No matter how you look at the raft of new federal regulations and fees targeting methane reduction in the natural gas supply chain, Uncle Sam wants your money. Or specifically those in the business of extracting, processing, and moving methane.
Pipeline operators are caught in a difficult situation. On one hand, there’s the new Quad O regulations that require specific upgrades to facilities equipment new and existing. That’s the hard place, though nearly a billion in government grants make this more of a carrot. The hard place, or stick, is a new charge on methane emissions over .11% of gas throughput (.05% for gas processing plants).
This carrot and stick work together, incentivizing midstream companies to install less leaky equipment and perform regular leak detection (e.g., compressors). The carrot is you don’t have to pay the methane fee if you are fully Quad O compliant, if not you pay Uncle Sam.
Lost and unaccounted for (LAUF) gas gets tangled up in all of this. If midstream companies can’t tell where their LAUF ends and their emissions start, well it will all get reported and charged.
Effective starting in 2024, the methane fee is $900 per metric ton, rising to $1,200 in 2025, and settling at $1,500 in 2026. The Congressional Budget Office estimates that this will generate as much as $6.35 billion from 2026 to 2031. So, for the short term, our industry is on the hook for billions in methane fees until companies become Quad O compliant, which is the whole point.
The problem for many bottom lines is that LAUF is largely driven by measurement uncertainty. Some gas actually gets lost but we want to avoid paying Uncle Sam on the rest if we don’t have to. But how?
Better measuring your methane is a natural place to start, which can be accomplished with C-SMART’s AI powered gas measurement analytics engine. If you already have great LAUF, then chances are you’re under the .11% threshold and will receive a “get out of jail card” like in Monopoly. But you would still benefit from increasing error catching sensitivity and resolution speed with C-SMART’s digital twins, NIST traceable data, and instant alerts.
But for most midstream companies, their emissions and LAUF will be high enough to trigger the methane fee. C-SMART can’t get you off the hook for actual emissions, though our measurement technology can help you document the actual extent and duration for better reporting. Our technology can shrink your LAUF by up to 80%, and if you have to pay Uncle Sam, that’s 80% less cash from your LAUF that has to be included with methane charges.
Good news, C-SMART has your entire system covered, from capital intensive custody transfer USM and Coriolis to low flow meters, check, and segment stations. By driving down measurement uncertainty, your team can save money even as government rules and fees take a laser aim at cutting emissions.