Will Companies Pay Higher Prices for RNG, RSG, or Carbon-Neutral LNG?
If you have even the most basic education in economics (Econ 101) you will have come across the concept of commodities–things like gold, silver, corn, soybeans, oil, and (yes) natural gas. A commodity is something that no matter who produces it, the product itself is the same. A molecule of methane (CH4) is a molecule of methane, no matter who or how it gets produced. Consequently, the only factors that drive price for a commodity are availability and whoever has the lowest cost. Efforts to pretty up a commodity like natgas by claiming it is “responsibly sourced gas” (RSG), or it comes from the butt holes of cows and pigs and chickens (RNG), or is carbon-neutral LNG, are efforts to (in our opinion) snooker people into paying more for what is a garden-variety commodity. Are there people/companies willing to pay more if natgas is produced in a certain way or from a certain source?
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In August 2020 when Range Resources, the very first company to sink a Marcellus well back in 2004, issued its annual Corporate Sustainability Report (CSR), the company laid out a goal of achieving so-called net-zero carbon emissions by 2025 (see 
Seems like everybody is getting “responsible” all of a sudden. Over the past year, we went from nobody hearing of “responsibly sourced gas” (RSG) to now almost everyone clamoring to hop onto the RSG bandwagon. At least that seems to be the case here in the Marcellus/Utica. The nascent RSG movement is rapidly developing. By our count, there are four independent organizations/programs that certify parts of the natural gas industry and provide a certification that gas is responsibly produced and/or sourced. So far there have been at least seven (maybe more) major M-U drillers and several M-U pipeline companies to sign on for RSG certification. We try to make sense of the RSG landscape below…
S&P Global Platts and Xpansiv have joined forces to launch a new benchmark for methane performance in natural gas production in the United States. Methane Performance Certificates (MPCs) allow a U.S. shale producer to sell instruments representing zero methane emission natural gas production. Our immediate impression was to think of medieval-era indulgences sold to atone for sins.
“All aboard! Next stop, responsibly sourced gas.” Both the Marcellus/Utica and the Haynesville shale plays have emerged as the major shale basins for so-called certified natural gas. Certified for what? Certified that the companies extracting it and (now) the companies flowing it through pipelines (i.e. the midstream) are doing so “responsibly.” We guess they did so irresponsibly before, right? What exactly is responsibly sourced gas (RSG) and how is the midstream (and upstream) tackling certification?
Yesterday Antero Resources announced the publication of its 2020 ESG Report (environmental, social, governance) highlighting a focus on People, Performance, and Purpose. The report details Antero Resources’ ongoing commitment to the communities in which it operates, safe operations, environmental excellence, and strong governance. Frankly, we could care less about ESG programs–an attempt to impress people who will never be impressed with the extraordinary efforts made by fossil fuel companies to respect the environment. What caught our eye in Antero’s report is the amount of money the company invested in West Virginia and Ohio, where it drills for liquids and gas.
Yet another entrant in what is becoming a crowded field of programs aimed at reducing methane leaks from natural gas systems. A coalition of major U.S. natural gas operators, including Devon Energy, EQT, Sempra, Southern Company, and Williams, have signed on to something called the Veritas project, created by research firm GTI. How will Veritas reduce methane emissions and how is it different from Project Canary and other similar programs?
We’ve noticed nearly all of the public companies (and many private companies) in the oil and gas space are talking about their ESG (environmental, social, governance) programs. There’s a lot of hot air surrounding ESG programs. How does one separate out fact from fiction? Enverus, the company that produces (in our opinion) the best and most accurate weekly rig count numbers, has a solution. Enverus has developed a new framework/system to compare one oil/gas company’s ESG efforts against its competitors. Of the top 10 best ESG programs in the oil and gas industry are four companies (drillers) in the Marcellus/Utica. Coming in at the #1 position is none other than the largest natural gas driller in the country: EQT.
In April, CNX Resources Corp. announced instead of just blowing smoke about ESG (environmental, social, governance) with pretty slide shows and hoopla, they would donate $30 million to local, underserved communities and populations in the tri-state region (see 
Robert Rapier, a chemical engineer in the energy industry, often writes for both the Forbes.com and OilPrice.com websites. Excellent writer. Rapier recently concluded a four-article series examining Environmental, Social, and Governance (ESG) programs in the oil industry, with an emphasis on how some companies are using hydrogen to improve their metrics. The last article in the series (below) tackles the issue of how hydrogen could/might/maybe become a “game-changer” for midstreamers in the oil and gas space. Our takeaway from reading his article is this…
Another great company succumbs to the siren call of ESG (environmental, social, governance). A week ago we told you that Seneca Resources, the drilling arm of utility giant National Fuel Gas Company (NFG), had signed up with Project Canary to certify its natural gas as responsibly sourced (see