Where Does the Marginal Methane Molecule Come From? Implications of LNG Exports for US Natural Gas Supply and Methane Emissions

Brian C. Prest
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Brian C. Prest: Resources for the Future

No 25-05, RFF Working Paper Series from Resources for the Future

Abstract: Surging exports of US liquefied natural gas (LNG) over the past decade have raised concerns about their potential to increase domestic gas prices and spur environmental impacts, both local and global, especially because methane, a potent greenhouse gas, commonly leaks from US oil and gas infrastructure. Yet methane leak rates vary widely—up to an order of magnitude—across sources of US oil and gas supply, creating uncertainty in the carbon footprint of US LNG. This paper models the impacts of increased US oil and gas export demand on domestic oil and gas prices, marginal oil and gas supply by US basin, and the implied methane intensity of that marginal supply. Each 1 billion cubic feet per day (Bcf/d) increase in gas export demand is estimated to increase domestic natural gas prices by approximately 2.5% while reducing crude oil prices by 0.5% due to the induced supply of coproduced oil. The US supply response to gas export demand comes disproportionately from basins with low estimated methane leak rates, led by Appalachia, yielding an effective methane intensity of the gas supply anticipated to meet export demand (1.7% leak rate) that is lower than the average US gas supply (3.1%). The supply response to an increase in oil demand shows the reverse pattern, with high-leak Permian supply crowding out low-leak basins like Appalachia, yielding a very high effective methane leak rate (9.1%). These widely varying effective methane leak rates suggest that the 2015 repeal of the US crude oil export ban may have been a bigger driver of US methane emissions than expanded LNG exports would be. In particular, model results suggest that US crude oil exports over 2015–23 drove methane emissions twice as large as those driven by US LNG exports over the same period, with the former’s induced emissions equivalent to those expected to be caused by more than 20 Bcf/d of gas exports.

Date: 2025-03-10
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