Rice: EQT Walking the Walk on Natgas Emissions, Despite Politics

EQT Corp., the largest natural gas producer in the U.S., is on track to hit its net-zero target by 2025, according to CEO Toby Rice.

The Pennsylvania-based company’s carbon footprint shrank from just over 1 million tons to about 200,000 tons as it overhauled operations. One of the biggest methane emissions reduction initiatives came with the elimination of thousands of pneumatic devices, which have been identified by the U.S. Environmental Protection Agency as one of the biggest sources of vented emissions from the oil and gas industry.

“We eliminated all of those devices across our program, over 9,000 of them, which is a big task. But we did it quickly in less than 18 months, and we did it cost effectively for a cost of less than $30 million,” EQT CEO Toby Rice said Sept. 18 during the Gastech conference in Houston. “When you do the math, the abatement cost was less than $10 a ton.”

Other steps taken include carbon offsets; drilling wells faster, which Rice said impacts the company’s footprint; conducting aerial monitoring across the entire Appalachian Basin, watching for other emitters across an area he says is equivalent to the size of France; and partnering with Context Labs to generate a full cycle carbon intensity score.

“We cannot let the emissions associated with making our product overshadow the emission reduction benefits of people using our product,” Rice said.

Companies and countries across the world are working to reduce global greenhouse gas (GHG) emissions to slow global warming. While natural gas is considered a cleaner-burning fuel compared to coal and oil when combusted, the potential for methane leaks is an environmental concern. Methane, the primary component of natural gas, is a potent GHG.

Reducing methane emissions is not without challenges, particularly in areas where the technology, knowhow and maintenance culture are missing.

Politics intrude

Reducing methane emissions is achievable, Rice said, adding that the steps taken by EQT can be taken by others. The company is discovering and sharing best practices.

“ESG should be open source within industry,” he said.

Operational execution is not the greatest challenge the industry is facing, he said. Rather, “it is the fact that political forces overwhelm the market forces, and that is creating some really difficult operating environment[s] for energy producers.”

Geopolitics impacting the energy market is nothing new. But new political risks in the sector have seemingly moved to another level, he said, with the role of natural gas being challenged despite its benefits.

The Biden administration, for example, temporarily paused LNG export approvals to allow for current economic and environmental analysis of export authorizations.

Producing energy has never been more important, whether that’s feeding growing LNG demand or meeting the massive power demand for artificial intelligence data centers, Rice said.

“It’s also never been more difficult … We need to get to a place where the most affordable, most reliable, cleanest energy finds its way to the marketplace,” Rice said. “And that means the political force needs to take a back seat. That doesn’t mean the political force is eliminated completely. I think our leaders have a tremendous responsibility to help drive and steer the markets, and that means they need to set up incentives that will encourage the most affordable, most reliable, cleanest energy to find its way to the marketplace.”

‘Wasting resources’

The oil and gas industry is responsible for about one-fifth of global anthropogenic methane emissions. About half comes from the developing world and primarily from national oil companies, or NOCs, but some international oil companies (IOCs), too, said Zubin Bamji, program manager for the World Bank’s Global Flaring & Methane Reduction (GFMR) Partnership. As the largest financier of global climate initiatives, the World Bank has made reducing methane emissions a priority, he said.

Its initiatives involve establishing the Global Gas Flaring Reduction Partnership by working with Shell and other private sector companies, as well as governments including the U.S. and Norway. The fund was designed to help the developing world address gas flaring, providing technical assistance, he said. The Global Gas Flaring Tracker monitors about 10,000 flares.

“We found that this monitoring of global flaring was really helpful to sort of identify the problem and help many operators understand that this is a lost opportunity. It’s not just about the climate,” Bamji said. “It’s about the economic value being lost, and especially in the developing countries where you’re talking about a huge percentage of people without access to energy. It’s unconscionable to be wasting resources.”

The World Bank announced a new and larger trust fund last year backed by IOCs and governments. In addition to providing technical assistance, funds will be used to finance flaring and methane reduction projects, he said.

“We’re not going to be able to fund all of them, but what we hope to do is provide a … percentage toward the capex of the project to incentivize the operator to do something,” Bamji said. He added, “we’re not naive to think it’s going to be easy. When we go into a lot of countries, the first thing we hear from the government is ‘we don’t even know where to start’” with so many different organizations pursuing various initiatives.

What’s needed?

A massive opportunity is ahead for gas producers, especially in the wake of what instability in Europe.

Russia’s invasion of Ukraine led to drastic cuts of its gas deliveries to the EU, sending prices to record highs. It also increased Europe’s reliance on LNG imports.

“Gas is far more expensive in Europe than the U.S. So, we’re incentivized to reduce methane emissions,” said Didier Holleaux, executive vice president of Engie.

The EU, which emits 6% of global emissions, dropped emissions by more than 31% in 2022 compared to 1990 levels, according to the European Environment Agency. It is targeting a 55% or greater reduction below 1990 levels by 2030.

“Most European countries can claim that they are far below the 0.2% of methane emissions. … We still need to make progress,” Holleaux said. “It really means that now the focus has to turn first to other industries, [and] second other countries.”

That is something the World Bank is working on with a pilot program aimed at equipping developing countries with what is needed to lower emissions. For these countries, allocating funds may be a choice of whether to decarbonize their oil and gas sector or put money into efforts to keep people alive, feed them and make sure homes have electricity, Bamji said.

In engaging with such countries, conversations are on prioritizing what makes sense and the economic value of what is being lost, he added.

Bamji shared an example of a pilot project in one country in which the World Bank is helping with methane and flaring reduction initiatives.

“Once they start repairing leaks and saving this gas, monetizing it and putting it back into distribution, the revenues that are received from that gas that would otherwise be flared or emitted can go back into a pot of money,” Bamji said. “This is a long-term programmatic approach. … These are the ways we can do the financing and be creative.”

Different countries have different challenges when it comes to methane reduction, according to Osama Mobarez, secretary general of the East Mediterranean Gas Forum (EMGF).

Technologies required are proven, “but sometimes the challenge is access to these technologies. In other [countries], conducive policies and regulations are missing,” he said, adding the initiatives are among those the EMGF seeks to address.

Clarity, culture, coal

There are also industry-wide needs. Having clarity on carbon intensity and what should be rewarded is among them.

“There’s a lot of incentives that are put in place, but does anybody really understand all of those incentives and what actually is being rewarded?” Rice asked. “It’s an opportunity for us to streamline and get centered on a carbon intensity standard for the energy products that we produce and incentivize the market to deliver solutions that are better than the carbon intensity average of that specific market.”

Having a standardized way to quantify the amount of emissions being emitted is another challenge, according to Paul Krishna, chair of Ipieca, a global oil and gas association that strives to advance environmental and social performance in energy.

He added there has been a lot of work by natural gas producers to reduce emissions. However, “when you move further down the value chain into the transmission sector, those emissions probably haven’t come down as fast. So that’s probably going to be another focus area as people look at the entire value chain.”

Technology, financing and measurements are all prerequisites for reducing methane, Holleaux said. “But we should go through a cultural change” in countries and companies.

The person responsible for maintenance work should be rewarded as well as the person responsible for increasing production, he said.

In countries such as the U.S. and Europe, “people know the importance of painstakingly changing equipment, making sure that everything is conformed to the policy of the country,” Holleaux said. “But in many other places, it’s not easy.”

Continuing to replace coal could also have tremendous impact on reducing emissions.

Rice pointed out how methane emissions climbed in China and Europe when they increased coal mining to help meet energy needs.

“It would take 170 Bcf a day to replace all of the coal that’s being consumed in the world today, 170 Bcf a day,” Rice said. “That’s almost three and a half times larger than the total LNG market today.”