Five key strategies for oil and gas firms.
Adapting to regulatory changes is nothing new for the oil and gas industry, so when the new Methane Emissions Reduction Program (MERP) was introduced in 2022’s Inflation Reduction Act, the industry braced for yet another transformation. But MERP is decidedly more challenging than previous evolutions in the regulatory landscape. Applicability and compliance are inexplicably intertwined with existing and evolving federal rules and programs, making it harder and more complex than ever to determine real risks and responsibilities.
To help guide oil and gas companies through these changes, my organization, Cority, recently sought input from Christi Wilson, an environmental and sustainability expert at Trinity Consultants. Wilson, who has dedicated her entire career to helping companies in the energy sector advance their decarbonization journeys, shared practical strategies for navigating MERP while accelerating efforts toward true sustainability.
1. Think like an energy transition company
In an era dominated by the imperative of sustainability, Wilson advises traditional oil and gas companies to think like an energy transition company. This means
strategically positioning their products and services to excel in a low-carbon economy by embracing both a long-term approach to planning and a focused effort to achieve organizational objectives.
Industry leaders should identify and implement changes today that will deliver consistently over the next two, five, and ten years, looking beyond immediate gains and compliance obligations to consider science-based targets and reconciliation of top-down and bottom-up approaches. This will help companies make the difficult shift from aspiration to action.
Despite the obvious challenges, Wilson insists the obstacles are opportunities for innovation and transformation. She asserts that companies adopting this approach have found surprising ways to adapt and excel in their new, low-carbon identities.
2. Maximize the quality and quantity of data collection
A critical step towards minimizing obligations under MERP and achieving a low-carbon identity requires maximizing the quantity and quality of the data you’re collecting. Oil and gas companies have a wealth of potential data at their disposal, but if they aren’t effectively collecting and processing everything from site-specific emission factors and source types to fugitive leak data, they are not taking full advantage of the potential actionable insights this data holds for charting an intelligent path into the future.
Wilson emphasizes that integrating advanced measurement systems and empirical data with specialized software provides real-time and more precise emission calculations. This enables significantly more informed emission-reduction decisions, reducing risk and increasing the likelihood for success. What’s more, using technology to streamline the data collection process ultimately allows companies to redirect their time to data analysis, offering more opportunities for potential emissions reduction.
3. Create data-driven decision-making models
With improved data collection, companies can formulate data-driven decision-making models that can completely (and sometimes surprisingly) reshape how an organization approaches emission management challenges and opportunities.
Data-driven decision-making models allow organizations to use both historical and predictive data to create different scenarios that can aid significantly in budgeting, operating cost allocation, and liability forecasting. You can then evaluate mitigation strategies and rank options based on implementation timeframe and cost-effectiveness.
Wilson emphasizes that while she sees many companies continue to rely on Excel spreadsheets for forecasting and scenario analysis, that approach is much more tedious, time-consuming, and prone to error than software systems – particularly once you add a fiscal component to it.
4. Carefully review source data and calculation methodologies
To estimate methane emissions effectively, Wilson recommends asking the following key questions:
- Are the most accurate data/calculation approaches used for specific operations?
- Is real-world empirical data used when available?
- How is actual measured/site-specific data compared to default factors?
- Is actual or measured site-specific data available to inform future calculations?
- Are sources not currently covered under EPA’s Greenhouse Gas Reporting Program categories also evaluated for a holistic approach to company decarbonization objectives?
Additionally, Wilson emphasized the need for operators to assess their applicability and compliance with New Source Performance Standards (NSPS) requirements. For affected facilities, companies should ensure they are following applicable requirements so they can minimize potential liabilities under the MERP.
She says companies should also evaluate any assets they operate that pre-date the NSPS rules and determine if there are any opportunities to retrofit equipment or implement work practices at those sites to reduce methane emissions below the corresponding MERP thresholds.
Wilson notes the supportive role of technology to integrate monitoring systems with environmental software to provide the best available data to enable such evaluations for strategic planning purposes.
5. Establish a robust, up-to-date greenhouse gas monitoring plan
Wilson asserts that having a Greenhouse Gas (GHG) monitoring plan in place is not just a regulatory checkbox but a strategic investment in an organization’s future – particularly given the evolving nature of today’s regulatory environment.
A comprehensive GHG plan, according to Wilson, should clearly delineate source data; roles and responsibilities; quality assurance and calibration measures; and document calculation methodologies, emission factors, and assumptions.
These documents should be strictly controlled and include clearly documented updates. They should also be subject to periodic reviews, she maintains. This level of rigor only serves to strengthen the credibility of these documents, should they ever be needed.
Wilson also underscores the critical nature of an auditability feature within GHG monitoring plans – making the case again for a strong data digitization strategy.
By shifting the way an organization fundamentally thinks about its approach to decarbonization and pursuing advanced analytics, it can not only meet regulatory compliance obligations and minimize liabilities under MERP, but also lead to an entirely new era of low-carbon economics.
By William Palmer
William Palmer is Product Marketing Manager, Environmental and Safety at Cority. Cority empowers employees to reduce risks and enhance safety, health, and sustainability. With over 35 years of expertise, CorityOne integrates organizational data for efficiency, insights, decisions, and reporting. Trusted by 1,400+ organizations, Cority’s solutions support a better future.