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Executive Perspectives

EXECUTIVE PERSPECTIVE: Technology to the Rescue

Mark R. Kriss

23 Oct 2018

Satellites can deliver transparency on super polluters in near real time.

This week brought depressing news of yet another environmental mega disaster. An oil spill has been quietly leaking between 300 and 500 barrels of oil per day into the Gulf of Mexico since a Taylor Energy-owned production platform located 12 miles off the coast of Louisiana was toppled by an underwater mudslide caused by Hurricane Ivan in 2004.  After 14 years of limited success in capping the leak, the Taylor Energy leak now verges on becoming a worse offshore disaster than the infamous British Petroleum Deepwater Horizon explosion of 2010.

Sadly, the Taylor Energy leak is not the gravest environmental threat we face. But it’s symptomatic of the sometimes hidden costs – to ecosystems, the food chain, public health and climate stability – of the fossil fuel industry.

Like Deepwater Horizon, the Taylor Energy oil spill is primarily a regional ecological disaster. Invisible methane leaks from oil and gas production and distribution have a far bigger effect on global warming – an existential threat to human life as we know it – than oil spills.

Methane – the primary component of natural gas – is a potent greenhouse gas. A powerful heat trapper, methane produces 86 times the warming power of carbon dioxide during its first 20 years in the atmosphere. This is why fugitive methane emissions are extremely deleterious to climate stability.

Reducing methane emissions from oil and gas super emitters is the fastest, most cost-effective way to slow the rate of global warming today, as the larger transition to lower-carbon energy proceeds.

Unfortunately, methane levels have shot up in the past decade. Keeping methane in check is critical to staving off the worst effects of climate change. In the U.S., the onus chiefly falls on the oil and gas industry as the #1 source of methane emissions. The U.S. oil and gas industry emits 13 million metric tons of methane from its operations each year – enough to offset much of the climate benefits of burning natural gas instead of coal.

Satellites can attribute point sources of invisible greenhouse gas emissions with resolution of 50 meters.

Live data from satellites can now detail methane venting activity at a fine enough spatial and temporal scale to allow for a nearly real-time attribution of methane emissions to the party responsible. High-resolution spectrometers measure the amount of light absorbed at specific wavelengths, which in turn enables quantification of methane concentrations. These satellite-based instruments take hundreds of thousands of measurements around a source with a resolution of tens of meters. Such high resolution is key to successful attribution of point sources. Visible spectrum satellites also might be helpful in monitoring super polluters such as the Taylor Energy leak.

Illustrative example of MethaneScan® news service. © 2018 Geofinancial Analytics, Inc.

Satellite detects large toxic methane leak at Acme Petroleum wellhead in Texas

In this hypothetical example, scientists have attributed a major methane leak in Orla TX to an Acme Petroleum (ACME) wellhead with 95% confidence. The invisible methane release is equivalent to monthly emissions from a coal-fired power plant, earning ACME a super emitter classification. Super emitters are likely to have above average exposure to legal liability, regulatory/compliance and reputation risk, as well as accidents.

Levers beyond governmental policy are needed to improve the odds of averting catastrophic climate change – and stopping super polluters in their tracks. Financial market pressure is already playing a central role. Yet, while long-term institutional investors such as sovereign wealth and pension funds are integrating climate-change and other sustainability considerations into their investment decisions, such efforts fall well short of the necessary action. Delivering transparency on invisible catastrophic risks in near real time open up new opportunities for pressure and profits. For example:

  • Alpha generation from long-short equity trading – Enhance proprietary strategies with early indicators of methane emission anomalies which may anticipate price movement, shifts in sentiment, and company systemic problems
  • Risk management– Reduce or close positions when material negative news impacting a given company is anticipated, shifting capital to more sustainable peers or alternatives
  • Engagement – Inform efforts by major institutional stakeholders such as pension funds and mutual fund managers to drive changes in sustainability practices at companies via shareholder resolution, proxy votes, disclosures, or other pressures.

Given the policy swing from the science-driven Obama administration to the climate denialism of the Trump administration, such technology-enabled, market-based mechanisms for reducing harmful greenhouse gas emissions are particularly timely.

Note: Taylor Energy ­is a joint venture of Korean National Oil Company and Samsung.









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