October 8th, 2021
A trend that began in the natural gas-heavy Marcellus, Haynesville and Denver-Julesburg basins is making its way to the Permian Basin. Already, more than 10 billion cubic feet of US natural gas production has been certified as responsibly sourced, and Permian Basin players are making moves to certify their Permian production. ExxonMobil announced this summer it will certify production from its Poker Lake facilities in southeast New Mexico. Now, Laredo Petroleum and Chisholm Energy each are partnering with Project Canary to certify natural gas from their Permian Basin operations. Laredo is partnering with Project Canary to continuously monitor emissions from selected facilities in Howard County and initiating the certification process for all horizontal wells in its western Glasscock and Howard County development areas. Laredo company representatives told the Reporter-Telegram by email, “Laredo is proud of our proven track record of environmental stewardship, which is enhanced by our pledge to further reduce our GHG and methane emissions and eliminate routine flaring by 2025. By initiating Project Canary’s RSG certification process in our western Glasscock and Howard County development areas, we are further demonstrating our commitment to sustainability and remaining one of the most responsible operators in the Midland Basin.” Fort Worth-based Chisholm is focused on the southeastern New Mexico portion of the Permian, Scott Germann, Chisholm Energy CEO, told the Reporter-Telegram in a telephone interview. He noted that through the pilot agreement, Project Canary will deploy its Canary X continuous, real-time emissions monitoring technology at a location in Lea County, which Germann noted has more rigs in operation than any other county in the nation, followed by Eddy County, New Mexico. Chisholm has always been focused on its environmental impact, in part because of its work in New Mexico and with the federal Bureau of Land Management, he said. The company already flew methane-monitoring drones across its locations, he said. In talking with the company’s sponsors, Warburg Pincus and Ontario Teachers’ Pension Plan, he said the decision was made to get further ahead in its emissions mitigation efforts. Project Canary was chosen to offer continuous monitoring. “It’s the right thing to do and we thought it’s the next progression on environmental impact,” Germann said. “Whether you’re talking RSG — or later RSO as well — we thought that should go hand-in-hand with other operations. If we can lower our environmental impact and get paid to do so, that’s a win-win.” The company’s natural gas is a commodity it doesn’t want to flare, especially with natural gas prices currently so high, he said. Anna Scott, co-founder of Project Canary, said her company is talking with a number of Permian Basin players, who she said are watching as certification efforts kick off in the region. Speaking with the Reporter-Telegram by telephone, Scott said companies are increasingly being held to higher ESG – Environment, Social and Governance – standards and must not only issue sustainability reports but provide external vetting. Project Canary independently certifies individual wells utilizing 600 various data points to determine a score. At its core, she said, the process will work in certifying natural gas wells or oil wells. “We have seen in the marketplace deals happen at a premium,” Scott said. “Producers look to recoup the costs associated with enhanced monitoring, enhanced technology. Utilities and liquefied natural gas buyers are interested in paying a premium to support that.” It is a surprisingly small cost, only pennies on the dollar, she said. That means the premiums are enough to incentivize producers while not enough to raise consumer prices. Some of the producers’ efforts are hard work, she continued: Building processing units, stop flaring, sending pumpers out more frequently to repair leaks. They need to be rewarded, she said. Scott said the deals with Laredo and Chisholm show small producers are as forward-thinking on ESG as their larger counterparts. The growth in certification has been “truly an explosion in the best way possible” for her company, she said. Project Canary has already doubled in size and is hiring, including to serve the Permian Basin. As the certification effort progresses, Germann said Chisholm will offer advice and assistance to other operators interested in certifying their production, offering lessons learned from the process. “We’re all in this together,” he said.