Smaller firms top methane emitters

As oil and gas giants face increasing pressure to reduce their fossil fuel emissions, it's the small, privately held drilling companies that are becoming the country's biggest emitters of greenhouse gases, often by buying up the industry's high-polluting assets.

According to an analysis of the latest emissions data disclosed to the Environmental Protection Agency, five of the industry's top 10 emitters of methane, a particularly potent planet-warming gas, are little-known oil and gas producers, some backed by obscure investment firms, whose environmental footprints are very large relative to their production.

In some cases, the companies are buying high-polluting assets directly from the largest oil and gas corporations, such as ConocoPhillips and BP; in other cases, private equity firms acquire risky oil and gas properties, develop them and sell them quickly for maximum profits.

The largest emitter, Hilcorp Energy, reported almost 50% more methane emissions from its operations than the nation's largest fossil fuel producer, Exxon Mobil, despite pumping far less oil and gas. Four other relatively unknown companies -- Terra Energy Partners, Flywheel Energy, Blackbeard Operating and Scout Energy -- each reported emitting more of the gas than many industry heavyweights.

These companies have largely escaped public scrutiny even as they have become major polluters.

"It's amazing how the small operators manage to constitute a very large part of the problem," said Andrew Logan, senior director of oil and gas at Ceres, a nonprofit investor network that commissioned the study along with the Clean Air Task Force, an environmental group. "There's just no pressure on them to do things better. And being a clean operator, unfortunately, isn't a priority in this business model."

Nick Piatek, a spokesman for Hilcorp, said the company "spends substantial capital retrofitting and refurbishing aging equipment" at its newly acquired sites and that its investments would eventually bring down emissions while extending the life of those assets.

"We inherit those emissions," he said.

The analysis, carried out by the energy consultancy M.J. Bradley & Associates using data that companies are required to submit to the EPA Greenhouse Gas Reporting Program, highlights the climate consequences of methane.

The main component of natural gas, methane can warm the planet more than 80 times as much as the same amount of carbon dioxide over a 20-year period if it escapes into the atmosphere before being burned. A recent U.N. report singled out the oil and gas industry as holding the greatest potential to cut its emissions from methane, and the Biden administration is in the process of reinstating methane regulations relaxed by then-President Donald Trump.

Blackbeard Operating said a recent review had revealed that the company had overstated its emissions to the EPA, adding that it would soon update its numbers. It said one of Blackbeard's top priorities was reducing emissions from its operations. Terra Energy declined to comment. Flywheel Energy and Scout Energy did not respond to requests for comment.

DATA CAVEATS

The analysis also comes with significant caveats. The EPA data, from 2019, includes emissions from drilling and fracking sites but excludes emissions from offshore drilling, as well as some parts of the oil and gas supply chain such as pipelines or processing plants.

Recent research has shown that the official data is likely to greatly underestimate actual emissions from oil and gas production, in part because it does not properly account for leaks from equipment, which can be a significant source of emissions. Poorly maintained sites often mean more leaks that go undetected for longer.

Still, the findings allow for comparisons between producers in a way that other disclosures of emissions do not, underscoring how greenhouse gas emissions can vary dramatically between operators, experts said.

"A comparison is only as good as the actual company-level data is," said Drew Shindell, professor of earth science at Duke University and the lead author of the U.N. report on methane. "That said, I do think it's interesting to see that some of the various high-emissions intensity come from fairly small players that probably hardly anybody's ever heard of."

An EPA spokesperson, Enesta Jones, said the agency was "always working to improve and build on" ways to track emissions.

The new analysis also shows how oil and gas giants starting to shift away from fossil fuels are shedding some of their most polluting assets to companies that provide almost no transparency into their operations.

OFFLOADING ASSETS

When ConocoPhillips sold off its old gas wells in the San Juan Basin in northwestern New Mexico to Hilcorp Energy in 2017, it offloaded a struggling and aging operation that had weighed on its bottom line. The fossil fuel giant also rid itself of heavily polluting assets.

That year, ConocoPhillips reported that its greenhouse gas emissions had fallen by some 20%. In 2018, it became a founding member of the Climate Leadership Council, a coalition of businesses calling for a carbon tax.

But those emissions didn't simply vanish. Hilcorp Energy, owned by Houston-based billionaire Jeff Hildebrand, was a top polluter, according to the EPA data.

According to the new analysis, Hilcorp, which has grown by buying up decades-old oil and gas assets, has the highest methane emissions in the country, despite being the 13th-largest gas producer. Hilcorp's methane emissions intensity, or leak rate, was almost six times higher than the average of the top 30 producers, largely caused by high emissions from its aging San Juan Basin operations.

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