The year, following Russia’s invasion of Ukraine, saw a rush for natural gas. This demonstrates the urgent need for hydrocarbons for power generation and heat.
Europe is still struggling to fill reserves. They have resorted to harvesting wood from deforestation to create biofuels, but they still suffer from the astronomical prices of natural gas. Now, American energy from states such as Texas, Louisiana, and Pennsylvania is helping save Europe from the brink of disaster.
Let’s Pull Back and View the Whole Picture: The Urgent Need
While the 2022 rush for gas was crisis-driven, there is a broader shift to produce cleaner, more sustainable energy sources that are also reliable and readily available to provide energy security. Natural gas has a huge opportunity to solidify its place in the evolving energy mix. However, it will need to meet high standards of environmental performance.
Financial incentives, shifting consumer preferences, the need for climate accountability, and pending U.S. and E.U. regulations have made it imperative for energy companies to reduce methane emissions and improve their environmental footprint.
While war and energy security concerns may have dominated the headlines and driven gas purchases, last year also saw an increased demand for Responsibly Sourced Gas (RSG) – low-methane gas coupled with high-quality environmental attribute data. Major European gas buyers, such as ENGIE, Uniper, and industrial companies, have entered into RSG contracts. Thus, the number of companies seeking certification has increased.
We can now differentiate a commodity by providing contextual details about the molecule’s production. This includes information pertaining to water usage, methane intensity, community impact, and more. Furthermore, the rise of registries, like Xpansiv and EarnDLT, to tokenize and transact attributes digitally has created a pathway for natural gas attributes to trade independently from physical gas.
A New Market Has Now Unlocked: America’s Energy
The impact of Russia’s invasion has not only highlighted the importance of U.S. energy supply to domestic and global markets but also opened new markets for U.S. natural gas (hence, the urgent need for America’s energy). Now, the world has reframed its view on American energy. This is especially relevant to all of us in Texas, a major gas-producing state that is home to many LNG terminals.
Market action, where gas buyers seek specific methane, water, and sustainability thresholds, has already inspired rapid change. Going the extra mile, leading operators in the Marcellus, Haynesville, and DJ Basins use accurate methane measurement to minimize emissions and participate in budding low-methane gas markets on digital registries. Doing so is not only good for the climate, but is also great for business.
Russia’s aggression and the world’s swift response underscored the essential nature of energy. But expectations have shifted – we no longer operate with an energy-at-all-cost mindset. Companies should act on market signals by slashing methane so the U.S. can position itself as the world’s natural gas supplier. Already, more than a quarter of U.S. daily gas production has undergone some form of third-party primary certification.
As one energy executive summarized at CERAWeek, “the industry is judged by its dirtiest molecule, so let’s clean them all up.” I’d like to see Texas lead the way from here.
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Tanya Hendricks resides in Austin and is Chief Commercial Officer at Project Canary, an environmental data measurement and assessment firm. ProjectCanary.com
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