As oil and gas companies are looking at different approaches to implement environmental, social and governance (ESG) programs, many companies have focused on the issue of methane emissions along the supply chain. These emissions represent a real challenge for producers and question the merits of natural gas as a clean fuel. As a result, the industry came up with a novel way to cut methane emissions through a process that certified gas as a Responsibly Sourced Gas (RSG).

Methane is a greenhouse gas (GHG), emitted both by natural sources and from human activity. Methane is more a potent GHG than carbon dioxide (CO2) but has a shorter atmospheric lifespan, which averages a decade compared to CO2 that stays in the atmosphere for centuries1. Methane is also the largest component of natural gas. Methane emissions occur along the supply chain from production, through processing and transmission to distribution. These emissions can be released intentionally from oil and gas wells through venting or flaring natural gas; or can be emitted inadvertently as fugitive leaks.

What is Responsibly Sourced Gas?

Responsibly Sourced Gas (RSG), also called differentiated or certified gas, is a conventional natural gas that has been produced through operations that meet certain environmental, social, and governance (ESG) standards. Natural gas is a homogenous commodity, but the level of methane emissions associated with production, processing, transport, and distribution creates an attribute with a different environmental and monetary value. Natural gas gets certified once an organization or third party verifies and declares that it adheres to certain environmental standards. Gas certificate can be either bundled with physical natural gas or unbundled. Certified or differentiated gas is analogous to Renewable Energy Credits (RECs) or Renewable Identification Numbers (RINs) that are currently used to track environmental attributes.

Global Methane Pledge

At government level, the increased concerns related to air quality have pressed countries across the globe to collectively take actions. Subsequently, placing reducing methane emissions at the center of the climate diplomacy agenda. At the Major Economies Forum on Energy and Climate (MEF) on September 17, 2021, the U.S., the European Union (EU), and seven other countries announced Global Methane Pledge initiative, which officially launched during the United Nations Climate Change Conference (COP26) in November 2021 in Glasgow. The objective of the global initiative is “to take voluntary actions to contribute to a collective effort to reduce global methane emissions at least 30% from 2020 levels by 2030, which could eliminate over 0.2˚C warming by 20502 .”

The landmark pledge was eventually signed by 111 countries, though the signatory list does not include the largest emitter countries including China, Russia, and India. Nonetheless, the agreement marks a significant step toward a collective commitment to curb methane emissions. The U.S. went a step further as the EPA launched a proposal of regulations3 that would require the oil and gas operators to implement strict measures to detect and repair methane leaks.

The IEA estimates that the oil and gas sector emitted around 704 Mt of methane in 2020, which represents approximately 5% of global energy-related greenhouse gas emissions. As illustrated in chart 1, natural gas production accounts for 41% of total methane emissions from the oil and natural gas industry in the U.S., while oil production, transmission and storage, processing, and distribution accounts for 19%, 19%, 6%, and 7%, respectively.

Market Size

The abatement of methane emissions has, without a doubt, an environmental impact, but its economical value can’t be ignored since these emissions are in essence wasted gas that could have been sold or monetized. Energy companies are gradually embracing gas certification as a vehicle to achieve ESG goals voluntary initiatives and commitments.

The RSG market is at a nascent stage of development, but it’s gaining traction in the industry. The volume of differentiated gas hit a record high6 in 2021, as 5 bcf of gas were certified in Appalachia and 1.2 bcf of gas in Haynesville. The volume is expected to grow to 12.3 Bcf/d7 in 2022 based on Platts estimation. Consultancy firm Enverus expects about a fifth of US natural output to be certified in 20228 .

EQT Corporation announced9 in January 2022 that they became United States largest producer of certified natural gas, with production level of approximately 4.0 Bcf/day using EO100™ Standard for Responsible Energy Development and MiQ methane standard. Also, ExxonMobil10 pledged certifying natural gas produced at its Permian Basin facilities at Poker Lake, New Mexico. ExxonMobil is also considering expanding certification to include other Permian Basin fields and shale production areas, including Appalachia and Haynesville.

In June 2021, Cheniere Energy announced11 a major research collaboration with five natural gas producers, technology firms, and several academic institutions to implement quantification, monitoring, reporting, and verification (“QMRV”) of GHG emissions performance at natural gas production sites. The list of producers includes Aethon Energy, Ascent Resources — Utica LLC, EQT Corporation EQT, Indigo Natural Resources LLC, and Pioneer Natural Resources Company PXD, Inc. The R&D project aims at monitoring sites for CO2 and for methane emissions using multiple ground-based, drone, aerial, and satellite monitoring technologies to establish baseline emissions levels. The initiative will also verify emissions performance and identify opportunities to reduce emissions. This project is aligned with Cheniere’s strategy to start issuing a certification, or cargo emissions "tag" (CE tag), to their LNG buyers. The initial effort will cover gas production wells in the Marcellus, Utica, Permian and Haynesville basins. Among other companies that also implemented pilot programs are Chesapeake Energy, Range Resources, Southwestern Energy, Antero Resources, Northeast Natural Energy, Seneca Resources etc. In addition. Xpansiv12 , a company that specializes in environmental commodities, like carbon offsets and RECs, partnered with S&P Global Platts to launch Methane Performance Certificates in early October 2021, which can be issued and tracked with Xpansiv's Digital Fuels Registry.

Reporting Initiatives

Many initiatives and programs emphasize either explicitly or implicitly the reporting methane emissions. Below are some:

The Oil & Gas Methane Partnership13 (OGMP) was initially launched by UN Environment Program (UNEP) and the Climate and Clean Air Coalition (CCAC) at the UN Secretary General’s Climate Summit in 2014. The objective of OGMP is to create a comprehensive reporting framework of methane emissions in the oil and gas sector. In November 2020, UNEP, the CCAC, Environmental Defense Fund, the European Commission, and 62 oil and gas member companies listed the OGMP 2.0 and its updated reporting framework.

International Methane Emissions Observatory14 (IMEO) is an initiative that was launched at the G20 Summit by the UN Environment Program (UNEP) with support from the European Commission track and store methane emissions data.

IEA Methane Tracker Data Explorer15 is a tool which the IEA’s country-by-country estimates of energy-related methane emissions and compare these estimate other publicly available sources and with estimates from other human activities.

U.S. EPA Greenhouse Gas Reporting Program16 (GHGRP) requires certain facilities, including gas and oil suppliers to report their GHGs.

Nation's Energy Future17 (ONE Future) is a coalition of U.S. natural gas companies working together to minimize methane emissions and ensure the future of natural gas as a long-term clean energy.

Natural Gas Sustainability Initiative (NGSI) is a voluntary, industry-wide approach for companies to calculate methane emissions intensity by segment—the Methane Emissions Intensity Protocol (Protocol).

Certification Standards

Three standards have emerged as the main frameworks for gas certification:

Project Canary's TrustWell Certification18: Project Canary is an International Environmental Standards company, which captures real-time data and continuously monitors the operations and emissions of methane and volatile organic compounds at oil and gas sites. The system covers 600 operational data points along wells, pipelines, and storage. According to its certification program, TrustWell™ Responsible Gas19, is defined as “natural gas, which has been produced from a natural gas well, which has gone through the TrustWell™ evaluation and verification process and has a current TrustWell™ rating.” This attribute and other associated attributes of the gas, called Verified Attributes, enable gas purchasers to know and claim things about how the natural Definition gas they are purchasing was produced with respect to the environment and responsibility.” The performance rating is based on three scoring levels: Silver, Gold, and Platinum.

EO100™ Standard for Responsible Energy Development: Equitable Origin20 is a nonprofit organization establishes a broad ESG metrics to nonrenewable and renewable energy development projects, including oil or natural gas exploration and production sites, solar installations, hydroelectric dams, and wind farms. The standard incorporates a scoring system based on three levels of Performance Targets (PTs): P1 meets industry best practices; P2 exceeds industry best practices; and P3 leads industry best practices.

MiQ Standard: MiQ21 is not-for-profit partnership between SYSTEMIQ and Rocky Mountain Institute. The program objective is to certify and differentiate natural gas based on its methane emissions performance at every batch of gas. The performance rating is grade-based ranging from A to F. An A grade represents very low methane emissions (<0.05%) while F represents up to 2%.


The emergence of RSG as a potential solution for oil and gas companies to address the climate issue of methane emissions seems promising. As the market for certified natural gas expands, it would be interesting to see how the economics of RSG certification develop within the gas market ecosystem.



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