A Strategic Guide for Oil and Gas Companies

The oil and gas (O&G) industry is under increasing pressure to address its role in global methane emissions, which contribute significantly to climate change. Methane, a potent greenhouse gas, is responsible for approximately 45% of total GHG emissions from O&G operations. Given its impact, reducing methane emissions is one of the most viable and cost-effective decarbonisation strategies available to the sector. According to the IEA’s “Net Zero by 2050 Roadmap,” emissions from O&G operations must decline by over 75% by 2030 to align with global efforts to limit temperature rise to 1.5°C.

Despite the urgency, the pace of methane abatement within the O&G industry remains slow. However, a growing number of companies are stepping up their efforts, with more than 50 major O&G companies committing to near-zero methane emissions by 2030. This commitment, if achieved, could cut methane emissions by 23 million tons (Mt CH₄), significantly closing the gap toward achieving global climate targets.

To accelerate this transition, companies must take a systematic approach to reducing methane emissions across their operations. At BCG, we have identified six steps that serve as a framework to address regulatory requirements and unlock economic benefits through enhanced operational efficiency and potential revenue streams. Below is an overview of the six steps and their significance.

Step 1: set clear aspirations

The first step for any company is to define its methane emissions abatement aspirations. These goals can vary in scope but must, at a minimum, comply with local regulatory standards and align with the company’s broader strategy. Several O&G companies have committed to achieving near-zero methane emissions, defined as 0.2% intensity or less by 2030, and are working toward third-party certification of their low-methane emissions products. Publicly committing to such targets is crucial, as it helps to mobilise internal and external stakeholders, including employees, investors, and customers.

Step 2: secure funds for the methane abatement journey

Securing funding is a critical component of methane abatement. While many abatement solutions come with no net cost, especially when considering the value of the gas saved, some initiatives require upfront investment. Companies operating in jurisdictions with strong regulatory frameworks may benefit from government incentives or carbon credit markets. Collaborative efforts between countries and companies can also help reduce costs. International organisations such as the World Bank’s Global Flaring and Methane Reduction (GFMR) Partnership are emerging as potential sources of external funding for methane abatement projects.

Step 3: develop a practical emissions baseline

A realistic methane abatement strategy begins with developing an accurate emissions baseline. This involves identifying the key sources of emissions within a company’s operations, such as pneumatic controllers, storage tanks, and pipelines. Deploying a combination of detection and measurement technologies—ranging from satellite imagery to on-site sensors—enables companies to identify and assess the largest emissions sources. Conducting a pilot in an asset representative of a company’s portfolio can help progress in parallel building a practical emissions baseline, designing a company’s abatement program, and launching quick wins to cut emissions fast.

Step 4: integrate data, actions, and reporting

A major challenge in reducing methane emissions is the complexity of integrating emissions data with operational actions and regulatory reporting. Many O&G companies struggle with inconsistent data formats and lack streamlined interfaces to track emissions. Therefore, companies must develop a robust, scalable solution that can ingest and reconcile data across multiple detection technologies, operational systems, and reporting standards. Such a solution supports compliance with regulatory standards and provides actionable insights that can drive day-to-day operations and long-term structural changes.

Step 5: measure progress and earn recognition

Tracking progress is key to ensuring you are moving at the right pace and cost toward near-zero methane emissions. Accurate reporting fulfils regulatory requirements and plays a critical role in driving a company’s internal transformation efforts. As laws become stricter, companies must shift from estimation-based reporting to direct measurement of emissions. Reconciliation of bottom-up data (from equipment and field-level measurements) with top-down data (from satellite or drone-based monitoring) will be essential. Beyond regulatory reporting, companies aiming to sell near-zero methane emissions products will need third-party certification, such as by MiQ, to demonstrate their performance to customers and investors.

Step 6: kick-start abatement and transform operations

The final step is to initiate abatement actions and transform the company’s operations for the long term. Quick wins, such as replacing high-bleed pneumatic controllers with low-bleed versions, can provide immediate reductions in methane emissions. However, sustained progress requires embedding methane abatement into the company’s operational DNA. Establishing a central emissions control centre to manage leak tracking, repairs, reporting, and training will ensure that methane abatement becomes a routine part of operations. Ultimately, success in this endeavour hinges on integrating emissions control into the company’s broader decarbonisation strategy, including accountability, talent management, and cultural shifts.

Conclusion

The pathway to near-zero methane emissions offers O&G companies both a challenge and an opportunity. Companies can mitigate regulatory risks, avoid financial liabilities, and unlock new revenue opportunities by addressing methane emissions. The six steps outlined in this article provide a comprehensive framework for companies to accelerate their methane abatement efforts. However, corporate efforts alone will not be sufficient. Industry-wide progress will require supportive policies, rapid technological advancements, and improved collaboration among stakeholders.