Oil and Gas Carbon Accounting: Why Is It So Hard?

Deb Ryan, host of Navigating Carbon Podcast with Bryan Ross, Global Account Executive for Envana Software Solutions - December 2024

Hear insights from Deb Ryan and Bryan Ross as they jointly unpack the complexity of oil and gas carbon accounting. They discuss the importance of emissions tracking, the challenges of managing methane emissions, and the evolving landscape of emissions reporting. The conversation also delves into the significance of Scope 3 emissions and the future trends in carbon management, emphasizing the need for robust data management systems and collaboration across the supply chain.

From centralizing governable data to meeting regulations and leveraging international gas trade, Deb and Bryan discuss the most compelling reasons why oil and gas companies today are putting their emissions data to work and what the future entails. 

Methane and Data Quality

One of the critical topics for oil and gas companies Deb and Bryan discussed were the challenges operators face accounting for GHG throughout the value chain all the way to LNG. 

In the past, methane emissions were calculated based on generalized emission factors and publicly available methodologies to estimate leaks and fugitive emissions. But what the industry has realized is that directly measuring, finding leaks, and quantifying is a more appropriate way to calculate methane emissions, aligned with the Oil and Gas Methane Partnership. For companies working toward OGMP 2.0 Levels 4 and 5, the challenges with methane emissions involve identifying the most material assets to measure directly, the required frequency, what to do with the data, uncertainty, and more. 

Bryan explained the value of implementing an LDAR (leak detection and repair) program, creating a centralized platform to operationalize and visualize the data, and making informed calculations, contextualizing what the leak rates mean in the overall methane footprint. 

GHG Reporting Challenges

One of the biggest hurdles international companies face is reporting emissions amidst constantly changing requirements. This becomes more complex when companies need to report a carbon footprint across several geographical jurisdictions with different reporting factors as well as voluntary frameworks. Most of the systems used today such as in-house spreadsheets are very manual and error-prone. Using a centralized platform to visualize all the data in one place, accounting for such differences helps ease the burden.

Key Questions

• Is your system flexible and adaptable through time and for different geographies and frameworks?
• Are all your emissions sources mapped?
• Is your reported emissions data right?
• Are you partnered with a stable GHG solution provider that will be around in the long run?

Scope 3 Emissions and Cross-Border Regulations

Scope 3 emissions reporting is becoming increasingly important. Per Bryan, the requirement to report Scope 3 this year only applied for companies listed on the London Stock Exchange and some Asian stock exchanges. Now, the Carbon Sustainability Reporting Directive (CSRD) is also adding Scope 3 reporting requirements on European companies. 

The most interesting challenge Envana has seen is on the upstream operations side, with many vendors contributing to well operations. The operators' procurement and supply chain management teams are starting to exert pressure on vendors to report emissions and select lower carbon options. 

For downstream, most of the pressure comes from companies offering carbon-neutral fuels like blue ammonia or blue hydrogen, where it's important to quantify emissions from a site-to-site basis, tying these to a carbon product footprint, and allowing to deduct any offsets to show a carbon-neutral distribution when they export that gas to a different country. 

It's becoming a bigger pressure now as the European Union will start requiring exporters of gas to the E.U. to report on methane intensity by 2027, affecting Trinidad and Tobago, West Africa, U.S., East Canada, and Latin America exporters. 

Reach out to Envana to find out more about how we are helping world-class leaders efficiently meet their GHG goals and how we can help your organization too. Tell us about your carbon accounting challenges. Most likely, we'll be able to support you in solving your emissions reporting challenges with solutions that will benefit your bottom line and help mitigate your risks.   

To listen to the podcast, visit Navigating Carbon.