MiQ targets LNG buyers amid oversupplied US certified gas market

US certified natural gas is selling for little to no premium because of a “gigantic” oversupply of certificates, but the demand side could pick up as LNG buyers in Europe or Asia are increasingly interested in buying certified cargoes, Georges Tijbosch, CEO of the non-profit certificate issuer MiQ, said March 20.

From a standing start in 2022, MiQ now certifies 22 Bcf/d in the US, or around 20% of total natural gas production, Tijbosch said on the sidelines of CERAWeek by S&P Global in Houston. “The buyers, from what we can see, are in the single-digit percentages versus that 20%.”

Buyers do pay a premium for certified natural gas, Tijbosch said. “The premium is just vey low. From what we hear the premiums are between one cents and five cents.”

“Right now we’re in the earlier stages,” William Jordan, general counsel at EQT said March 19 at a CERAWeek panel discussion. “Not everything commands a premium but that’s where it’s going to go and that’s where it needs to go.” EQT has over 4 Bcf/d of production that is being certified by third parties like MiQ. For now, “we’re not even asking for a premium.” Jordan said.

EQT also sees certification as a way to push back against environmental groups who have made building egress capacity in the Northeast particularly difficult. “We have an inventory that we could effectively double for 30 years. Right now we cannot do that… because we don’t have any pipelines, and it’s because of concerns around the environment and natural gas. We think those concerns are misguided.”

At the same panel, Tijbosch compared the certified natural gas market to the early stages of the EU’s emissions trading system. “For about five or ten years it traded near zero. Everybody gave up. And then the EU tinkered around with it.” December 2024 EU allowances settled at around Eur61/mtCO2e March 19, and were over Eur100/mtCO2e in April 2023, data from Intercontinental Exchange shows.

“That’s the kind of world we will end up in,” Tijbosch said. “Whether its embedded or explicit, there are going to be carbon and or methane prices in the world”

LNG buyers

The demand for US certified gas is likely to be driven LNG buyers in Europe and Asia, Tijbosch said. “Here at CERA, we’re speaking to several companies that are very very keen to get this going, to deliver certified cargoes into Europe or into Japan. That’s what we’re going to do this year.”

MiQ announced March 19 a supply chain protocol to estimate emissions across the entire supply chain.

The open-source protocol is based on based on recognized life cycle assessment principles, the company said in a statement. It “accommodates multiple data sources–certified and uncertified data–and provides a ranking of the quality of each methodology, MiQ said.

The framework fills in gaps for parts of the supply chain which are not currently being certified, Tijbosch said. Gaps exist because there are seven segments of the supply chain from US producer to landed Europe.

“That is different people for every supply chain,” he said. “That’s just going to take time for that system to develop.”

For now, the average US gas molecule “doesn’t look good” for LNG buyers. US production has average methane emissions of 1%, which could rise to almost 3% when including midstream and LNG terminals, Tijbosch said.

Production with a grade C certification from MiQ already meets the EPA’s proposed methane intensity standards of 0.2%. MiQ’s standards are more robust because they are externally audited, whereas the EPA rules will be self-reported, Tijbosch said.

“I think that’s going to create some tension in the market,” he said.
Source: Platts