Released August 17, 2020 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--In a move cheered by independent Oil & Gas Producers but opposed by major integrated firms like Royal Dutch Shell Plc (NYSE:RDS.A) (The Hague, The Netherlands), ExxonMobil Corporation (NYSE:XOM) (Irving, Texas) and BP Plc (NYSE:BP) (London, U.K.), the Trump administration last Thursday unveiled two final rules that would undo rules enacted by the Obama administration to lower methane emissions from the oil and gas industry.
The new rules, almost certain to be litigated, come as some states are grappling with rising levels of vented and flared natural gas, caused by perennially low prices, weak demand and an inadequate infrastructure to process the associated gas that is produced alongside crude oil.
Methane accounts for about 10% of U.S. greenhouse-gas emissions but it is about 25 times more potent than carbon dioxide in trapping the earth's heat, according to estimates from the U.S. Environmental Protection Agency (EPA). Data from that agency shows the oil and gas industry has long been the nation's largest emitter of methane, contributing an estimated 30% of methane emissions in 2018.
The new rules would apply to all wells drilled after 2016. The Trump administration has been working for two years to scale back the methane-capture rules enacted by the Obama administration, arguing they are an unnecessary and duplicative burden that falls heavily on smaller firms.
The EPA estimated the new rules would save the industry about $100 million per year over the 2021-2030 period. The new rules also would increase methane emissions by about 850,000 short tons, volatile organic compounds (VOCs) emissions by 140,000 short tons and hazardous air pollutants (HAPs) emissions by 5,000 metric tons over that same timeframe compared with the estimated reductions contained in the Obama-era rules, according to the EPA's Regulatory Impact Analysis for the new rules.
The administration issued two new rules under New Source Performance Standards (NSPS) for the oil and gas industry. The new rules will be published in the coming days in the Federal Register.
One rule, called the "policy package," holds that the Obama EPA's extension of methane-capture rules to the Pipelines and Terminals industries was improper and rescinded emissions standards for those industries, according to a statement from the EPA. The policy package also requires oil and gas operators to reduce emissions of ozone-forming VOCs in the production and processing of oil and gas, but the rule removes methane-control requirements for the production and processing segments. The EPA has said the pollution controls used to reduce VOC emissions also reduce methane emissions, making clear that the separate regulation of methane imposed by the 2016 rule was "both improper and redundant."
The second rule, referred to as the "technical package," includes what the EPA called "commonsense changes to the NSPS that will directly benefit smaller oil and gas operators who rely on straightforward regulatory policy to run their businesses and provide Americans with reliable, affordable energy."
The rules, announced by EPA Administrator Andrew Wheler in Pittsburgh, Pennsylvania, seem to have been issued with an eye on the November 3 elections. Pennsylvania is a large gas-producing state that President Donald Trump narrowly won in the 2016 election. Slumping demand for oil and gas, coupled with low prices, has hurt energy companies in Pennsylvania and elsewhere, costing many employees their jobs. Two oil and gas companies with a large presence in the Keystone State, Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas) and EQT Corporation (NYSE:EQT) (Pittsburgh, Pennsylvania), reported large losses in the second quarter. A third, Cabot Oil & Gas Corporation (NYSE:COG) (Houston, Texas), reported a profit that was down sharply from the comparable year-earlier quarter. Smaller firms reported poor financial results.
"The EPA has been working hard to fulfill President Trump's promise to cut burdensome and ineffective regulations for our domestic energy industry," Wheeler said last Thursday in Pittsburgh. "Regulatory burdens put into place by the Obama-Biden administration fell heavily on small and medium-sized energy businesses."
A New York Times article quoted Lee Fuller, a vice president at the Independent Petroleum Association of America (IPAA), as saying "the burden of the rule falls overwhelmingly on smaller, independent companies." The IPAA represents smaller oil and gas companies.
"They have a rule that was written for all these bigger companies," continued Fuller. "They would basically be continuing to do what they're already doing now. But these small companies -- that rule would just kill them."
The new rules could be undone in early 2021, however, if Democratic presidential candidate Joe Biden defeats President Trump in November, the House of Representatives remains Democratic-led and the U.S. Senate flips to Democratic control. The Congressional Review Act allows lawmakers in the new Congress to overturn, by a simple majority, any executive-level rule enacted by the previous administration within 60 legislative days prior to the November election.
States and environmental groups that have consistently clashed with the Trump administration's efforts to undo the energy and environmental rules enacted during the Obama administration, scorned the new rules.
"What the administration is doing is fundamentally flawed," said Fred Krupp, president of the Environmental Defense Fund. "It ignores the facts." Research from the EDF shows methane emissions are about 60% higher than what the EPA has previously estimated.
The Natural Resources Defense Council (NRDC) said it will launch a legal challenge to the new rules. "We will see EPA in court," said David Doniger, head of climate policy at the NRDC.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook-Twitter-LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
The new rules, almost certain to be litigated, come as some states are grappling with rising levels of vented and flared natural gas, caused by perennially low prices, weak demand and an inadequate infrastructure to process the associated gas that is produced alongside crude oil.
Methane accounts for about 10% of U.S. greenhouse-gas emissions but it is about 25 times more potent than carbon dioxide in trapping the earth's heat, according to estimates from the U.S. Environmental Protection Agency (EPA). Data from that agency shows the oil and gas industry has long been the nation's largest emitter of methane, contributing an estimated 30% of methane emissions in 2018.
The new rules would apply to all wells drilled after 2016. The Trump administration has been working for two years to scale back the methane-capture rules enacted by the Obama administration, arguing they are an unnecessary and duplicative burden that falls heavily on smaller firms.
The EPA estimated the new rules would save the industry about $100 million per year over the 2021-2030 period. The new rules also would increase methane emissions by about 850,000 short tons, volatile organic compounds (VOCs) emissions by 140,000 short tons and hazardous air pollutants (HAPs) emissions by 5,000 metric tons over that same timeframe compared with the estimated reductions contained in the Obama-era rules, according to the EPA's Regulatory Impact Analysis for the new rules.
The administration issued two new rules under New Source Performance Standards (NSPS) for the oil and gas industry. The new rules will be published in the coming days in the Federal Register.
One rule, called the "policy package," holds that the Obama EPA's extension of methane-capture rules to the Pipelines and Terminals industries was improper and rescinded emissions standards for those industries, according to a statement from the EPA. The policy package also requires oil and gas operators to reduce emissions of ozone-forming VOCs in the production and processing of oil and gas, but the rule removes methane-control requirements for the production and processing segments. The EPA has said the pollution controls used to reduce VOC emissions also reduce methane emissions, making clear that the separate regulation of methane imposed by the 2016 rule was "both improper and redundant."
The second rule, referred to as the "technical package," includes what the EPA called "commonsense changes to the NSPS that will directly benefit smaller oil and gas operators who rely on straightforward regulatory policy to run their businesses and provide Americans with reliable, affordable energy."
The rules, announced by EPA Administrator Andrew Wheler in Pittsburgh, Pennsylvania, seem to have been issued with an eye on the November 3 elections. Pennsylvania is a large gas-producing state that President Donald Trump narrowly won in the 2016 election. Slumping demand for oil and gas, coupled with low prices, has hurt energy companies in Pennsylvania and elsewhere, costing many employees their jobs. Two oil and gas companies with a large presence in the Keystone State, Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas) and EQT Corporation (NYSE:EQT) (Pittsburgh, Pennsylvania), reported large losses in the second quarter. A third, Cabot Oil & Gas Corporation (NYSE:COG) (Houston, Texas), reported a profit that was down sharply from the comparable year-earlier quarter. Smaller firms reported poor financial results.
"The EPA has been working hard to fulfill President Trump's promise to cut burdensome and ineffective regulations for our domestic energy industry," Wheeler said last Thursday in Pittsburgh. "Regulatory burdens put into place by the Obama-Biden administration fell heavily on small and medium-sized energy businesses."
A New York Times article quoted Lee Fuller, a vice president at the Independent Petroleum Association of America (IPAA), as saying "the burden of the rule falls overwhelmingly on smaller, independent companies." The IPAA represents smaller oil and gas companies.
"They have a rule that was written for all these bigger companies," continued Fuller. "They would basically be continuing to do what they're already doing now. But these small companies -- that rule would just kill them."
The new rules could be undone in early 2021, however, if Democratic presidential candidate Joe Biden defeats President Trump in November, the House of Representatives remains Democratic-led and the U.S. Senate flips to Democratic control. The Congressional Review Act allows lawmakers in the new Congress to overturn, by a simple majority, any executive-level rule enacted by the previous administration within 60 legislative days prior to the November election.
States and environmental groups that have consistently clashed with the Trump administration's efforts to undo the energy and environmental rules enacted during the Obama administration, scorned the new rules.
"What the administration is doing is fundamentally flawed," said Fred Krupp, president of the Environmental Defense Fund. "It ignores the facts." Research from the EDF shows methane emissions are about 60% higher than what the EPA has previously estimated.
The Natural Resources Defense Council (NRDC) said it will launch a legal challenge to the new rules. "We will see EPA in court," said David Doniger, head of climate policy at the NRDC.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook-Twitter-LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
