As Shell gambles on gas, leaks loom over clean credentials

Bloomberg

After spending $50 billion on the world’s biggest bet on natural gas, Royal Dutch Shell Plc is at the forefront of Big Oil’s efforts to clean up its act. But what if the constant, insidious leaks of gas into the atmosphere actually make the fuel more polluting than coal?
Methane, the main component in natural gas, can seep into the air at various points between extraction and delivery. Trapping more heat than carbon dioxide, it’s a potent contributor to global warming. Yet credible data on the volumes released is scarce, and that’s spurring pressure from investors.
“This is such an important issue,” said Tim Goodman, a director at asset manager Hermes EOS who has urged oil companies to address climate matters in their quarterly updates. ”The less methane is lost to the environment, the less dirty methane and natural gas is, and the longer gas might be a viable fuel.”
Shell last year bought BG Group Plc for $54 billion as it intensified its focus on gas. While the fuel emits half the CO2 of coal when burned, it becomes more polluting than coal if just 3.5 percent of the methane escapes, according to Shell. The company acknowledged its data on leaks needs to change if it’s to appease policy makers and shareholders at a time when greener and ever-cheaper alternative energies are attracting investors around the world.
This is “a very important point — how strong really are the environmental credentials of natural gas if you take into account fugitive emissions of methane?” Shell Chief Executive Officer Ben van Beurden said in November. “We’re doing all the work that we need to do to understand.”
Energy companies worldwide are facing increasing pressure from investors to manage climate risks and disclose the effects of carbon regulations on their business. Exxon Mobil Corp., the biggest driller by market value, said last week it will start to publish such analyses, reversing its earlier opposition after shareholders held a vote to push for more detailed disclosure on the issue.

UNCERTAIN DATA
Unknown leaks, and practices like venting into the atmosphere, probably account for 70 percent of methane emissions from the oil and gas industry, according to the International Energy Agency. While many large companies do report how much they believe they’re emitting, there isn’t a consistent methodology, and the IEA says it’s uncertain about the data.
Methane leaks aren’t a new problem, but they’re increasingly under the spotlight as gas is touted as a “transition” fuel amid the global shift to cleaner energy. The expansion of shale-gas production in the US, where Shell has interests in the Marcellus and Permian basins, also has added urgency to boosting the reliability of reported emissions.