• Rule to be first targetting methane at wells, pumps, pipes
  • Energy companies would have to detect and repair seeps

The Obama administration will unveil on Thursday the first explicit U.S. regulation of methane emissions with a rule designed to reduce leaks of the potent greenhouse gas from oil wells.

QuickTake Climate Change

The measure will require oil and gas companies to do a better job finding and plugging methane leaks at new wells, pumps, pipes, compressors and other equipment. It will be released by the Environmental Protection Agency, according to three people told of the plans who asked not to be identified prior to the formal announcement.

The primary ingredient of natural gas, methane is pound for pound 84 times more powerful than carbon dioxide at warming the atmosphere when measured over two decades. Previous regulations pared traditional air pollutants from some natural gas wells but did not specifically target methane.

"This is an incredibly important step," said Mark Brownstein, vice president of the Climate and Energy Program at the Environmental Defense Fund, in a phone interview earlier this month. "Methane is responsible for 25 percent of the warming that our planet is experiencing right now, and in the United States, the oil and gas industry is the largest source of methane emissions."

New Wells

The mandates will apply only to new and modified oil and gas industry sources of the greenhouse gas, but they set the framework for the EPA to impose similar requirements on nearly 1 million existing wells and other equipment nationwide.

President Barack Obama promised the U.S. would go after methane from those existing oil and gas sources during a March summit with Canadian Prime Minister Justin Trudeau. While the EPA might not finish writing a proposed rule before Obama leaves office, the agency is set to start the work soon by formally asking oil and gas companies for detailed information about methane emissions.

Industry leaders have lobbied against the rule, describing it as unnecessary in light of companies’ continuing work to pare methane emissions. American Petroleum Institute Vice President of Regulatory and Economic Policy Kyle Isakower credited "innovations by the oil and natural gas industry" as achieving "great progress" on the issue. "We are spending more than ever on reducing emissions," he told reporters in an April 19 conference call. 

Energy companies have a financial interest in keeping methane bottled up as it moves from the wellhead to compressor stations and into storage tanks, but some gas does seep out. As proposed, the rule would require energy companies to upgrade some equipment, use special emissions-capturing techniques when completing new oil wells and regularly search out leaks.

Inspection Surveys

Under the draft rule proposed last August, those inspection surveys would generally have to be conducted semi-annually. It was not immediately clear whether the EPA had stepped up the inspection schedule in the final rule in response to environmentalists’ pleas for quarterly monitoring.

Environmentalists also took aim at the EPA’s initial plan to exempt low-producing wells that generate less than 15 barrels per day of oil or its equivalent.

"Some of these oil wells that are only producing a few barrels of oil a day are leaking huge amounts of gas," Lena Moffitt, director of the Sierra Club’s Dirty Fuels Campaign, said in a May 3 interview. "To really get at the intent of this rule, they need to be covering these facilities that are leaking a lot."

The scope of the rule on new and modified sources is significant because it largely dictates how far the EPA can go with any future mandates for existing wells and equipment. It’s like a gate swinging open, said Conrad Schneider, senior counsel and legal director of the Clean Air Task Force, a nonprofit that seeks to reduce pollution. 

Climate Pledge

"If they only open it halfway, existing sources will be narrow," he said. "There is an opportunity to open the gate as wide as possible" so "a comprehensive existing source rule will follow from this."

The Obama administration has pledged to cut methane emissions 40 to 45 percent by 2025 over 2012 levels. Meeting that target requires an expansive approach, Schneider said.

But oil industry leaders warned that aggressive new rules -- especially coming on top of additional proposed mandates for wells on federal land -- could shut in some marginal wells and wipe out small, independent producers. Companies could spend more paring incremental methane emissions than they will recover by selling the natural gas they keep from leaking, industry groups said.

An EPA cost-benefit analysis of the rule last year assumed natural gas prices would climb to about $3.90 per million British Thermal Units. On Tuesday, futures contracts were trading at $2.17 per MMBtu.

"Smaller independents, many conventional well operators, and operators of wells that are marginally economical will not be able to weather the storm until natural gas reaches" EPA’s assumed price, the Independent Petroleum Association of America and American Exploration and Production Council warned in joint comments last year. "Wells will not be drilled or will be shut in prematurely, and other companies will simply go out of business because of EPA’s erroneous assumption on the price of natural gas."

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