Frack-Free Natural Gas: The Future of the Industry?
In November, natural gas producer Carbon Creek Energy, accomplished a groundbreaking achievement for the natural gas industry when they offered the first-ever Frack-Free Natural Gas Certificates to energy services company East Coast Power & Gas. Until now, a mechanism for authenticating and independently verifying the environmental quality of a product of this kind did not exist. By pioneering this method, Carbon Creek has tapped into a significant, growing need in the energy industry, and paved the way for offering a new, verifiably green natural gas product to consumers.
Alexandre Baldassano, Managing Director of Regulatory & Renewable Resources at GP Energy Management, was heavily involved in this project, working with Carbon Creek to develop and market their Frack-Free Natural Gas Certificates. He sat down with Energy Pages to discuss this industry innovation and its far-reaching potential.
For many years, renewable energy credits (RECs) were the standard for substantiating the environmental quality, or “green” nature of electrical power. One renewable energy credit represents one megawatt-hour of renewable electrical energy. Thanks to the existence of RECs, many states seamlessly implement renewable energy requirements (Renewable Portfolio Standards) to ensure compliance and assure consumers they are purchasing environmentally friendly power produced from clean generation resources.
According to Baldassano, proving the environmental quality of natural gas is historically more difficult, thanks to the absence of a REC equivalent and regulatory guidance in the natural gas industry. While producers can use carbon offsets or allowances to offer carbon-free natural gas products, there has been no way to quantify and verify when natural gas has been produced in a frack-free way, a way that does not use the more damaging process of excavation known as fracking.
This has been particularly troubling, because in some areas, natural gas produced by fracking is illegal, yet consumers have no way of knowing if their natural gas complies with the law.
Carbon Creek is unique in the industry because they access natural gas from Wyoming’s Powder River Basin, where, thanks to the geology, fracking is not required. The only thing needed to set this resource apart was a way to verify production data at the well-head and have a third-party substantiate the frack-free nature.
What does the third-party actually certify? According to Baldassano, they independently verify that the entire process of extracting the natural gas has been environmentally friendly.
“You can point to one dekatherm of frack-free [natural gas], and you can look at the whole lifecycle, and attribute it to one of East Coast Power & Gas’ customers. The transparency is there, the viability is there, and the integrity of the product is there. Carbon Creek achieved what no one else has been able to.”
Now that Carbon Creek developed a two-pronged system of data validation and third-party verification, Baldassano believes the same system can be used on a broader basis. While most domestically produced natural gas is not geologically accessible without fracking, the ability to identify and verify natural gas can provide governments with a way to encourage and require the use of environmentally friendly natural gas products, just as they have been doing with electrical power.
“Considering that over the last 8 years, over 90 percent of enacted state-level legislation has been bullish for growing a renewable portfolio standard on the power side, I don’t think it’s a long shot to believe a frack-free or green-gas standard will be adopted by one of these states, particularly when you have a robust retail market in power and gas.”
Carbon Creek may have been the first to provide frack-free natural gas certification, but they likely won’t be the last, which could be good news for consumers and states increasingly concerned with the renewable and environmentally friendly aspects of their energy landscape.
About GP Energy Management
GP Energy Management is an outsourced energy risk management firm dedicated to creating unique solutions for the wholesale, retail, and developing energy marketplace. GP leverages its power, gas, and renewables expertise in both the wholesale and retail energy markets to create and execute customized energy strategies.
About Alexandre Baldassano
Alex Baldassano joined GPEM as a founding partner in 2010. Baldassano runs the renewable energy and regulatory services businesses, leading the team responsible for navigating the dynamic regulatory environment to identify, structure, and execute unique solutions for renewable power producers to monetize their assets. Additionally, he is responsible for managing the REC portfolios of more than 30 compliance and voluntary buyers while maintaining their overall compliance at the State and federal level. Previously, Alex worked for 3 years at the premier international environmental commodity hedge fund, Natsource LLC where he held various roles in origination, marketing, and portfolio management. Alex graduated from Haverford College with a BA in Economics and completed his MBA at Fordham University.
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