The US Environmental Protection Agency (EPA) released a 577-page proposal Nov. 2, 2021, to both increase controls on emissions of methane and other greenhouse gases (GHG) and volatile organic compounds (VOC) resulting from new oil and gas exploration and production and, for the first time, regulate emissions from existing wells. The Department of Transportation, meanwhile, proposed expanded regulations intended to reduce methane leaks from natural gas gathering lines in onshore rural areas and the Bureau of Land Management did the same for emissions from oil and gas operations on federal lands.
EPA says its proposal would update and strengthen current requirements for new sources, broaden the types of sources covered by those standards, and encourage the development and deployment of cost-effective technologies to further reduce pollution from oil and natural gas sources. The proposal also would regulate some sources for the first time, including well liquids unloading, natural gas-driven intermittent vent pneumatic controllers, and oil wells with associated gas. Another first is defining guidelines for states to follow in their efforts to reduce methane emissions from existing oil and gas infrastructure.
The proposal will require, among other things, rigorous leak detection and repair at well sites and compressor stations, widespread conversion of pneumatic controllers to zero-emitting technologies, and the elimination of associated gas venting. Overall, according to EPA, the proposed requirements would reduce by about 75% emissions from the sources, equipment, and operations the proposal covers.
Aspects of compliance also include periodic optical gas imaging at well sites and compressor stations as well as a 95% reduction in VOC and methane emissions at storage vessels, centrifugal compressors, and pneumatic pumps. Leaks found under the new monitoring program would have to be repaired at both new and old sites. Mitigation measures could include anything from replacing leaky pipes to installing vapor recovery systems in storage tanks.
Costs, reaction
EPA’s Regulatory Impact Analysis estimates the value of 2023-35 cumulative net climate benefits from the proposed rule, after accounting for the costs of compliance as well as savings from recovered natural gas, at $48-49 billion, or about $4.5 billion/year. Climate benefits were estimated using the social cost of GHG and represent the monetary value of avoided climate damages associated with a decrease in emissions.
The American Petroleum Institute’s (API) initial reaction to the proposed methane rule was positive. Senior vice-president for policy, economics, and regulatory affairs Frank Macchiarola said that API supports “direct regulation of methane from new and existing sources and [is] 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.”
Just a few days before the EPA issued its proposal, however, the Supreme Court agreed to consider four environmental cases addressing the agency’s authority to regulate GHG emissions. Its ruling, expected by third-quarter 2022, could impose new limits on the ability of Congress to delegate rule-making authority to regulatory agencies.
Efforts on the part of industry to participate in the crafting of effective regulation are well-founded and an essential component to developing rules that will be both beneficial and sustainable. Reducing the autonomy of regulatory agencies, however, is not a matter to be taken lightly. Yes, it will make the imposition of new regulations more difficult by virtue of having to pursue them through the legislative process, but it will do the same for the removal of outdated rules.