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(Alliance News) - Diversified Energy Co PLC on Tuesday hit back at a Bloomberg article detailing the firm's strategy of buying unused gas wells which are emitting methane.
The FTSE 250-listed energy company is focused on the acquisition of "mature, low-decline and low-risk" wells.
Shares in Birmingham, Alabama-based onshore upstream and midstream natural gas firm, formerly called Diversified Gas & Oil, slumped 16% in London on Tuesday at 106.14 pence each.
"Over the course of the last few months, the company has engaged in lengthy and transparent dialogue with the journalists to ensure the article was factually correct and provided appropriate context for their footage and assumptions," Diversified said.
It continued: "The company believes the article fails to reflect this extensive and constructive engagement, nor does it reflect the positive environmental, social and economic benefits stemming from the company's investment into - and stewardship of - its assets within communities in which the company operates."
The article, published on Tuesday, said the old wells that Diversified have snapped up all over the US tend to leak, and raw natural gas consists mostly of methane, which has far more planet-warming power than carbon dioxide.
"The company believes that aggregating producing wells and tailoring operating programs designed to improve their performance and emissions profile addresses a void in the industry whereby wells often pass from one operator to another creating a 'churn' effect, removing long-term accountability for asset integrity," Diversified hit back.
It continued: "Without capable operators like Diversified, often less capable, less financially stable or less accountable, operators acquire assets from companies that are more focused on developing new wells. As a consequence, mature wells sometimes fall into disrepair and potentially emit in excess of levels that simple, routine maintenance would limit."
Diversified said its business model of buying up these wells - and the article points out the company now owns more onshore US wells than anyone else, owning nearly double Exxon Mobil Corp - is "important" to manage costs.
Keeping costs down, Diversified said, allows it to improve well economics and "enlarging a platform from which it can administer its well optimisation programs designed to improve asset productivity while reducing their emissions."
Bloomberg visited some of Diversified's well sites and found methane leaks "at most" the places they visited. However, Diversified stressed that the wells sampled represent less than 0.05% of the company's total portfolio of assets.
"Extrapolated emissions across Diversified's entire portfolio are consistent with levels specified in the company's public reports," it said.
Diversified added: "We also understand that certain wells visited were non-producing and, importantly, were not emitting. The company had these wells on its list of those awaiting retirement, which it will safely retire in compliance with its long-term agreements using both internal resources and third-party vendors."
Diversified said it has a "well-established, highly successful and well-funded program" to systematically retire wells.
Bloomberg noted US state laws require that every well be plugged with cement after it runs dry - which can be an expensive and complicated chore.
Diversified said it has "demonstrated its commitment" by annually retiring more wells than required under its long-term agreements with Pennsylvania, West Virginia, Ohio and Kentucky.
However, Bloomberg noted that Diversified is not aware how much methane its wells are leaking. The company replied, saying it has recently invested in its well retirement personnel and equipment in an effort to "continuously improve its processes and reduce costs".
https://www.bloomberg.com/features/diversified-energy-natural-gas-wells-methane-leaks-2021/
By Paul McGowan; paulmcgowan@alliancenews.com
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