(Bloomberg) -- Natural gas drillers’ earnings would take a hit from a potential U.S. crackdown on methane leaks, according to Citigroup Inc. -- but the magnitude of the impact depends on how emissions are measured.

Lawmakers have proposed adding a $1,680-per-ton fee on methane to the budget bill making its way through Congress. If the levies are based on figures reported by the companies themselves, the hit to gas producers will be less than 1% of 2023 earnings, Citigroup said. But if the gauge is based on the much higher levels of emissions detected by satellite from shale basins, the financial impact could jump to 8.5% of earnings, according to the bank. 

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Basin-wide studies done using satellite data point to methane emissions “an order of magnitude higher” versus what companies have reported, Citi analysts including Scott Gruber wrote Wednesday in a note to investors. “While there’s still debate as to whether or not a methane fee is included in the reconciliation bill, another key on this topic appears to be the accuracy of reported fugitive methane figures.”

Energy companies are touting natural gas as a clean-burning fuel because it produces far fewer emissions than coal. But methane leaks from production sites, compressor stations and pipelines undermine the environmental case for gas. Methane is about 80 times more potent than carbon dioxide over its first two decades in the atmosphere.

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