Differentiated Gas: Alignment on Definitions, Methodologies, and Labels
The lack of alignment around definitions adds an unnecessary transaction cost and hampers the development of an active and liquid market for differentiated natural gas.
Details
Core information and root causes
There is considerable disagreement across the industry about what the word “differentiated” actually entails. There are reasonable arguments for qualifying the gas at the well, the basin, or the country level, and nearly a dozen competing platforms and methodologies for monitoring, reporting, and verifying (MRV) methane intensity with no commonly agreed-upon floor for minimum performance.
The lack of alignment around definitions incurs a transaction cost; every commercial conversation effectively “restarts from zero” while buyers and sellers litigate the methodology, the boundaries, and the underlying assumptions before they can get to commercial terms. That kind of fragmentation is anathema to a liquid commodity market.