ONE Future Coalition

About ONE Future ONE Future is the trade name for “Our Nation’s Energy Future Coalition, Inc.” ONE Future is a unique coalition of leading companies1 with operations across every part of the natural gas supply chain. ONE Future’s member companies collectively produce, process, transport and retail roughly a quarter of all the natural gas used in the United States. Formed in 2014, ONE Future is developing innovative policy and technology solutions to environmental and operational challenges across the natural gas industry.

ONE Future has also developed a unique private-public partnership under the EPA’s Methane Challenge. Members may participate in the Methane Challenge program by employing EPA approved estimation methods, implementing reduction strategies the company knows to be most effective, and reporting performance in a transparent manner.

Our Vision ONE Future member companies aspire to continuously improve the energy delivery efficiency of the natural gas supply chain by reducing total methane emissions to less than one percent of gross production, a scientifically developed target. By promoting smarter policy approaches and working to identify solutions across every segment of the natural gas supply chain, our members can deliver better results to their customers, increase value to their shareholders, and improve our environment.

Why was ONE future formed? ONE Future was founded on the premise that continuous improvement is possible and necessary. We share many of the public’s concerns, and we know that we can do better – and that we have to demonstrate that we are doing better. That’s why we formed ONE Future and why we are working with external stakeholders in government, academia, think-tanks and investment communities to review, assess and share technology and policy solutions to improve our operational efficiencies while minimizing our methane footprint.

Why are we focused on methane emissions? 1. To support the role that natural gas can play in a low-carbon economy. While natural gas has played a significant role in reducing over a billion tons of carbon dioxide emissions in the US, excessive methane leakage across the natural gas supply chain can erode the climate benefits of natural gas. Ensuring a sustained role for natural gas in a low-carbon economy requires that it be prudently developed, transported and distributed, with a focus on minimizing methane loss.

2. Methane is our product, so any emissions constitute a loss of saleable product and diminished efficiency.

1 As of January 15, 2017, ONE Future members include: Apache, BHP Billiton, Hess, Southwestern Energy, Kinder Morgan, TransCanada, Southern Company Gas, Summit Utilities and National Grid. More information can be found at http://www.onefuture.us/ 3. To be responsive to our shareholders and investment community, we want to ensure that we are transparent with our shareholders and the rest of the investment community about our “goal oriented” actions on methane emissions. 4. We want to innovate and minimize risks. Finally, the ONE Future design supports innovation that is intended to protect the environment and minimize regulatory and reputational risk by proactively shaping future policies, technologies and work practices.

Our Approach - Flexible. Performance-Based rooted in science Historically, regulatory agencies have approached environmental challenges with a prescriptive approach that mandates the adoption of specific technologies, practices or procedures for all impacted facilities. While a prescriptive approach may sometimes be effective in reducing the targeted pollutant — the prescriptive approach is rarely cost-effective. By focusing on the process or technology and not the outcome, the prescriptive approach frequently increases costs without achieving a commensurate environmental benefit. Additionally, by mandating specific technologies, the prescriptive approach tends to discourage (and often prohibits) the adoption of new, innovative technologies. As a result, prescriptive regulations that may initially be effective tend to show diminishing returns over time.

ONE Future begins with a focus on the outcome we want to achieve. In the case of methane emissions, that desired outcome is to collectively achieve an average rate of emissions that is equivalent to one percent (or less) of total natural gas production. Each company then has the flexibility to determine the most cost-effective pathway(s) to achieve the goal - whether that be deploying an innovative technology, modifying a work practice, or in some cases, retiring an asset. In order to demonstrate credible and measurable results, ONE Future companies agree to estimate their methane emissions and track their progress toward the methane intensity goal according to uniform, EPA-approved reporting guidelines2 and ONE Future’s methane emissions protocol3.

Combining a performance target with a flexible pathway allows member companies to deploy their capital where it will be most effective in reducing emissions. This is important, because most studies clearly show that the majority of methane emissions come from a small fraction of sources. ONE Future’s approach allows companies to focus their resources on identifying and addressing those sources.

Methane emissions: Defining the customer and investor risks.

Inefficiency: Efficiency is a fundamental cornerstone of our market valuation. Efficient operation includes cost effectively mitigating avoidable loss of methane in the natural gas supply chain. Operational inefficiency in the natural gas supply chain results in a degradation of the bottom line, reducing shareholder value and possibly increasing costs to our customers.

Regulatory: Demonstrating compliance with new or proposed rules will also be important at every stage of the natural gas supply chain. The ONE Future program will result in similar or greater reductions than a technology-based approach at significantly lower cost.

2 https://www.epa.gov/sites/production/files/2016-08/documents/methanechallenge_one_future_supp_tech_info.pdf

3 http://www.onefuture.us/wp-content/uploads/2016/08/ONE-Future-Methane-Intensity-Protocol-v-1-2016.pdf Reputational: Both residential and industrial gas consumers are demanding that their energy not only be reliable and affordable, but that it be clean and sustainable as well. We know that assuring environmental sustainability in our supply chain is critical to our economic sustainability as companies. Many are questioning our “license to operate” and methane emissions is one of the reasons. Sustainability concerns are by no means limited to our emissions, but we view the climate benefit of our product as being fundamental to the natural gas value proposition. We wouldn’t be here today if we didn’t take sustainability risk very seriously.

What is ONE Future doing to manage these risks? Quantifying impact. Each of the categories mentioned above are real, but in our view, manageable.  We formed ONE Future in an effort to proactively address impacts and avoid being in a reactive posture.  ONE Future does not seek to avoid regulations; when regulations are necessary, we want “smart” regulations that are designed to cost-effectively address any adverse impacts.  We believe strongly that we know our operations best and that our flexible, performance-based approach to managing emissions is the best way to harmonize regulatory priorities with commercial imperatives.

ONE Future has committed to Performance Targets that are Specific, Measurable, Achievable, Realistic and Time-bound (SMART) ONE Future companies have committed to achieving and sustaining a level of performance consistent with highly efficient operations.

Measuring Progress with Integrity, Transparency and Credibility. We have committed to transparently recording and publicly reporting our progress toward our goal on our ONE Future website each year. Our protocols for methane emission intensity estimation have been peer reviewed by both regulators at the EPA and by leading academic experts to assure that our work is technically sound and scientifically rigorous. EPA’s acceptance of the ONE Future approach in their Methane Challenge program lends further credibility to our measurement and reporting methods.

What is the governance structure of ONE Future? ONE Future is governed by a set of by-laws and is a “membership-based organization”. Membership is open to natural gas industry participants that have operations in the production, gathering and processing, transmission and storage, or distribution segments of the natural gas industry.

The Board of Directors is responsible for developing and recommending the policies and directives that govern the Coalition and that further the Coalition’s purposes. The Board of Directors consists of up to eleven (11) members (limited to one appointee per company) and has at all times at least one (1) member representing each segment of the natural gas supply chain. The Board meets generally at least 3-4 times a year.

Currently, there are two committees that report to the Board of Directors: the Policy Committee and the Technical Committee. The Policy Committee implements the directives of the Board with respect to the policy goals and priorities of ONE Future. This includes commissioning relevant papers and research and organizing advocacy efforts with policy makers and other stakeholders. The Technical Committee implements the directives of the Board with respect to any technical projects that are designed to advance ONE Future’s policy positions. Technical projects may involve funding of academic institutions, consultants and think-tanks to conduct studies, provide guidance during the execution of the studies and assist in the preparation of peer-reviewed papers.

The Board has the authority to form a non-voting Advisory Council, consisting of representatives of member companies, trade associations, environmental organizations, academic institutions, and other entities for the purposes of advising, counseling, and assisting in the effective implementation of the Coalition’s objectives.

For calendar year (CY) 2017, the Board has set membership dues at $20,000 per company.

What are the 2017 priorities for ONE Future? In CY 2017, ONE Future has several key priorities. The Policy Committee will continue to ensure ONE Future’s “rational middle” methane policies are communicated to relevant policy makers and stakeholders. This includes engagement with the new Administration in Washington, certain state regulators, environmental NGO’s and think-tanks. The Technical Committee4 has two key external projects underway with NETL (funded 100% by DOE) and Colorado State University. These research activities will support the improvements of methane quantification and analysis from the natural gas supply chain. A key internal project underway involves the preparation of a “Leak Detection and Repair (LDAR) White Paper” that incorporates data from “real world” experiences of ONE Future members from their respective standard operating practices, methane leak detection and measurement, directed inspection, maintenance and repair programs. This LDAR paper will support the development of appropriate programs and policies within companies and with external stakeholders. In addition, the Technical Committee continually reviews relevant methane research and technology developments and synthesizes the same for members. The Technical Committee will also develop the tools that are necessary for members to compute their performance and submit relevant reports to the EPA and/or ONE Future.

What are the long-term priorities for ONE Future? The number one long term priority for ONE Future members is to meet our emissions targets by 2025. In order to do this, we believe a performance-based framework is the optimal solution. ONE Future members will deploy existing technologies and practices to cost- effectively detect and mitigate methane emissions, and work to identify and implement new or enhancements to existing technologies that can further reduce the cost of detecting and mitigating methane emissions. ONE Future intends to leverage its diversity across the supply chain to seek out these new innovative solutions by attracting designers of emerging technologies and providing them with a platform for proving their effectiveness.

Last, ONE Future will continue to engage the investment and environmental community on both the issue of methane emissions and the benefits of natural gas in a low-carbon energy future.

4 In 2016, the Technical committee focused on finalizing the ONE Future – EPA technical documents and completion of the ICF Marginal Abatement Cost Study.