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US considers stepping up methane emissions cuts

07 April 2021 Kevin Adler

The Biden administration and Democrats in Congress are gearing up for another run at mandatory reductions of the oil and natural gas industry's methane emissions, amid signals from the sector that it might accept some additional controls as part of its contribution to addressing climate change.

Given that methane has about 84 times the global warming potential of carbon dioxide over a 20-year period, agreement is widespread that further reductions are necessary.

The economic downturn due to the COVID-19 pandemic led to a short-term reduction in global methane emissions of 8-10%, the International Energy Agency (IEA) reported in January. But that one-time drop merely illustrates the scale of the challenge, said Christophe McGlade, IEA senior analyst. "This magnitude is required every year for the next decade" for the world to be on track to meet the goals of the Paris Agreement, he said in presenting IEA's report, "Driving Down Methane Leaks from the Oil and Gas Industry."

Adding further urgency, the US National Oceanographic and Atmospheric Administration released a report on 8 April that the reduction didn't even last for the entire year. Data collected at remote NOAA sampling locations indicated the global surface average for CO2 was 412.5 parts per million (ppm) last year, and that the 2.6-ppm increase was the fifth-highest year ever recorded.

The US oil industry has made major strides in controlling methane from flaring and venting of production, as well as detecting fugitive leaks from pipelines and infrastructure. The American Petroleum Institute (API) said US methane emissions from the natural gas value chain declined 14% from 1990 through 2017 (to 26.3 million mt), despite an increase in gas production of 50%. The US Environmental Protection Agency (EPA) said last year that methane emissions rates (methane as a percentage of oil-equivalent production) from the five largest-producing US basins fell by 60% from 2011 through 2018.

The API-led Environmental Partnership and the gas industry's ONE Future Coalition allow operators to share best practices -- identifying and fixing leaks, testing new technology -- which they say will lead to further improvements.

But climate activists in the US respond that the oil and gas industry's voluntary efforts are insufficient to solve the problem and that evidence is emerging that emissions of methane are much higher than has been reported. The most extensive study to date was completed by the Environmental Defense Fund (EDF) last year. Using satellite and aerial methane sensors, EDF said it found that the oil and gas industry emits at least 13 million mt of methane annually, or 60% higher than the EPA estimate of 8 million mt/year.

A Harvard School of Engineering and Applied Sciences Study, published in "Atmospheric Chemistry and Physics" this year, found that emissions estimated by EPA's modeling are 50-90% below actual figures.

And a report using data from EDF's Permian Methane Analysis Project found that methane emissions from Permian Basin oil and gas operations in April 2020 fell by more than 50% compared with March 2020 levels, correlated with a 10% drop in oil production and co-produced gas. However, by November, with oil and gas production back to prior levels, methane emissions were back to pre-COVID levels as well. This led EDF scientist and lead author David Lyon to argue "emissions from flaring and overloaded midstream sites can no longer fly under the policy radar. This science should put those problems squarely in policymakers' scopes in Texas, New Mexico, and at the federal level."

In addition, climate groups say the industry's focus on methane intensity, rather than total methane emissions, obscures the point that total emissions must decline, per the IEA's recommendation.

Rethinking Obama's methane rule and Trump's rollback

With a swing in presidential administrations and Democrats setting the agenda in Congress, the push for large reductions in actual methane emissions (not methane intensity levels) has returned.

In a 20 January executive order, President Joe Biden specifically authorized EPA to review a rule finalized in September 2020 under the Trump administration that rolled back EPA's 2016 Emission Standards for New, Reconstructed and Modified sources, also known as "The Methane Rule."

The Methane Rule required operators of new oil and gas wells, pipelines, and process­ing facilities to reduce intentional flaring and venting, regularly inspect equipment for leaks, and fix within 30 days any leaks they discover. EPA said the cost to meet the rules would be $360 million by 2025, with some of that offset by the sale of captured methane (an estimated 27 billion cubic feet in 2025).

EPA projected that methane emissions would be reduced by about 43% by the 2016 rule. The rule also set the legal stage for EPA to proceed with similar regulations for existing oil and gas facilities, but the agency did not propose them before President Barack Obama's term ended in 2017.

The 2020 replacement regulation, which is due to take effect in September 2021, changes the Methane Rule significantly. Among its features, it exempts small-production wells; repeals methane emissions requirements for oil and gas production and processing; and removes rules on emissions from gas transmission pipelines and storage.

Congressional Democrats also have taken aim at the rollback of the Methane Rule, too, introducing a resolution to invoke the Congressional Review Act (CRA). The CRA allows for the cancellation of regulations within 60 legislative days (days Congress is in session) through an expedited process.

Some 16 Democrats in the Senate co-sponsored the CRA resolution, as did 14 Democrats in the House of Representatives.

Scrapping the Trump rules would be faster through a CRA than via a new EPA rulemaking process, pointed out Representative Diana DeGette, Democrat-Colorado. "Time is of the essence in this fight to combat the climate crisis," DeGette said in a statement. "If we're serious about want­ing to stave off the worst effects of climate change before it's too late, then we abso­lutely have to take steps now to reduce the amount of methane that's being released into our atmosphere."

But the CRA route has its own dynamics that Democrats might wish to avoid. Because the Trump administration's rules were filed as revisions to the 2016 Methane Rule, the CRA would presumably eliminate those rules as well. And under the CRA, a "substantially similar" regulation cannot be written again by a federal agency, without congressional legislation that specifically authorizes it.

DeGette attacked methane through other legislation as well, sponsoring the Methane Waste Prevention Act of 2021, which would ban routine flaring and venting nationwide. This act would require EPA and the Bureau of Land Management to set standards for the oil and gas industry to reduce methane emissions from 2012 levels by 65% by 2025 and 90% by 2030. The bill was included as part of the Democrats' CLEAN Future Act, a comprehensive piece of energy legislation that seeks to reduce power sector GHG emissions by 50% from 2005 levels by 2030, and to net zero by 2050.

Industry's stance evolving

In some ways, the industry sees eye-to-eye with the federal government, such as the need to plug abandoned wells that leak methane. EPA reported that the approximately 3.2 million abandoned wells in the US are leaking about 7-8 million mt/year of carbon dioxide-equivalent, mostly methane.

At his first press conference on 25 March, Biden spoke about putting "pipefitters and miners to work capping those wells at the same price that they were charged to dig those wells," and he incorporated that idea in his American Jobs Plan rolled out on 27 March.

When it comes to operating wells, industry's response is more mixed.

In comments when API released its "State of the Industry" update on 13 January, CEO Mike Sommers said API will work with the administration on methane reduction. "We believe that this administration is going to want our industry at the table to make sure that they can put forward the most effective regulation possible in this space that can actually survive judicial scrutiny," he said.

Sommers expanded on this position in March, when he spoke about API's willingness to "advance direct regulation of methane from new and existing sources," and added: "We support cost-effective policies and direct regulation that achieve methane emission reductions from new and existing sources across the supply chain."

API's evolving position matches the position of some large oil companies, such as ExxonMobil and BP, which both said they support national methane regulations during the Trump administration's policy review. But the Independent Petroleum Association of America, which represents small producers, said that it still supports the 2020 regulations, which it said provide much-needed relief from what would have been "burdensome, costly regulations."

API also has said it could support Congress setting a price on carbon.

While such a wide-ranging measure seems unlikely to gain enough support from legislators, a bill that would set a fee only on methane emissions has been introduced in the Senate. The Methane Emissions Reduction Act, proposed by Democrats Sheldon Whitehouse, Cory Booker, and Brian Schatz, would mandate the Department of the Treasury to set fees on oil and gas producers' methane emissions beginning in 2023.

Trade groups did not respond to IHS Markit about their stance on a methane fee, but IPAA in the past has questioned the fairness and cost effectiveness of focusing so much regulation on a sector that contributes just 1.2% to the annual US Greenhouse Gas Inventory.

State activity

There's one more factor to consider, and it is potentially significant in controlling methane: state regulations. Oil and gas production is primarily regulated at the state level, and both Colorado and New Mexico have enacted new rules in the last few months that will tighten their emissions standards.

The New Mexico Oil Conservation Commission finalized a rule 26 March that took two years to complete. This rule will tighten the limits on methane emissions across the entire supply chain to 2% by 2026 through banning routine flaring and venting, imposing new reporting requirements, requiring increased frequency of inspections, and setting tighter timelines for repairing leaks.

However, echoing one of the key issues in federal regulations of methane, EDF and the Sierra Club testified against the rule's exemptions for low-producing/low-emissions wells.

Colorado's new regulations, which come into effect on 1 May, require zero-emission pneumatic controllers, which open and close valves at production facilities and well sites, for both new and modified operations. The nonprofit Conservation Colorado hailed the rule for its first-in-the-nation retrofitting of an estimated 100,000 existing controllers within the next 24 months.

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