IPT Analyses Emissions to Reduce Carbon Footprint and Minimize the Impact of Methane Tax
With the Inflation Reduction Act methane tax looming over the oil and gas industry, clients are challenged with reducing methane emissions to minimize the possibility of paying a methane tax. In addition, clients continue seeking ways to reduce their carbon footprint.
The Inflation Reduction Act implements a methane tax fee on emissions beginning in 2025. The tax is set at $900 per metric ton of methane for the 2024 reporting year and increases to $1,200 per metric ton for the 2025 reporting year.
The Challenge & Approach
This methane fee can significantly impact the bottom line of many oil and gas companies. As a result, companies potentially subject to the tax are actively seeking solutions to lower methane emissions.
A client requested a review of emissions associated with combustion processes to identify emission reduction opportunities. During the study, numerous combustion sources were analyzed, including emissions associated with drilling and completions, compression, and electrical generation.
The Approach
EPA methodologies were used to study various combustion scenarios using different fuel sources such as diesel, propane, and natural gas for drilling and completions, compression, and electrical generation activities.
The Solution
After analyzing various combustion scenarios and fuel sources, IPT determined that converting from diesel combustion to natural gas combustion, where possible, significantly reduced the client’s carbon footprint and methane emissions.
The Results
The conversion from diesel to natural gas combustion resulted in significant potential savings related to methane tax exposure while simultaneously reducing overall emissions and carbon footprint.