By Professor Jim Krane, originally published in The Conversation

What’s the cheapest, quickest way to reduce climate change without roiling the economy? In the United States, it may be by reducing methane emissions from the oil and gas industry.

Methane is the main component of natural gas, and it can leak anywhere along the supply chain, from the wellhead and processing plant, through pipelines and distribution lines, all the way to the burner of your home’s stove or furnace.

Once it reaches the atmosphere, methane’s super heat-trapping properties render it a major agent of warming. Over 20 years, methane causes 85 times more warming than the same amount of carbon dioxide. But methane doesn’t stay in the atmosphere for long, so stopping methane leaks today can have a fast impact on lowering global temperatures.

That’s one reason governments at the 2022 United Nations climate change conference in Egypt focused on methane as an easy win in the climate battle.

So far, 150 countries, including the United States and most of the big oil producers other than Russia, have pledged to reduce methane emissions from oil and gas by at least 30%. China has not signed but has agreed to reduce emissions. If those pledges are met, the result would be equivalent to eliminating the greenhouse gas emissions from all of the world’s cars, trucks, buses and all two- and three-wheeled vehicles, according to the International Energy Agency.

There’s also another reason for the methane focus, and it makes this strategy more likely to succeed: Stopping methane leaks from the oil and gas industry can largely pay for itself and boost the amount of fuel available.

Capturing methane can pay off

Methane is produced by decaying organic material. Natural sources, such as wetlands, account for roughly 40% of today’s global methane emissions. But the majority comes from human activities, such as farms, landfills and wastewater treatment plants – and fuel production. Oil, gas and coal together make up about a third of global methane emissions.

In all, methane is responsible for almost a third of the 1.2 degrees Celsius (2.2 degrees Fahrenheit) that global temperatures have risen since the industrial era.

Unfortunately, methane emissions are still rising. In 2021, atmospheric levels increased to 1,908 parts per billion, the highest levels in at least 800,000 years. Last year’s increase of 18 parts per billion was the biggest on record.

Among the sources, the oil and gas sector is best equipped to stop emitting because it is already configured to sell any methane it can prevent from leaking.

Methane leaks and “venting” in the oil and gas sector have numerous causes. Unintentional leaks can flow from pneumatic devices, valves, compressors and storage tanks, which often are designed to vent methane when pressures build.

Unlit or inefficient flares are another big source. Some companies routinely burn off excess gas that they can’t easily capture or don’t have the pipeline capacity to transport, but that still releases methane and carbon dioxide into the atmosphere.

Nearly all of these emissions can be stopped with new components or regulations that prohibit routine flaring.

Making those repairs can pay off. Global oil and gas operations emitted more methane in 2021 than Canada consumed that entire year, according to IEA estimates. If that gas were captured, at current U.S. prices – $4 per million British thermal unit – that wasted methane would fetch around $17 billion. The IEA determined that a one-time investment of $11 billion would eliminate roughly 75% of methane leaks worldwide, along with an even larger amount of gas that is wasted by “flaring” or burning it off at the wellhead.

The repairs and infrastructure investments would not only reduce warming, but they would also generate profits for producers and provide direly needed natural gas to markets undergoing drastic shortages due to Russia’s invasion of Ukraine.

Getting companies to cut methane emissions

Motivating U.S. producers to act has been the big hurdle.

The Biden administration is aiming for an 87% reduction in methane emissions below 2005 levels by the end of the decade. To get there, it has reimposed and strengthened U.S. methane rules that were dropped by the Trump administration. These include requiring drillers to find and repair leaks at more than 1 million U.S. well sites.

The U.S. Inflation Reduction Act of 2022 further incentivizes methane mitigation, including by levying an emissions tax on large oil and gas producers starting at $900 per ton in 2024, increasing to $1,500 in 2026. That fee, which can be waived by the Environmental Protection Agency and doesn’t affect small producers or leaks below 0.2% of gas produced, is based on the social cost to society from methane’s contribution to climate damage.

Customers are also putting pressure on the industry. Regulatory indifference by the Trump administration to U.S. methane flaring and venting led to cancellation of some European plans to import U.S. liquefied natural gas.

Reducing methane isn’t always straightforward, though, particularly in the U.S., where thousands of oil companies operate with minimal oversight.

A company’s methane emissions aren’t necessarily proportional to its oil and gas production, either. For example, a 2021 study using data from the EPA found Texas-based Hilcorp Energy reporting nearly 50% more methane emissions than ExxonMobil, despite producing less oil and gas. Hilcorp, which specializes in acquiring “late life” assets, says it is working to reduce emissions. Other little-known producers have also reported large emissions.

Investor pressure has pushed several publicly traded companies to reduce their methane emissions, but in practice this sometimes leads them to sell off “dirty” assets to smaller operators with less oversight.

In such a situation, the easiest way to encourage companies to clean up is via a tax. Done right, companies would act before they had to pay.

Using technology to keep emissions in check

Unlike carbon dioxide, which lingers in the atmosphere for a century or more, methane only sticks around for about a dozen years. So, if humans stop replenishing methane stocks in the atmosphere, those levels will decline.

A review of methane leaks in the Permian Basin shows the big impact that some regions can have.

Researchers found that gas and oil operations in the Permian, in west Texas and New Mexico, had a leakage rate estimated at 3.7% in 2018 and 2019, before the pandemic. A 2012 study found that leakage rates above 3.2% make climate damage from using natural gas worse than that from burning coal, which is normally considered the biggest climate threat.

Methane leaks used to escape detection because the gas is invisible. Now, the proliferation of satellite-based sensors and infrared cameras makes detection easy.

Companies such as GTI Energy’s Veritas, Project Canary and MiQ have also launched to assist natural gas producers in reducing emissions and then verifying the reductions. At that point, if leaks are less than 0.2%, producers can avoid the federal fee and also market their output as “responsibly sourced” gas.

Jim Krane, Fellow for Energy Studies, Baker Institute for Public Policy; Lecturer in Management – Energy, Jones Graduate School of Business at Rice University

Updated from original post that was published on 11/21/2022.

How to Chart a Path to a Consulting Career

Consulting is one of the most popular career paths for MBA graduates, and for good reason. Not only is it lucrative, with salaries around $176,000, consulting enables you to put creative problem-solving into action to help businesses succeed. At Rice Business, you’ll find four key advantages that prepare you to launch and thrive in a consulting career.

1. Design a Curriculum That Aligns with Your Goals

At Rice Business, your rigorous, STEM-designated coursework will help you cultivate the problem-solving skills that companies are looking for. That’s just one part of being a knowledgeable consultant, though. Rice’s customizable curriculum is designed to emphasize the soft skills required to be successful in consulting. This structure allows you to focus on multiple strengths and build up your experience to put you ahead when you graduate. 

2. Join a Program with a Strong Consulting Track Record

In 2024, 20% of the Full-Time MBA graduating class at Rice Business entered the consulting industry after graduation — making it second-largest employment industry for that class. They have been hired by Accenture, FTI Consulting, McKinsey & Company, Deloitte Consulting, Boston Consulting Group, L.E.K. Consulting and EY-Parthenon, to name a few. 

Getting the right degree at a top-ranked business school with a tight-knit culture is important for building connections needed for a consulting career. 

3. Leverage Experiential Learning to Set You Apart

Just one of the reasons Rice is one of the top-ranked MBA programs for consulting is the unlimited experiential learning opportunities that give you plenty of inspiration for the personal experience portion of a consulting interview

The Rice Business Board Fellows connects Rice MBA students with nonprofit boards to create positive change in the Houston community, with a goal of developing the next generation of leaders for the city’s nonprofits. By participating in this year-long program, you’ll serve on a local nonprofit board as a non-voting member, with a front row seat to how to make an impact on a board. And it isn’t only the students that benefit from the Board Fellows program. The local organizations gain a fresh perspective from the students as they look to solve problems or improve their organization.

As part of the core curriculum, professional and online MBA students at Rice Business take the Capstone Course, a consulting project that enables students to help community organizations in the Houston area. The MBA students work in teams to craft recommendations for organizations that are undergoing major growth or expansion plans or developing turnaround strategies, as well as new ventures in need of business plans. 

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Finally, students travel to another country for an immersive international learning experience built into the core curriculum for all MBA programs, including the online MBA. The Global Field Experience lets you take what you learn in the first year of the program and apply it to short-term consulting projects for organizations and communities in diverse cultural settings. Students are paired with a local business abroad — we work with 250 companies per year, usually a small business or entrepreneur — to solve real problems such as growth strategy and market expansion projects.

The Rice Business Board Fellows, the Capstone Course and the Global Field Experience are just a few of the experiential opportunities offered at Rice Business that will help set you apart in your interviews.

4. Tap Into a Network That Has Your Back

The Consulting Association, one of our student-led clubs, is dedicated to helping its members succeed in the consulting field. Through workshops, team practices and intra-school competitions, you can improve your skills at case analysis and interviewing. Plus, the club has a network of consulting and business leaders that you can learn from at their social events.

You also get support from our Career Development Office (CDO). Career coaches help you refine your behavioral interview stories to reflect your unique personal experience. You can also book time with an advisor to practice your interview skills and get feedback. Additionally, two Rice Business alums who went on to work at BCG and McKinsey (Matthew Thurman and Ryan Heider) developed a 10-week workshop, WayFinder, to help our students master case interviews. You can access the training for help with the problem-solving portion of consulting interviews.  

These academic, experiential learning and social opportunities and strong career support from the CDO will set you apart amongst a competitive field of aspiring consultants. Finding a consulting job doesn’t have to be stressful, with the support and foundation you’ll get here at Rice Business. You can learn more about our career outcomes here. 

Explore Our Rice MBA Programs

Rice Business will offer a Ph.D. with a concentration in organizational behavior starting next fall. The deadline to apply is Jan. 13, 2023.

The field of organizational behavior addresses topics such as leadership, power and influence, teams, networks, emotions, cognition, diversity, motivation and trust, as well as employee well-being, ethical decision-making and social justice. The new doctoral program’s broad interdisciplinary training will prepare students to draw from psychological and sociological perspectives to research the complexities of organizations and organizational life, focusing on the structures, environments and mechanisms that impact behavior.

“Organizational behavior faculty are at the forefront of research and teaching on the growing challenges of a modern workforce in a complex world,” said Scott Sonenshein, Rice Business’ organizational behavior area coordinator and a New York Times bestselling author. “Our program will invest in and train the next generation of professors so their research and teaching helps organizations become more effective, innovative, equitable and humane.”

The new concentration in organizational behavior joins existing Rice Business doctoral programs in accounting, finance and strategic management. The programs are intended for those aspiring to become faculty members at business schools at prestigious research universities. Doctoral students engage in coursework, teaching preparation and high-quality research at multiple levels of analysis.

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An expert in leadership and organizational change is available to speak on Twitter employees’ exodus.

“Leadership starts with a vision that inspires employees and sets expectations,” said Scott Sonenshein, organizational behavior area coordinator and the Henry Gardiner Symonds Professor of Management at Rice Business and a New York Times bestselling author. “Employees need to feel valued, secure and open to express their ideas, and not handed an ultimatum to work hardcore for an unknown vision.”

Prior to joining Rice Business in 2007, Sonenshein taught at the Ross School of Business at the University of Michigan, where he also received his Ph.D. in management and organizations. He also received a B.A. from the University of Virginia in business ethics and an master of philosophy from the University of Cambridge in management studies.

To schedule an interview with Sonenshein or for more information, contact Avery Franklin, media relations specialist at Rice, at averyrf@rice.edu or 713-348-6327.