🌏 Inside methane monitoring’s big moment

The US is drilling into methane emissions, with new EPA regulations stemming from the IRA taking effect next week. On May 7th, new rules for oil and gas companies will:

• tighten emissions abatement and leak monitoring requirements for new sources by mandating leak repair within 15-30 days and regulating the types of devices that are acceptable for monitoring methane leakage
• allow third parties to report “super-emitter” events, triggering a costly new methane tax on O&G emitters starting at $900/ton of released methane, ramping to $1,500/ton by 2026
• phase in regulation of existing petroleum infrastructure for the first time, including additional requirements for gas processing plants

This spate of regulations, announced in December, has spurred investment in the methane monitoring, reporting, and verification (MRV) space, as we explored earlier this year. The improvement and commercialization of MRV technologies present a Catch-22: They’re leading to new accountability and actions from methane emitters, but also revealing that far more methane is being released into the atmosphere than previously known. For example, one recent study found major U.S. oil fields emit three times as much methane as official estimates, while another showed that German coal mines emit 184 times more methane than what’s been reported.

Here, we’ll dive even deeper into the challenges that methane presents, and monitor the solutions on the ground (and in the air). 

All methane gas, no brakes

Despite being more potent than carbon dioxide, methane receives far less attention and even less funding — <1% of total climate finance flows, while accounting for nearly a third of global warming. The oft-cited stat is that one ton of methane has ~28 times the warming effect of CO2 over 100 years, but it’s 84 times more in the first 20 years. Plus, high concentrations of the odorless, invisible gas are poisonous, so overexposure affects workers and communities. But this invisible cloud has a visible silver lining: Reducing methane emissions will have a greater immediate (and long-term) impact on climate change over the next 20 years than comparable CO2, and help prevent exacerbating climate feedback loops.

Anthropogenic methane emissions primarily come from agriculture and energy (with waste a smaller but still significant source). Agricultural emissions, primarily driven by livestock, require complex biological and logistical mitigation solutions. Energy is more straightforward: Most emissions stem from three actions — leaking, flaring, and venting — that account for ~25% of all methane released by human-caused activities. 

• Leaking (“fugitive emissions”) occurs primarily from natural gas escaping due to poor maintenance and broken equipment.
• Flaring occurs when unsafe pressures build up during extraction, so gas is released and ignited to turn methane into carbon dioxide. Research suggests flaring has ~91% efficiency — but near-continuous flaring at many drill sites means this quickly adds up.
• Venting is the intentional release of natural gas without ignition, generally due to faulty flaring equipment and unlit flares, but sometimes intentionally if operators lack the infrastructure to sell or equipment to flare it.

Oil and gas operators have typically reported methane emissions on monthly, quarterly, or even annual bases, but largely used rough calculations and estimations. Now, new MRV technologies allow for continuous, real-time monitoring, detecting both "super-emitter events" and smaller, cumulative leaks. This can unlock more than just emissions benefits: By identifying and fixing leaks, operators can capture valuable methane, and increase revenue — around $1bn in methane literally goes up in smoke annually. With recent support like the DOE and EPA’s $1bn investment in MRV technology, regulatory and technological tailwinds are blowing through the market.

Changing the game

Before these regulations, the ones buying this information were mostly watchdogs — regulators, journalists, other interested parties. With new regulations in place, the customer universe will expand to the emitters themselves — the operators of these assets now on the hook to curb methane emissions.

Asset managers are another important potential buyer, as they own equity in these companies who could be adversely impacted by running afoul of the regulations (e.g. stocks could take a hit if a company is found liable for exceeding methane thresholds and must pay a meaningful penalty). 

Monitoring the solution set

Solutions from incumbents and startups alike have entered the market to meet the needs of the different stakeholders in the methane value chain, from O&G majors to small players to governments. Factors to consider when choosing from the methane solutions menu:

• Data granularity. Different technologies enable different levels of granularity. Those with higher coverage ranges tend to be less able to pinpoint specific sources but can provide useful insights into regional trends.
• Price point. You get what you pay for. Options span from pricey to low-cost, though quality and depth of data often track cost.
• Labor. Getting humans out to remote O&G sites or pipelines can be expensive and/or dangerous. 
• Modality. Aerial tech can scan wider areas, portable ground-based tech can find leaks at the valve, and fixed systems can detect when leaks start. Modalities can also integrate and complement each other for highest coverage level.
• Technology type. Companies use different technologies at varying maturity levels, from imaging (rely on capturing visual or infrared signatures of methane) to spectroscopy-based (measure methane concentrations based on the absorption of specific wavelengths of light) to chemical detection (involve reactions or processes that produce detectable signals in the presence of methane).

Types of solutions include:

Handheld: Handheld devices are mature technology used for detecting methane at a range of 0.5 to 150 meters. These portable, battery-operated units are becoming increasingly sophisticated, often coupled with advanced software.

• Good for: High granularity but more limited range / coverage.  Useful in complementing broader aerial monitoring systems by providing detailed local data. Prices vary by quality and capability.
• Key innovators: Companies like FLIR use Optical Gas Imaging (OGI) in cameras to provide real-time visualizations of the infrared light of nearby methane. Xplorobot’s handheld devices combine OGI with laser spectroscopy to measure precise methane concentrations. Others include Atmio, ChampionX, and Flogistix.

Fixed: Like home carbon monoxide alarms, fixed methane detectors can be installed on or near key oil and gas assets to continuously monitor emissions.

• Good for: High granularity, similar to handheld, but can be networked across broad areas to extend range, especially for remote locations where manual surveys are expensive. Enable more continuous monitoring, so can flag when leaks start.
• Key innovators: Companies like Kuva Systems and Qube use a continuous infrared imaging system to monitor operations. LongPath Technologies uses laser-based monitoring sensors for continuously monitoring infrastructure, while QLM uses Lidar. Other companies include Puloli, Earthview, TrelliSense, Project Canary, and Andium.

UAV/drone: Emerging in the oil and gas sector, uncrewed aerial vehicles (UAVs), aka drones, are increasingly used for tasks like pipeline inspections and accessing difficult offshore assets. Capable of low-altitude flight and navigating around obstacles, drones enable detailed surveys of hard-to-reach infrastructure.

• Good for: High granularity and broad detection coverage, with ability to pinpoint emission sites and detect super-emitter events for major O&G players. Can be expensive to operate and require operational support. 
• Key innovators: Companies using autonomous aerial vehicles to monitor oil and gas pipeline operators include Flyscan, which uses lasers. FlyLogix, SeekOps, and Sniffer Robotics have created drones to do the same. Other companies include ChampionX and Flogistix.

Crewed aircraft: Crewed aircraft equipped with sensors such as laser or infrared spectroscopy can quickly survey large, remote areas for methane concentrations using direct air sampling or remote sensing with location-tracking.

• Good for: Data collection across wide areas. Can cover larger areas more quickly than uncrewed aircraft, and can carry heavier sensing equipment, including advanced spectroscopy tools. More labor- and cost-intensive than drones.
• Key innovators: Companies like ChampionX use single-engine propeller aircraft (helicopter and small planes) equipped with advanced technology, including wavelength-scanned cavity ring-down spectroscopy. Insight M (formerly Kairos Aerospace), meanwhile, flies their planes over dense oil & gas regions to identify methane using their spectrometry-based technology. Other companies include Bridger Photonics.

Satellite: Orbiting satellites use spectral imaging technologies like hyperspectral imaging to detect methane over far-reaching area. They measure methane by analyzing reflected sunlight or Earth's infrared light, though weather can impact accuracy. Different satellites vary in granularity and precision, but the tech is improving rapidly.

• Good for: Coverage of an entire region, far from emission sources; many customers can pay for each scan, or continuous scanning, so high total cost is divided between several customers.
• Key innovators: Private companies pioneering methane satellites include the later-stage startup GHGSat. Nonprofits like the Environmental Defense Fund and Carbon Mapper have also launched their own satellites, which will help boost third-party super-emitter reporting and also offer publicly-accessible emissions data.

Beyond monitoring 

Data analytics. New startups are emerging to analyze and interpret the vast data from various sources, creating actionable insights. Companies like Kayrros, Sensorup, Beyond AI, Orbio, and Highwood Emissions Management use AI and machine learning for data aggregation, analysis, predictive optimization, and reporting, including for EPA compliance.

Abatement. Meanwhile, other hard-tech companies have cropped up to help companies abate these emissions. Innovators include BioSqueeze, which developed a biomineralization solution to seal well leaks. Crusoe Energy Systems captures flared methane (EPA regulations on flaring are on the horizon) to power modular data center infrastructure. Qnergy uses captured methane to power commercial generators. Frost Methane converts methane from emission sources such as coal mines into carbon offsets.

What’s next?

The new US regulations complement the patchwork of international rules and voluntary commitments in the oil and gas sector:

• The European Commission has established industry methane MRV rules, with plans to hold gas imports to methane intensity standards by 2027. China, Japan, and South Korea are considering similar measures. 
• Globally, over 130 companies covering 40% of oil and gas production have joined the UN-backed Oil & Gas Methane Partnership 2.0 (OGMP 2.0) to standardize methane emissions reporting. 
• Over 50 companies pledged at COP28 to curb nearly eliminate methane emissions and end routine flaring by 2030, although such voluntary commitments lack enforceability. Organizations like MiQ have begun certifying compliance.

Key takeaways

• No “winner-take-all.” Adoption is still unfolding and technologies are evolving in the space. Different customers have varying needs, which means technologies with distinct use cases can coexist and be effective — and there’s a lot of wiggle room for consolidation among players.
• Measuring it means managing it (hopefully). As the saying goes. With the influx of data, regulators aim to compel emitters to identify their methane emissions and address them with abatement measures. The IEA estimates that over 75% of methane emissions in the sector can be reduced with existing technologies at no net cost, given the recovered methane is valuable and can drive more revenue. 
• The inevitability of it all. The new EPA regulations have already been challenged in court by more than 20 Republican-led states, but notably, most major oil and gas companies haven’t joined the lawsuit. It could be that they’re all-in on the OGMP 2.0 and COP28 pledge. Or it could be that they just see the writing on the wall, at least for operating internationally. But not all O&G companies will be able to respond equally, and smaller operators may need to play catch up.
• Emission impossible. By monitoring more methane in oil and gas, there’s the potential to lift all boats. MRV technologies have already revealed that other industries also underestimate their methane emissions (one study found that US landfills emit at least 40% above reported levels). They could extend to emissions from landfills, wastewater, and cattle production, areas that have largely escaped scrutiny.

Thanks to Emma Kulow from AccelR8, Lauren Singer from Overview Capital, Jon Goldstein from EDF, and Oliver Booth from Sightline Climate for their super contributions to this newsletter.