Bloomberg NEF Overestimates Methane Emissions Cuts Needed by Oil & Gas Producers to Avoid Methane Fees

The Inflation Reduction Act (IRA) was signed into law by President Biden in 2022 and will have a significant impact on the oil and gas industry.

This legislation contains a charge on excess methane emissions from oil and gas facilities that emit over 25,000 metric tons of carbon dioxide equivalent per year. The threshold for methane is 0.20% of the natural gas sent to sales for oil & gas producers. This new legislation has implications for a number of producers who have much to accomplish in methane emissions reduction by 2024 to achieve a methane intensity level below the excess threshold.

With various intelligence and research providers publishing estimates on methane emissions from the oil and gas industry and associated costs to reduce emissions, it is crucial to have access to accurate and reliable data and analytics. Recently, a publication by Bloomberg NEF caught the attention of the ESG Dynamics team and we have compared ESG Dynamics’ internal analytics to the publication results. While we found alignment on some producers, we observed overestimation of methane emissions by Bloomberg NEF on most oil and gas producers referenced in the publication.

Chesapeake Energy and Continental Resources reported methane emissions below the excess methane emissions threshold in 2021, alike Pioneer Natural Resources and EQT Corp., and should have been shown to need no further methane emissions reduction to meet the excess threshold. This contrasts significantly to Bloomberg NEF and could provide mis-leading conclusions and related action. Furthermore, ConocoPhillips, TotalEnergies, Occidental (Oxy) and ExxonMobil all had some work to do, however, percent methane emissions cuts needed to reach the threshold were overestimated by 28 to 188%. Finally, Endeavor Energy, Diversified Energy, Pioneer Natural Resources and EQT Corp. estimates were comparable.