CONCORD, MA - WASHINGTON, DC

1225 Eye Street NW, Suite 200

Washington, DC 20005

202-525-5770
www.mjbradley.com

MJB&A Issue Brief ◼ October 23, 2018

Methane Emissions Intensity Targets Adopted by Natural Gas Producers

Over the past several months, two natural gas producers, as well as an international oil and gas coalition, have
announced methane emissions intensity targets. These entities join the ONE Future Coalition in committing to meet
an intensity target. Methane emissions intensity refers to the “leak rate” of gas production, or the ratio of methane
emissions to natural gas produced. Organizations set methane emissions intensity targets with a goal of minimizing
leaks of methane, a potent greenhouse gas (GHG).
This Issue Brief reviews guidance developed by the Environmental Defense Fund (EDF) for establishing a methane
emissions intensity target, summarizes intensity targets established by Shell and BP, and reviews intensity targets
agreed to by ONE Future and the Oil and Gas Climate Initiative (OGCI). The targets range from 0.20 percent to
0.36 percent, calculated as methane emitted per unit of natural gas produced or marketed. Net methane emissions
from natural gas systems, as reported in the U.S. Environmental Protection Agency (EPA) Greenhouse Gas
Emissions Inventory (GHGI), were about 1.30 percent of U.S. natural gas production in 2016.1

Methane emissions targets

There are two main methane emissions target types: absolute and intensity. Absolute targets set a limit on total
methane emissions, independent of production rates or pipeline throughput. These often take the form of percentage
reductions in methane emissions from a set baseline. Absolute targets can guarantee certain environmental
outcomes, as it is possible to calculate the exact emissions saved compared to the specified baseline year.
Intensity targets set an emissions rate expressed as a percentage of production or throughput, providing a way to
measure how efficient an operator is at preventing methane leakage. This means that the resulting emissions quantity
can vary depending on how much natural gas is produced. As a result, there is less certainty in specific total emission
reductions. Emissions intensity targets, however, provide natural gas producers with flexibility to accommodate
changes in production in response to market forces, divestitures, or acquisitions, while also providing a way to
measure the impact of deploying methane minimizing strategies and practices.
The recent announcements summarized in this brief are focused on intensity targets.

EDF perspective on methane emissions intensity targets

In Taking Aim: Hitting the mark on oil and gas methane targets, EDF calls on companies to commit to a 75 percent
reduction in methane emissions from oil and gas operations on an absolute basis, but it also outlines its perspective
on the key elements of intensity targets for the oil and gas sector. It proposes that methane emissions intensity
targets be calculated as2:

𝑇𝑜𝑡𝑎𝑙 𝑚𝑒𝑡ℎ𝑎𝑛𝑒 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑓𝑟𝑜𝑚 𝑜𝑖𝑙 𝑎𝑛𝑑 𝑔𝑎𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛

𝑇𝑜𝑡𝑎𝑙 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛

1
Calculated by MJB&A using estimated Natural Gas Systems emissions reported in EPA’s 2018 GHGI and gross natural
gas production data reported by the Energy Information Administration, this estimate does not include the production of
associated gas or emissions from the production of associated gas, which EPA reports as part of Petroleum System
emissions.
2
Environmental Defense Fund, “Taking Aim: Hitting the mark on oil and gas methane targets”, April 2018. Available at:
https://www.edf.org/sites/default/files/documents/EDF_TakingAim.pdf

M.J. Bradley & Associates, LLC | Strategic Environmental Consulting Page | 1

EDF proposes that its calculation be used by upstream oil and gas operations. The International Energy Agency
(IEA) estimates these sources are responsible for more than three-quarters of the natural gas industry’s methane
emissions. In its guidance, EDF recommends that emissions from all oil and gas production, including stranded and
marketed associated gas, be included in the calculation of an intensity target.
EDF estimates that a 75 percent absolute reduction in methane emissions is feasible with today’s technology and
practices and proposes a 0.20 percent leakage rate as an emissions intensity target for production that provides
similar methane emissions reductions to the 75 percent absolute target.

Companies with individual intensity targets

This year, two companies, Royal Dutch Shell in September and BP in April, announced intensity targets for their
oil and gas operations.
Royal Dutch Shell
On September 17, 2018, Shell announced a target to maintain methane emissions intensity below 0.2 percent by
2025.3 The target applies to all upstream oil and gas assets for which Shell is the operator. Emissions considered in
the intensity target include fugitive, venting and incomplete combustion emissions.
The equation Shell uses to calculate intensity is:
𝑇𝑜𝑡𝑎𝑙 𝑚𝑒𝑡ℎ𝑎𝑛𝑒 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑓𝑟𝑜𝑚 𝑆ℎ𝑒𝑙𝑙 𝑜𝑝𝑒𝑟𝑎𝑡𝑒𝑑 𝑜𝑖𝑙 𝑎𝑛𝑑 𝑔𝑎𝑠 𝑎𝑠𝑠𝑒𝑡𝑠
𝑇𝑜𝑡𝑎𝑙 𝑆ℎ𝑒𝑙𝑙 𝑜𝑖𝑙 𝑎𝑛𝑑 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑚𝑎𝑟𝑘𝑒𝑡𝑒𝑑
Shell reports that its current leak rate ranges from 0.01 percent to 0.8 percent across its oil and gas assets, and that
its North American shale operations leak rate is less than 0.25 percent methane emitted per volume of natural gas
produced. These reported estimates include methane emissions from operated facilities supporting natural gas
production. Currently, emissions are calculated using standard emissions factors and actual measurement. By 2025,
Shell announced that operated assets will implement more robust quantification methodologies.
BP
In April 2018, BP announced a methane emissions intensity target of 0.2 percent and committed to holding intensity
below 0.3 percent.4 The equation BP is using to calculate intensity is:
𝑇𝑜𝑡𝑎𝑙 𝑚𝑒𝑡ℎ𝑎𝑛𝑒 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑓𝑟𝑜𝑚 𝐵𝑃 𝑚𝑎𝑟𝑘𝑒𝑡𝑒𝑑 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠
𝑇𝑜𝑡𝑎𝑙 𝐵𝑃 𝑚𝑎𝑟𝑘𝑒𝑡𝑒𝑑 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠
BP reports that this intensity accounts for more than 90 percent of methane emissions from BP-operated oil and gas
assets. Not included in the company’s calculation are methane emissions resulting from gas that is only reinjected,
recycled or associated with assets where BP does not produce the gas. Emissions from oil production facilities with
stranded gas are also not included.5

3
Royal Dutch Shell, “Shell announces methane emissions intensity target for oil and gas assets”, Press Release, September
17, 2018. Available at: https://www.shell.com/media/news-and-media-releases/2018/shell-announces-methane-
emissions-intensity-target.html
4
BP, “Tackling Methane”, April 2018. Available at: https://www.bp.com/en/global/corporate/sustainability/climate-
change/tackling-methane.html
5
Ben Ratner (EDF), “Sitting down with BP to discuss its new methane target”, EDF Energy Exchange, April 16, 2018.
Available at: http://blogs.edf.org/energyexchange/2018/04/16/sitting-down-with-bp-to-discuss-its-new-methane-target/

M.J. Bradley & Associates, LLC | Strategic Environmental Consulting Page | 2

Coalitions with intensity targets
Earlier this year, OGCI announced participating companies would adopt a collective intensity target, becoming the
second industry initiative, after ONE Future, which was formed in 2014, to adopt a collective intensity target for
production operations.
Oil and Gas Climate Initiative (OGCI)
OGCI is a voluntary, CEO-led initiative with a goal of lowering the GHG footprint of member companies, including
BP, Eni, Equinor, Chevron, CNPC, ExxonMobil, Occidental Petroleum, Pemex, Petrobras, Repsol, Royal Dutch
Shell, Saudi Aramco and Total. In September 2018, OGCI announced a target to reduce the collective average
methane intensity of its aggregated upstream gas and oil operations to below 0.25 percent by 2025, with ambition
of achieving 0.20 percent by the same year.
The OGCI methane emissions intensity target is calculated as6:
∑ 𝑇𝑜𝑡𝑎𝑙 𝑚𝑒𝑡ℎ𝑎𝑛𝑒 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑓𝑟𝑜𝑚 𝑎𝑙𝑙 𝑂𝐺𝐶𝐼 𝑐𝑜𝑚𝑝𝑎𝑛𝑖𝑒𝑠
∑ 𝑇𝑜𝑡𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡𝑒𝑑 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑔𝑎𝑠 𝑓𝑟𝑜𝑚 𝑎𝑙𝑙 𝑂𝐺𝐶𝐼 𝑐𝑜𝑚𝑝𝑎𝑛𝑖𝑒𝑠
OGCI reported that it chose to set an intensity target as opposed to an absolute target because the intensity
calculation remains relevant even if there are changes to the OGCI asset make-up.
Intensity is calculated for upstream operations, from wellhead to point of sale, for marketed oil and/or gas where
OGCI members have operational control and for which each company has specific reporting routines. Gas
liquefaction, production drilling and completions are included in the upstream scope. Refining, shipping,
transmission, distribution, and exploration drilling activities are not included. All methane emissions at assets for
which OGCI companies have some ownership and are operators are included – there is no division based on equity
of entitlement shares. Assets where an OGCI company has an equity interest but does not function as operator are
not included.
Based on the assets included in the scope in the given year, OGCI will calculate and track intensity annually leading
up to the 2025 target year.
In addition to being part of the OGCI commitment, ExxonMobil and Eni have committed to company-specific
emission targets. ExxonMobil’s target is an absolute 15 percent decrease in methane emissions and a 25 percent
reduction in flaring by 2020, compared to a 2016 baseline. Eni’s target is to reduce fugitive upstream methane
emissions 80 percent by 2025, compared to a 2014 baseline.
ONE Future
Launched with eight companies in 2014, ONE Future is currently a group of 16 natural gas production, transmission
and distribution companies that have agreed to voluntarily reduce methane emissions across the supply chain.
Membership includes Antero Resources, Apache, Berkshire Hathaway Pipeline Group, BHP, Dominion Energy,
Equinor, EQT, Hess, Kinder Morgan, National Grid, Jonah, Southern Company Gas, Southwestern Energy, Summit
Utilities, and TransCanada.
ONE Future has a broader scope than the other announcements and is committed to developing segment-specific
methane emissions reduction goals that, when combined, will reduce the average annual rate of methane emissions

6
Saphina Waters (OGCI), “Methodological Note for OGCI Methane Intensity Target and Ambition”, September 24, 2018.
Available at: http://info.oilandgasclimateinitiative.com/blog/methodological-note-for-ogci-methane-intensity-target-and-
ambition

M.J. Bradley & Associates, LLC | Strategic Environmental Consulting Page | 3

across collective operations to one percent (or less) of production by 2025. The equation used to calculate intensity
is7:
𝑇𝑜𝑡𝑎𝑙 𝑚𝑒𝑡ℎ𝑎𝑛𝑒 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 𝑎𝑐𝑟𝑜𝑠𝑠 𝑐𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑣𝑒 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠
𝑇𝑜𝑡𝑎𝑙 𝑔𝑟𝑜𝑠𝑠 𝑔𝑎𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛
To achieve this goal, ONE Future developed segment-specific intensity targets from production and gathering,
processing, transmission and storage, and distribution. The segment-specific targets in 2025, as a percent of gross
production range from 0.11 percent to 0.36 percent as shown in Table 1.
Table 1. ONE Future Intensity Targets by Segment
Segment 2012 Methane Intensity 2020 Intensity Goal 2025 Intensity Goal
Production and Gathering 0.55% 0.46% 0.36%
Processing 0.18% 0.15% 0.11%
Transmission and Storage 0.44% 0.37% 0.30%
Distribution 0.26% 0.24% 0.22%

ONE Future includes emissions from upstream assets producing associated gas, like gas co-produced from well
sites primarily producing oil, but apportions emissions from such assets based on the average energy content of the
products. ONE Future attributes 33.5 percent of methane emissions from oil wells to the natural gas value chain.

Conclusion
Including natural gas produced by ONE Future members, OGCI members, and Shell, companies responsible for
more than 20 percent of U.S. marketed natural gas production in 2017 have committed to individual or collective
methane emission intensity targets. The majority of these commitments have been made in 2018, including
announcements by BP, Shell, and OGCI, and the addition of companies to ONE Future. Over the next year,
companies and organizations are expected to start reporting data demonstrating progress toward meeting the targets.
As the information becomes publicly available, it will be important to understand the scope of the included
emissions and differences in the methodology for calculating emissions intensity.

7
ONE Future, “Methane Emissions Estimation Protocol”, August 2016. Available at: http://onefuture.us/wp-
content/uploads/2018/05/ONE-Future-Methane-Intensity-Protocol-v-1-2016.pdf

M.J. Bradley & Associates, LLC | Strategic Environmental Consulting Page | 4

Contacts

Tom Curry
Senior Vice President
tcurry@mjbradley.com

Nicole Pavia
Senior Policy Analyst
npavia@mjbradley.com

About Us
MJB&A provides strategic consulting services to address energy and environmental issues for the private, public,
and non-profit sectors. MJB&A creates value and addresses risks with a comprehensive approach to strategy and
implementation, ensuring clients have timely access to information and the tools to use it to their advantage. Our
approach fuses private sector strategy with public policy in air quality, energy, climate change, environmental
markets, energy efficiency, renewable energy, transportation, and advanced technologies. Our international client
base includes electric and natural gas utilities, major transportation fleet operators, investors, clean technology
firms, environmental groups and government agencies. Our seasoned team brings a multi-sector perspective,
informed expertise, and creative solutions to each client, capitalizing on extensive experience in energy markets,
environmental policy, law, engineering, economics and business. For more information we encourage you to visit
our website, www.mjbradley.com.

M.J. Bradley & Associates, LLC | Strategic Environmental Consulting Page | 5