🇺🇸United States

Suboptimal Investment and Operational Decisions from Poor Emissions Data and Split Incentives

2 verified sources

Definition

Operators frequently under‑invest in methane‑reduction measures and emissions‑compliant infrastructure because internal economics are calculated using only gas revenue, ignoring externalized climate damages and regulatory risk. Split incentives between pipeline owners and gas owners further distort decisions, leading to persistent high‑emissions, high‑loss operations.

Key Findings

  • Financial Impact: For individual projects, forgone net benefits can reach tens of dollars per MMBtu of gas that could have been economically captured when including avoided damages; at sector scale, studies indicate hundreds of millions to billions of dollars in unrealized value and avoided future penalties annually
  • Frequency: Annually
  • Root Cause: Decision models that omit the full cost of emissions (current and expected future regulations, carbon pricing, reputational risk) and organizational fragmentation where the entity paying for leak repairs does not fully benefit from the additional throughput, leading to chronic under‑investment in compliance‑supporting infrastructure.

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Natural Gas Extraction.

Affected Stakeholders

CFO, Strategic Planning Manager, Asset Development Manager, Pipeline Owner / Midstream JV Manager, Board / Investment Committee

Deep Analysis (Premium)

Financial Impact

$1-3M annually from: (1) Reputational risk from emissions mis-reporting, (2) lost customer contracts requiring emissions transparency, (3) inability to access ESG-focused financing at favorable rates • $1-4M annually per LDC from: (1) Unaccounted-for gas loss (~2-5% of throughput = $10-50M in lost gas value across customer base), (2) inability to document compliance during regulatory inspections leading to fines, (3) deferred ROI on zero-bleed equipment investments due to poor baseline data • $1.5-4M annually from: (1) Methane Emissions Reduction Program penalties for under-reporting, (2) lost gas sales (~$50-150/MMBtu of fugitive methane), (3) deferred maintenance on capture infrastructure

Unlock to reveal

Current Workarounds

Estimates based on purchase volume × EPA emission factors; ad-hoc requests to suppliers for emissions certifications; manual tracking in spreadsheet • HSE Manager cross-references historical emission estimates with third-party consultant reports; maintains shadow spreadsheet reconciling equipment-level emissions against facility total; verbal communication with operations on methane mitigation project status; defers investment prioritization due to data uncertainty • HSE Manager relies on commissioning data and vendor guarantees rather than operational monitoring; maintains contact list of third-party emissions auditors for spot-checks; informal tracking of methane slip incidents in HSE logbook; escalates via email to terminal management, loses urgency

Unlock to reveal

Get Solutions for This Problem

Full report with actionable solutions

$99$39
  • Solutions for this specific pain
  • Solutions for all 15 industry pains
  • Where to find first clients
  • Pricing & launch costs
Get Solutions Report

Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Lost Saleable Gas from Unpermitted Venting, Flaring, and Fugitive Methane Emissions

$500M–$680M per year in wasted gas on U.S. federal/tribal lands and North Dakota alone; globally up to $60B/year in fugitive methane revenue loss

Escalating Compliance and Monitoring Costs from Stricter Methane and Air Emissions Rules

Hundreds of millions of dollars sector‑wide annually in additional compliance obligations and technology deployment; individual operators face multi‑million‑dollar program costs in labor, surveys, and systems

Rework and Retrofits from Emissions Permit Non‑Compliance

$100k–$5M per facility over retrofit cycles depending on scope (estimated by industry case patterns); sector‑wide losses scale to hundreds of millions annually when repeated across multiple basins

Delayed Revenue from Curtailments and Startup Holds Due to Incomplete Emissions Permits

Tens to hundreds of thousands of dollars per day per constrained pad in deferred gas sales; in North Dakota, flaring of 5.1% of gross withdrawals corresponds to about 0.3 Bcf/d of gas not sold, implying multi‑million‑dollar monthly revenue impacts tied to infrastructure and permitting gaps

Lost Production Capacity from Flaring and Venting Constraints and Undetected Leaks

In 2023, North Dakota and Wyoming alone vented/flared about 0.3 Bcf/d, representing millions of dollars per day in lost saleable gas; sector‑wide, fugitive methane from pipelines and distribution can exceed $94M–$354M per year in lost product value

Methane and Air Emissions Fines, Royalties, and Penalties for Permit Violations

$621M–$2.3B per year in potential U.S. methane fines for pipeline emissions alone at $900/ton, based on estimated 690,000–2.6M tons of methane emissions; additional lost taxes and royalties from vented/flared gas

Request Deep Analysis

🇺🇸 Be first to access this market's intelligence