Public confidence in the environmental benefits of natural gas is threatened by evidence of high levels of methane leakage from the oil and gas industry in many regions. A November 2013 study published in the Proceedings of the National Academy of Sciences shows the oil and gas sector in Oklahoma and Texas, where ONEOK has significant operations, may be emitting up to five times more methane than estimated. This study raises questions regarding the adequacy of current Environmental Protection Agency methods for measuring methane emissions.
Methane is a potent greenhouse gas (GHG), with 86 times the climate impact of carbon dioxide over a 20-year period. Studies from Harvard, Cornell, the University of Colorado, and the University of Texas, among others, estimate highly varied methane leakage rates as a percentage of production, creating uncertainty and garnering media attention that ONEOK should do more to proactively address.
Reducing methane emissions in oil and gas production is one of four policies proposed by the International Energy Agency (IEA) that “could stop the growth in global energy-related emissions by the end of this decade at no net economic cost.” All four policies “rely only on existing technologies”, “have already been adopted and proven in several countries”, and “would not harm economic growth in any country or region”.
The IEA highlights the risk of failing to implement best practice measurement and disclosure of methane emissions in its 2012 report “Golden Rules for a Golden Age of Gas.” The IEA recommends oil and gas producers undertake a set of actions “necessary to realise the economic and energy security benefits while meeting public concerns” of unconventional gas development. One of these actions is to “eliminate venting, [and] minimise flaring and other emissions,” and it recommends producers “consider setting targets on emissions as part of their overall strategic policies to win public confidence.”
In November 2013 Colorado proposed new regulations, with industry support, focusing on methane emissions and requiring companies to capture 95 percent of their hydrocarbon emissions.
We believe ONEOK’s social license to operate may be at risk due to the limited disclosures associated with emissions. In contrast, industry peer Spectra Energy has taken meaningful steps towards measuring and disclosing emissions.
Benefits of reducing methane emissions include worker safety improvements, maximizing available energy resources, protecting human health, reducing environmental impacts, and reducing economic waste. Upgrading assets may also improve performance, making equipment more robust and less susceptible to accidents, upsets and downtime. Significant reductions in methane emissions are possible using new technologies with positive return on investment.
Shareholders request ONEOK, Inc. publish a report that reviews its policies, actions, and plans to further develop measurement, disclosure, mitigation, and reduction targets for methane emissions resulting from all operations under its financial or operational control. The report should consider steps beyond legal compliance and be prepared in light of studies on this issue, at reasonable cost, omit proprietary information, and be available by October 2014.