Denver Business Journal
Oct 11, 2021
By Greg Avery
A Denver-based natural gas company may be the first producer to sell certified “responsibly sourced gas” to buyers.
PureWest Energy LLC, which operates wells in southwest Wyoming, this week took bids on 7% of its natural gas output that’s been certified as coming from net-zero wells and being responsibly sourced. The gas is being offered for winter or one-year delivery starting in November.
“We’re trying to see what the demand is out there,” said Chris Valdez, CEO of PureWest, in an interview. “We want to see how this resonates with the market.”
PureWest was previously known as Ultra Petroleum and UP Energy, prior to reorganizing in Chapter 11 bankruptcy and bringing on new executive management. The company employs 150 people, two-thirds of them at the company’s Wyoming locations.
Its natural gas comes from wells in southwest Wyoming and is delivered via pipelines primarily to utilities and other wholesale gas buyers in the Pacific Northwest and southern California.
Denver-based Project Canary, an environmental monitoring service startup, verified very low carbon-dioxide emissions from the wells clustered on two PureWest well pads. PureWest bought carbon offsets covering 12,000 tons of carbon dioxide emissions by the company and its vendors, allowing it to claim the 90-well output as having net-zero carbon impact.
If the offer attracts a buyer, it will be the first known sale of “responsibly sourced gas” in the U.S. that’s third-party verified from production to delivery, the companies say.
The PureWest sale will prove some buyers will jump at the chance to purchase responsibly sourced gas and likely pay a premium, justifying the extra effort by oil and gas companies to certify their production as net-zero carbon, predicted Chris Romer, CEO of Project Canary.
“The starting gun just went off for this new market,” he said. “This is it. It’s here.”
PureWest’s two well pads that have been certified as net-zero join nearly 10% of the wells Project Canary monitors that achieve the company’s highest rating for carbon impacts. PureWest’s are the first operations from entire multi-well pads to hit that high of a rating, Romer said.
Project Canary, a 48-employee company, has dozens of clients that operate in most of the major U.S. oil and gas basins. The company feeds data from its emissions sensors in oil and gas fields into a repository managed by Colorado School of Mines, which offers third-party validation.
PureWest hasn’t had to change much about its operations to achieve Project Canary’s platinum level certification, Valdez said.
He attributes that to high standards the company sets for its wells, which are on federal land and must meet methane leak reduction standards. The net-zero certification goes beyond what federal rules require.
PureWest aims to have 779 of its remaining natural gas wells nearby, which account for 70% of its production, certified as net-zero by the end of the year. The company aims to have other wells, ones it picked up in recent acquisitions of other companies, certified in 2022, Valdez said.
Achieving certification isn’t permanent.
Company operations are periodically reviewed by Project Canary to ensure they qualify for their current rating.
PureWest is looking for ways to lower the .04% carbon dioxide emissions intensity of the natural gas its certified wells produce, Valdez said.
“There’s always an opportunity to improve,” he said. “This isn’t just one and done.”