Major Energy Companies Agree to Methane Emissions Principles

On November 22, 2017, BP, Eni, ExxonMobil, Repsol, Shell, Statoil, Total and Wintershall signed a set of Guiding Principles on Reducing Methane Emissions across the Natural Gas Value Chain (the “Principles”).

Non-participating companies should know of and adhere to the standards that result from this and similar “voluntary” processes, with potentially serious consequences for failure to do so.

What May Seem Voluntary Can Be Mandatory

Although the plans to monitor and reduce emissions that underlie or will result from the Principles may seem voluntary, regulatory agencies may see them as setting industry standards.  Legally enforceable permit and regulatory requirements often incorporate, directly or indirectly, industry standards.  Moreover, these standards are often viewed as setting the standard of care that companies must meet to avoid being found negligent in private lawsuits.

Regulatory agencies may view companies that do not comply with such “voluntary” standards as out of compliance in enforcement actions, and juries may view them as negligent in tort actions.

Continuous Reduction, Performance across Value Chains, Improvement of Data Accuracy, Sound Regulatory Advocacy, and Increased Transparency

The Principles include commitments to have plans to monitor and reduce methane emissions, with an emphasis on venting, fugitives, and combustion efficiency.  The companies pledged to coordinate across value chains, ensuring that upstream, midstream, and downstream projects apply robust methane management practices.  Given the nature of the companies, this will involve both intracompany and third party coordination.

The Principles embrace the need for increasing improvements to emissions data accuracy.  The companies pledged to work constructively with international institutions, governments, industry, and NGOs to develop effective policies and regulations.  The Principles expressed a commitment to providing external reports on methane emissions data and working to standardize external reporting.

The practices and standards that underlie or result from the Principles may present themselves in formal industry standards, policy statements, and regulations in a variety of jurisdictions.  All companies with significant methane emissions should keep current on developments resulting from application of the Principles.

For a copy of the Principles click here.

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