Southwestern Energy battling emissions after M&A spree scales up production

Southwestern Energy Company is looking to rein in emissions from its dual-basin U.S. unconventional gas portfolio after its business expanded greatly in recent years.

Scope 1 GHG emissions are still some distance over pre-acquisition levels, at 1.55 million tonnes of CO2e in 2021. This compares to 516,000 tonnes of CO2e in 2019, Evaluate Energy data shows.

In 2021, it recorded a nine per cent reduction in GHG emissions intensity, with 2022 metrics as yet unavailable.

Methane intensity also spiked in 2020, primarily due to the acquisition of assets with higher methane leak/loss rates than Southwestern’s legacy assets, though this has now been brought down to earlier levels.

The company says it minimized the impact by integrating new assets into its own, rigorous methane emissions-reduction programs.

It also attributes some of this success on the low emissions intensity profile of the two core basins in which it operates, Appalachia and Haynesville.

Acquisitions trail

Southwestern, which holds predominantly gas-based assets with some additional liquids production, has been firmly on the acquisition trail for the past few years.

• In September 2021, it acquired Indigo Natural Resources, expanding its operational footprint into Louisiana’s Haynesville shale basin.
• A few months later, in December 2021, it extended this with the purchase of GEP Haynesville, LLC, making it a key supplier to LNG exporters on the Gulf coast.
• Prior to that, in late 2020, SWN landed Montage Resources Corporation, which expanded its operations into Ohio, in the Appalachia Basin, where it also holds assets and producing wells in Pennsylvania and West Virginia.

This has seen output rise sharply, reaching 1.7 trillion cubic feet equivalent in 2022— including 4.2 bcf/d of natural gas and 97,000 bbls/d of liquids — up from a total production of 880 billion cubic feet equivalent in 2020.

Total proved reserves across both basins jumped significantly as well, reaching 21.6 trillion cubic feet equivalent in 2022, up marginally from 2021, but close to doubling 2020 figures of 12.0 trillion cubic feet equivalent.

ESG commitments

After the big spending spree, and then integrating its Haynesville acquisitions, president and chief executive officer Bill Way has been keen to bolster financial resiliency of late, paying down US$1 billion in debt during the past year.

There are also plans to moderate activity through 2023, he says, which will result in cost reductions, and slightly lower expected production, which may yield a dampening knock-on effect on emissions.

The company once again reaffirmed its commitment to lower-carbon, reliable energy in its latest set of quarterly results, published at the end of April.

Corporate responsibility and ESG is an area it has been reporting on for the past nine years, with the group making strong headway among its peers.

In 2022, the company announced a longer-term GHG emissions reduction goal consistent with a path to net zero by 2050.

Responsibly sourced gas

Southwestern has also been an early mover in its commitment to certify all wells as responsibly sourced gas (RSG) — a target achieved by the end of 2022 — and to continuously monitor for potential emissions on all well sites.

RSG is a distinct natural gas classification that is verified for low-emission attributes and environmentally responsible production, a badge of transparency that is gaining market interest.

In 2022, it signed a multi-year RSG sales agreement with the North American subsidiary of Uniper, one of Germany’s largest publicly listed energy groups.

Southwestern supplies Uniper with RSG for its U.S. midstream gas portfolio that includes domestic distribution to downstream customers, as well as natural gas to U.S. liquefaction and export facilities.

The Texas-based gas producer has also been a frontrunner in other areas, being among the first companies in the industry to achieve and sustain fresh water neutral operations.

In 2021, it achieved its sixth year of fresh water neutral operations, delivering nearly 16 billion gallons of fresh water to local communities — more than it consumed over those six years.

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