye for the industry, given methane’s status as a powerful greenhouse gas. Improved monitoring of methane release in the upstream and midstream sectors is one important step in distinguishing various sources of natural gas and convincing the wider public of its superior climate attributes.
Other areas in which natural gas differentiation can occur through relative carbon intensity of its production process (conventional versus fracked gas, geological differences in respective shale plays). Finally, a premium market for biogas/renewable natural gas (produced in landfills or feedlots) or green hydrogen-blended natural gas is likely to emerge on top of the stratums created by the various production of conventional natural gas. It is on the industry to voluntarily take on these necessary steps before the order comes in the form of government regulation — “responsible” natural gas is the path forward.
