Biden in ‘historic action’ to cut methane emissions from oil & gas operations
A U.S. government agency is proposing measures to cut methane emissions resulting from oil and gas operations as part of President Biden’s commitment to action on climate change.
The U.S. Environmental Protection Agency (EPA) on Tuesday proposed comprehensive new protections to sharply reduce pollution from the oil and natural gas industry – including, for the first time, reductions from existing sources nationwide. As explained by the agency, the proposed new Clean Air Act rule would lead to significant, cost-effective reductions in methane emissions and other health-harming air pollutants. The proposal was announced during the UN Climate Summit in Glasgow, COP26.
As part of this action, EPA is seeking comment on additional sources of methane to further strengthen emission controls and increase reductions from oil and gas operations. EPA is issuing the proposal in response to President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.
EPA Administrator, Michael S. Regan, commented: “With this historic action, EPA is addressing existing sources from the oil and natural gas industry nationwide, in addition to updating rules for new sources, to ensure robust and lasting cuts in pollution across the country.”
According to the agency, one-third of the warming from greenhouse gases occurring today is due to human-caused emissions of methane, a potent greenhouse gas that traps about 30 times as much heat as carbon dioxide over 100 years.
In the United States, the oil and natural gas industry is the largest industrial source of methane emissions, emitting more methane than the total emissions of all greenhouse gases from 164 countries combined. The agency added that oil and natural gas operations also emit smog-forming volatile organic compounds (VOCs) and toxic air pollutants such as benzene that harm public health.
EPA analyzed the proposed rule’s impact on natural gas and oil prices from 2023 to 2035 and estimates that changes would be small – pennies per barrel of oil or thousand cubic feet of gas. The proposed rule would reduce 41 million tons of methane emissions from 2023 to 2035, the equivalent of 920 million metric tons of carbon dioxide. That’s more than the amount of carbon dioxide emitted from all U.S. passenger cars and commercial aircraft in 2019. In 2030 alone, the rule would reduce methane emissions from sources covered in the proposal by 74 per cent compared to 2005.
Climate benefits from the proposed rule
EPA’s Regulatory Impact Analysis estimates the value of cumulative net climate benefits from the proposed rule, after taking into account the costs of compliance as well as savings from recovered natural gas, is $48 to $49 billion from 2023 to 2035 - the equivalent of about $4.5 billion a year. The climate benefits are estimated using the social cost of greenhouse gases and represent the monetary value of avoided climate damages associated with a decrease in emissions of greenhouse gas.
In addition to these benefits, EPA estimates that from 2023 to 2035, the proposal would reduce VOC emissions by 12 million tons and hazardous air pollution by 480,000 tons.
It would accomplish this through updated and broadened methane and VOC emission reduction requirements for new, modified, and reconstructed oil and gas sources, including standards that limit emissions from additional types of sources for the first time under the Clean Air Act.
In addition, it would achieve this through requirements that states develop plans to limit methane emissions from hundreds of thousands of existing sources nationwide, along with presumptive standards for existing sources to assist in the planning process.
Monitoring well sites, compliance, zero-emissions standard & more
Key features of the proposed rule include a comprehensive monitoring program for new and existing well sites and compressor stations; a compliance option that allows owners and operators the flexibility to use advanced technology that can find major leaks more rapidly and at a lower cost than ever before; and, a zero-emissions standard for new and existing pneumatic controllers (with a limited alternative standard for sites in Alaska), certain types of which account for approximately 30 per cent of current methane emissions from the oil and natural gas sector.
Other key features include standards to eliminate venting of associated gas, and require capture and sale of gas where a sales line is available, at new and existing oil wells; proposed performance standards and presumptive standards for other new and existing sources, including storage tanks, pneumatic pumps, and compressors; and a requirement that states meaningfully engage with overburdened and underserved communities, among other stakeholders, in developing state plans.
EPA also is requesting information on additional sources of methane for the agency to consider in developing a supplemental proposal to reduce emissions even further. EPA intends to issue a final rule before the end of 2022.
Oil & gas sector supports methane regulation
Responding to EPA’s announcement, the American Petroleum Institute (API), a trade association representing the oil and gas industry, supported the direct regulation of methane emissions.
API’s Senior Vice President for Policy, Economics and Regulatory Affairs, Frank Macchiarola, commented: “We support the direct regulation of methane from new and existing sources and are committed to building on the progress we have achieved in reducing methane emissions. EPA has released a sweeping proposal, and we look forward to reviewing it in its entirety. We will continue working with the agency to help shape a final rule that is effective, feasible and designed to encourage further innovation.”
Ryan Lance, CEO of U.S. oil and gas giant, ConocoPhillips, has also shared his views on the agency’s proposed rule. He said: “ConocoPhillips has actively supported the direct federal regulation of methane emissions from both new and existing sources and believes that the right regulation can help raise the performance floor for the entire energy industry. Reducing greenhouse gas emissions, including methane, is a major priority for us.”
According to Lance, ConocoPhillips will now review the EPA’s proposed regulation and work with the agency to “help develop a final rule that encourages meaningful methane emissions reductions, while also providing producers with the flexibility they need to continue providing critical energy supplies to consumers and businesses.”
However, while recognising that direct federal regulation represents a step forward in reducing emissions, he believes that the most viable and effective approach for reducing end-use emissions would be a well-designed, economywide federal pricing regime on carbon.
“Given the current absence of a carbon pricing policy, we support enactment of cost-effective methane regulations that would preserve a state’s ability to adapt the implementation to local conditions,” Lance concluded.
ConocoPhillips’ rival ExxonMobil has also supported the government’s move to reduce methane emissions.