Neither Industry Nor Environmental Groups Happy With New Methane Regulations

Everything is amazing and nobody is happy.

- Louis C.K.

The process of bringing oil and natural gas to the surface results in the emission of harmful gases, like methane, ethane, volatile organic compounds, n-hexane, benzene, toluene, ethylbenzene, xylene and sulfur dioxide.

Methane is especially problematic as it is a significant greenhouse gas (GHG). While the industry has taken steps to reduce methane releases during oil and gas production, it represents nearly 30 percent of the methane released in the United States.

The U.S. Environmental Protection Agency (EPA) just announced new regulations for new oil and gas production facilities in an effort to control methane and other harmful gases. The proposal includes mandatory requirements and voluntary participation by the oil and gas industry to achieve a 40 percent to 45 percent reduction of methane emissions from 2012 levels by 2025. While the proposed rules will initially apply only to new operations, it is widely expected that EPA will eventually regulate existing sources.

In an earlier blog entry, I wrote about how much natural gas is being flared off during oil production —totaling some $1 billion annually in North Dakota, alone. So, the process of capturing emissions serves not only an environmental purpose, but an economic one, too.

In 2014, EPA modified 2012 regulations that required industry to minimize emissions from compressors used to transport natural gas through pipelines; pneumatic controllers used to maintain liquid levels, pressure and temperature at processing plants and compressor stations; condensate and crude oil storage tanks; and natural gas processing plants. The process known as “green completions,” would require new equipment, but EPA estimated that the costs to industry for compliance could be recovered with 60 days for green completions and one year for other necessary equipment.

Neither the industry nor the environmental community appears happy with the announcement of this new proposal. Industry representatives, like America’s Natural Gas Alliance (ANGA), point out that EPA already has a voluntary system for the reduction of methane emissions and improved efficiency for the oil and gas industry, known as “Gas Star.” Under this program, ANGA insists that methane emissions are down significantly: “Natural gas production is up 37 percent since 1990, yet across the entire natural gas sector methane emissions are down 17 percent.” They would like to see more focus on voluntary programs than regulations and point out that natural gas use is central to the administration’s GHG reduction program.

Environmental groups join in criticizing the new proposal, but for different reasons. They see that the 10-year phase-in period as taking too long. Also, the proposal leaves alone existing sources, which represents the bulk of methane emissions. Finally, they seem to reject the view that any fossil fuel production and use is consistent with a response to climate change or harmful emissions —even natural gas.

If the Obama administration’s past efforts to combat GHG emissions are any judge, we can expect that it will meet with all stakeholders to craft regulations and develop a voluntary program this year. The administration will also earmark budget dollars to study and develop new technology and processes to reduce methane emissions. Once a specific plan is proposed, there will be a significant public comment period, which will include a series of public meetings and likely hundreds of thousands of comments. The final version will likely be close to completion sometime in 2016 —followed by the inevitable industry and environmental groups’ lawsuits.

Stay tuned!

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