RNG report analyzes record natural gas prices

WYOMING – One of the leading global energy data companies released a reporter earlier this week that analyzed renewable natural gas factors across the United States.

Enverus Intelligence Research issued the report on Tuesday as national attention focuses on energy.

“Renewable natural gas is a prime example of how carbon accounting can impact investment decision,” John Gutentag, the report’s author, said. “The produced natural gas is functionally equivalent to fossil fuel gas, but its attractive carbon profile leads to realized prices three to 11 times higher than the already decade-high $8.50/MMBtu (metric million British thermal unit) Henry Hub spot price.

“We expect low-carbon funds to chase the strong economics and carbon profiles of RNG (renewable natural gas) projects, but we don’t think there is enough scale in the U.S. to make more than about 1 to 2 percent impact on the domestic natural gas market.”

There were three key takeaways from the report.

For one, RNG projects produce low, or even negative, carbon natural gas from plant or waste materials, which enables them to gain carbon credits that may push prices anywhere from $30/MMBtu to more than $100. Those would be exponentially higher than the recent decade-high Henry Hub spot price of about $8.50/MMBtu.

The quickly growing market remains small at 185 MMcf/d (million cubic feet per day) RNG market supply. Its growth, however, was measured at 29 percent. The report expects demand to grow four-fold by 2030 to 855 MMcf/d, based on existing procurement targets. To put that into context, the U.S. domestic market currently consumes around 83 Bcf/d (billion cubic feet per day).

The report concluded and led Enverus associates to believe landfills represent the highest volumetric RNG potential and estimate about 1,030 MMcf/d of total possible capacity in the U.S. with the potential of 870 MMcf/d from landfills with either planned projects or within 5 miles of existing gas infrastructure. Currently, the nearest landfills to natural gas gathering or transmission pipelines in Sublette County are in Natrona County or northern Utah.