Methane Losses Compromising the Potential Benefits of Using Natural Gas in Transportation Applications

Random Thoughts from the High Desert

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Natural Gas has two advantages with respect to coal and other fossil fuels. At some times it is a lower cost fuel than other fossil fuels. Today, NG in the US has perhaps a 100% cost advantage over other fuels for most applications. Outside the US, NG loses its advantage at current overseas prices which are far higher than US natural gas prices. At all times it produces lower greenhouse gas (GHG) emissions than other fossil fuels burned at the time it is being used. But to evaluate the use of natural gas in transportation applications, one needs to consider the total “well to wheels” GHG emissions not just what takes place within the vehicle. That is what this article is about.

Follow Up

There are concerns that losses of methane (the primary compound in natural gas) into the atmosphere prior to reaching the venue where it is utilized counteracts many of the advantages of using natural gas as a substitute for coal, gasoline and diesel fuel. In the burning process, natural gas produces much less greenhouse gases than coal or other fossil fuels. But methane is many times more potent as a greenhouse gas as compared to carbon dioxide. So small amounts of methane released into the atmosphere in the process of extracting and delivering the natural gas may counteract large reductions in carbon dioxide emissions during the use of natural gas in vehicles to substitute for other fossil fuels.

Estimates of methane losses are not necessarily highly accurate at this point in time as they are spot checked at best but estimates until recently tended to be in the range of 2% to 3% with most of these losses at the well. Some believe the losses are far higher. Others believe they are lower. But when you emit something that is at least 25 times more powerful (this ratio is called the Global Warming Potential or GWP) than carbon dioxide, the impact of the 25 times more powerful methane requires a lot of savings in carbon dioxide at the place of use to balance out. The estimation of percentage losses is complicated because losses that occur related to well completion can be expressed as a percentage of the total output of a well only if you know the lifetime production of the well.

For shale gas in particular we don’t really have a lot of years of experience. But 25X(2%) and 25X(3%) approach 100% so natural gas has to be quite a lower source of emissions when burned in a vehicle as compared to the emissions of the alternative hydrocarbon for the tradeoff to work. The total impact of emissions from the well to storage combined with emissions when the fuel is utilized must be lower than the impact of emissions from the replaced fuel to be beneficial from a GHG perspective.

[O]ne needs to convert and aggregate the environmental impacts by converting to a common measure which for purposes of this article is what is called the Global Warming Potential or GWP of all the emissions relative to carbon dioxide.

One reason the calculations are complex is that we are dealing with apples and oranges and have to convert everything into a standard unit. When gasoline is being used in a vehicle there are emissions prior to use in the vehicle and again emissions resulting from the use. But excluding the associated natural gas that might be lost from the oil well, the emissions are pretty much carbon dioxide. With transportation applications using natural gas, the emissions prior to use in the vehicle are methane and the emissions during use in the vehicle are carbon dioxide. So one needs to convert and aggregate the environmental impacts by converting to a common measure which for purposes of this article is what is called the Global Warming Potential or GWP of all the emissions relative to carbon dioxide. This article focuses mostly on the emissions prior to the use in the vehicle which I call “well to storage” since there must be a storage stage prior to fueling a vehicle with natural gas. Sorry for the long explanation but it is important in order to understand the rest of this article.

The transition to natural gas seems to work from a greenhouse gas perspective in power plants although not everyone agrees and it may or may not work in transportation applications. But use of natural gas in transportation applications would be highly desirable for many reasons including energy independence. It would save users a lot of money and reduce the cost of everything transported by vehicles so addressing the issue is in the National Interest.


Some studies show the breakeven point for natural gas being immediately more environmentally friendly than other fuels is for the methane losses at the well and during delivery to the user to be reduced from the earlier estimate of 2% to 3% (and those estimates are vigorously debated in the literature) to 1% to 1.5% for various transportation applications and 3% for power generation. So at this point, natural gas is already a breakeven proposition (or possibly slightly better) from an environmental perspective for power plants (while at today’s commodity prices often being a definite winner relative to costs) but surprisingly perhaps a negative or marginal environmental proposition for transportation applications.

Here is an updated graphical analysis of work originally performed by Stephan W. Pacala and a number of authors who identified this issue early on: ‘

Adapted from :
Greater focus needed on methane leakage from natural gas infrastructure

The way to read this chart is that if losses are 2.7% or less, natural gas replacing coal has an immediate benefit with respect to greenhouse gases (GHG). For an average car, the breakeven point is 1.4%. For heavy duty diesel it is 0.8%. On the other hand, if losses are 2% then looking out to the right on this chart the breakeven point is about 40 years. At 1.5% the breakeven point for heavy duty diesel appears to be over 100 years.

[Natural gas is] perhaps a negative or marginal environmental proposition for transportation applications.

Not everyone would agree with these break points as they involve many assumptions. A vexing problem is the issue of what length of time to use for the impact of gases other than carbon dioxide. The accepted approach is to look at the 100 year impact of a gas such as methane which is now currently estimated at either 28 or 34 times greater than carbon dioxide depending on how one considers the indirect impacts. Some argue that a 20 year time frame is more appropriate. The significance is that the GWP for methane for 20 years is 84 versus 28 for 100 years. There apparently is no agreed upon logic for even attempting to determine what time period makes the most sense.

So this is an issue that is far broader than the topic of this article. It makes the interpretation of any tradeoff analysis difficult. For example the statement that natural gas is breakeven immediately with gasoline in terms of impact on GHG in the atmosphere if well to storage losses are 1.4% or less means that the impact over a 100 year period is the same since clearly the initial impact of methane on the atmosphere is enormous. So it is a concept that requires a little imagination and recognition that it really is addressing the 100 year impact. The reason for this complexity is that methane is a much more powerful GHG but shorter lived (with a half life of perhaps 7 years) so it is that tradeoff that is attempted to be assessed and not everyone agrees on the best way to do that assessment. The Global Warming Potential (GWP) appears to be the most accepted way but there are pros and cons for alternative approaches. Nothing about climate change is simple.

There apparently is no agreed upon logic for even attempting to determine what time period makes the most sense [for assessing environmental impact].

The EPA recently updated their estimate of methane’s GWP for regulatory matters from 21 to 25 and has argued for sticking with the 100 year time frame. I mention this because computer runs and graphics tend to be accepted as truth when climate change is very complex and it is very difficult to find any statement that is made for which one cannot justifiably say “what about ______?” So we do the best we can but the answers are not simple.

[T]here is both an environmental and business objective to reducing these [methane] losses.

There are many ways that methane can be lost and most of these represent a loss of income to those who extract natural gas or higher prices for those who purchase natural gas. So there is both an environmental and business objective to reducing these losses. Reducing losses by 50% would appear to greatly reduce the problem. Even reducing losses by 25% would appear to dramatically reduce objections to a transition to the use of natural gas in standard vehicle applications. It is not necessary to achieve perfection. Small reductions in losses makes a big difference when you run the equations.

Some studies show that efforts to reduce methane losses show a very attractive return on investment (at $3 to $4 NG) although those studies may not yet have been always verified in practice.

Small reductions in losses makes a big difference when you run the equations.

This EPA graphic shows some of the places were losses occur but was not developed specifically to address transportation applications.

Here is a Table prepared by the National Resources Defense Council NRDC.

I have moved the data into a different table than their original simply because their original graphic does not print well. But I have not made any changes to the data.

Technology Investment Cost Methane Capture Profit Payout
Green Completions $8,700 to $33,000 per well 7,000 to 23,000 Mcf per well 28,000 to $90,000 per well <0.5 – 1 year
Plunger Lift Systems $2,600 to $13,000 per well 600 to 18,250 Mcf per year $2,000 to $103,000 per year < I year
TEG Dehydrator Emission Controls Up to $13,000 for 4 controls 3,600 to 35,000 Mcf per year $14,000 to $138,000 per year <0.5 years
Desiccant Dehydrators $16,000 per device 1,000 Mcf per year $6,000 per year <3 years
Dry Seal Systems $90,000 to $324,000 per device 18,000 to 100,000 Mcf per year $280,000 to $520,000 per year 0.5 – 1.5 years
Compressor Maintenance
$1,200 to $1,600 per rod packing 850 Mcf per year per packing $3,500 per year 0.5 years
Pneumatic Controllers Low-Bleed $175 to $350 per device 120 to 300 Mcf per year $500 to $1,900 per year <0.5 – 1 year
Pneumatic Controllers No-Bleed $10,000 to $60,000 per device 5,400 to 20,000 Mcf per year $14,000 to $62,000 per year <2 years
Pipeline Maintenance and Repair Varies widely Varies widely but significant Varies widely but significant <1 year
Vapor Recovery Units $36,000 to $104,000 per device 5,000 to 91,000 Mcf per year $4.000 to $348,000 per year 0.5 – 3 years
Leak Monitoring and Repair $26,000 to $59,000 per facility 30,000 to 87,000 Mcf per year $117,000 to $314,000 per facility per year <0.5 years

As you can see, there are many identified situations where methane is lost so there are many opportunities to reduce these losses. The information in the above table is an estimate of the economics of the solution. NRDC also has provided a flowchart the industry should follow for determining when the available solutions are economic. For example:

Here is a more complicated one.

The flow charts for each source of methane loss are all pretty much the same. You attempt to do things that make sense and where you can’t, you document the reasons that no better action could be taken. I have not checked in detail but I think the new EPA regs that have come out more or less follow these flow charts. There are similar charts in the EPA Gas STAR Program

Natural Gas STAR is a flexible, voluntary partnership that encourages oil and natural gas companies to adopt proven, cost-effective technologies and practices that improve operational efficiency and reduce methane emissions. Methane is emitted by oil production and all sectors of the natural gas industry, from drilling and production, through processing and storage, to transmission and distribution. Given that methane is the primary component of natural gas and a potent greenhouse gas, reducing these emissions results in many environmental, economic and operational benefits.

The charts and the costs and the payback periods in some cases are identical but in some cases vary a bit among the various papers written by environmental organizations and information available from the EPA but are very close. One has to understand that every oil and gas field is different and every extraction and processing situation is different so estimates are to some extent generalizations and you always have the question of new facilities versus retrofitting existing facilities.

I am not an oil person but do have a background in the hard-rock mining industry so I know that what looks good on paper doesn’t always work out exactly as drawn up by the engineers and regulators. Generally speaking all investment opportunities with a payback of one year or less simply get implemented and we see some evidence that this is indeed happening. But the rate of implementation is slower than one might expect given the projected high rate of return of the suggested investments. So that remains an area for continued study.

[T]here are many opportunities at the federal, state and local level to provide incentives to capture otherwise lost methane.

To encourage the industry to take on this challenge and proceed as quickly as possible, it may even be desirable to obtain preferential treatment for captured methane. For example it would seem to be appropriate to exempt methane captured rather than lost at the well from taxation. For example in New Mexico we have a severance tax on most resources that are extracted. In practice this tax is levied on the amount of production sold. So depending on where the losses occur, some lost production is not taxed. So if methane losses at the well were reduced and this salvaged natural gas was given a tax exemption, New Mexico would not incur a loss of previous levels of revenue. New Mexico would still receive income tax from producer profits on the salvaged natural gas and would also benefit from the economic activity associated with the efforts to reduce the losses. Many states have similar taxes as New Mexico. The information at this link does not include all taxes related to oil and gas operations which includes ad valorem taxes on equipment employed to reduce methane losses which would provide additional tax revenue and there are also royalties on oil and gas operations on Federal and Indian Land. So there are many opportunities at the federal, state and local level to provide incentives to capture otherwise lost methane.

Also, it would not be unreasonable to expect cooperation with regards to easing regulations that complicate capture of natural gas during the initial operations of a well which is one of the major times that methane is released into the atmosphere if vented and even if flared has a much smaller but still significant GHG impact and still represents a loss of energy which is contrary to conservation and requires additional wells. If the data is correct that many sources of losses can be offset profitably, then no additional incentives is actually required but some additional incentives would IMO be proper recognition of the effort expended by the industry. The cost benefit analyses probably do not include the cost of educating oil and gas operators to the problem and the cost of training, documentation etc. and distracts from the primary mission of an oil or gas producer to find and drill wells.


The latest estimate of well to storage methane losses by the EPA is 1.5% which would appear to indicate that this is a problem that may have already been solved or almost solved for gasoline powered vehicles and is unlikely to be able to be solved for heavy duty diesel. We will not know until at least the next EPA report if this reduced estimate of losses is accurate as right now it is based on voluntary reporting with a lot of estimation. The reported losses are not distributed evenly geographically and tend to be higher in rapidly developing well fields. Complicating matters, the most recent IPCC Working Group 1 Report estimates that the Global Warming Potential of methane is 28 versus the prior estimate of 25 and they have now defined a new measure equal to 34 which takes into account the diminishing ability of oceans to absorb carbon dioxide (the breakdown product of methane).

[T]his is a problem [methane loss] that may have already been solved or almost solved for gasoline powered vehicles and is unlikely to be able to be solved for heavy duty diesel.

So the bar may be raised although this is a slow process and the next EPA adjustment is likely to take place in the 2020 timeframe. But aside from regulation, public policy should be based on the latest information which advances more rapidly than it can be incorporated into the regulatory framework for many reasons including the reality that the regulatory framework is international and not limited to the U.S. and the update cycles of the many regulatory agencies involved are not in sync.

The EPA has recently promulgated regulations for emissions related to greenhouse gases which require extensive reporting. They are likely to be effective at reducing losses and also improving our estimates of losses but will be very costly to the oil and gas industry and create risk to oil and gas companies re filing inaccurate reports simply due to the bulk of the filing requirements. There may be some benefit in decentralizing some of the reporting to the state agencies responsible for oil and gas conservation.


Although some see this as a problem, I see it more as an opportunity. Reducing methane losses is good for the environment and results in more natural gas being available for sale so that is a win win. Reducing methane losses results in a stronger case for the use of natural gas in transportation applications which benefits the environment and the operators of vehicles plus reduces the imports of crude oil into the U.S. I believe it creates opportunities for U.S. companies to manufacture the equipment necessary to reduce these losses and provide the associated services to reduce methane losses initially in the U.S. but ultimately into a world market. So this is a major economic development opportunity.

The common element is that methane is both a hazard and has market value. So everyone wants to reduce loses.

A good example is Reduced Emission Completions sometimes called Green Completions. The cost of the equipment is $500,000. It is only used for about two weeks per well. Apparently it is possible to rent the equipment for $32,400. So a small operator is at a disadvantage unless there are sufficient services offering the use of this equipment with rapid delivery when needed. This would reduce flaring and the occasional venting which is probably not reported but which is very damaging from a GHG perspective since flaring converts the methane into carbon dioxide whereas venting is the release of methane with its far higher GWP. Apparently there are now more expensive green completion systems with more functionality appearing in the marketplace. This is very important where there is no sales pipe line in place and alternative uses are desired or if a liquid natural gas (LNG) product is to be prepared at the well site for transportation by rail or truck for sale.

Rarely do you see analyses by industry, government and activists which are in substantial agreement. It certainly provides hope that this is a problem where substantial progress can be made. The common element is that methane is both a hazard and has market value. So everyone wants to reduce loses.

List of References

(excellent lessons learned assessment of green completions by EPA Gas STAR production partners)

(explains some of the mysteries of methane and there are mysteries with respect to the genesis of methane and breakdown of methane in various milieus)

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