Biden Plan to Cut Methane Emissions Would Hit Oil & Gas Industry

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Blocked at home from decarbonizing the nation's electricity industry by a few recalcitrant members of Congress, President Joe Biden took to a foreign stage Tuesday to announce plans to reduce methane emissions from oil & gas producers, pipelines, agriculture and other sectors that emit methane, a potent greenhouse gas.

"One of the most important things we can do in this decisive decade--to keep 1.5 degrees (temperature gain) in reach--is to reduce our methane emissions as quickly as possible," Biden said Tuesday in Scotland, when announcing the new rules to limit methane. That gas is "one of the most potent greenhouse gases there is," he added.

In releasing the "U.S. Methane Emissions Reduction Plan" on Tuesday at the U.N. climate change conference in Glasgow, Scotland, the administration said that "these cost-effective actions will dramatically reduce greenhouse gas emissions; cut leaks, waste, and consumer costs; protect workers and communities; maintain and create high-quality, union-friendly jobs; and promote U.S. innovation and manufacturing of critical new technologies."

On November 2, the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) 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. The proposed new Clean Air Act rule would lead to significant, cost-effective reductions in methane emissions and other health-harming air pollutants that endanger nearby communities."

The agency will take public comments on the proposed rule for 60 days after it is published in the Federal Register.

The EPA's press release on the proposed rule said the impact to consumers would be small: "pennies per barrel of oil or thousand cubic feet of gas." In its Regulatory Impact Analysis, the agency said the rule would produce cumulative net benefits of $48 billion to $49 billion over the 2023-2035 period, or about $4.5 billion per year.

That assessment included the costs of compliance, as well as savings from recovered natural gas. The agency said it estimated net climate benefits using a social cost of methane that reflected the monetary value of the net harm to society associated with a marginal increase in emissions in a given year, or the benefit of avoiding that increase. Economists have been working on these calculations for over a decade.

To estimate those values, the EPA's Regulatory Impact Analysis contained a wide range of social costs coupled with varying discount rates. On the low end, the costs start at $750 per ton of methane in 2023 (valued in 2019 dollars at a 5% discount rate) and to up to $1,100 per ton in 2035 (again, measured in 2019 dollars using a 5% discount rate. On the high end, the costs start at $4,300 per ton (2019 dollars, 3% discount rate) in 2023 and rise to $6,000 per ton in 2035.

The EPA estimated that from 2023 to 2025, the proposal would reduce emissions of volatile organic compounds (VOC) by 12 million tons and hazardous air pollution (HAP) by 480,000 tons, thus preventing health problems, hospital visits and premature deaths.

The administration's plan focuses on the oil & gas sector because it accounts for about 30% of methane emissions, the largest of any source.

Click on the image at right to see EPA's estimate of industrial sources of methane.

Another part of the plan would see the U.S. Department of the Interior (DOI) (Washington, D.C.) investigate ways to reduce venting and flaring of methane from oil & gas operations and well closures on public lands and waters. In a third element, the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) will implement the bipartisan PIPES Act by upgrading and expanding pipeline rules that, among other things, will require operators to cut methane leaks and excursions. Finally, the plan seeks to reduce methane emissions from commercial landfills, the second-largest industrial source of methane emissions.

The draft rule would require most oil & gas producers to use special cameras or other instruments four times a year to spot and plug methane leaks from compressor stations, as well as sites the agency suspects are leaking more than three tons of methane annually. Drillers in Alaska's North Slope region will be subject to a more permissive monitoring schedule and other requirements to account for extreme weather.

The agency also proposed requiring new and existing pneumatic controllers to have zero emissions. Those devices, used to control valves at oil & gas sites, are a leading source of methane emissions in the sector. Yet sales of zero-emission controllers reportedly have been slow, because oil field operators want to keep costs down and prefer to wait until the device is broken to replace it.

Implementing all of the steps in the methane-reduction plan would cut methane emissions by an estimated 74%, the EPA said. The proposed rule would reduce methane emissions by 41 million tons between 2023 and 2035, the EPA estimated. That's equivalent to 920 million metric tons of CO2, which is more than the amount of CO2 emitted from all U.S. passenger cars and commercial aircraft in 2019.

The administration said reducing methane emissions "will generate substantial climate benefits. Although methane only represents 10% of U.S. greenhouse emissions, achieving significant reductions will generate rapid and significant beneficial effects because methane is a more powerful greenhouse gas--and more short-lived--than carbon dioxide (CO2)."

The action plan said it relies on "critical and commonsense steps" that "will create thousands of high-quality, union-friendly jobs, and spur innovative solutions in industry and agriculture that will boost U.S. competitiveness around the world."

The initiative also will improve public health and local air quality "for the many disadvantaged communities that have been living with the harmful effects of methane and its frequent companions, such as toxic volatile organic compounds (VOCs) and particulates."

"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," EPA Administrator Michael S. Regan said in a statement accompanying the draft rule. "By building on existing technologies and encouraging innovative new solutions, we are committed to a durable final rule that is anchored in science and the law, that protects communities living near oil and natural gas facilities, and that advances our nation's climate goals under the Paris Agreement."

The agency estimates that about 33% of today's warming from greenhouse gases is due to human-caused emissions of methane, "a potent greenhouse gas that traps about 30 times as much heat as CO2 over 100 years. Sharp cuts over the next decade will have a near-term beneficial impact on the climate. In the United States, the oil and natural gas industry is the largest industrial source of methane emissions."

"There is a general sense that at least when it comes to the oil and gas sector, a lot of the technologies and tools are available, so it is possible to cost-effectively reduce methane," Jeffrey Berman, director of energy transition analysis at the Rapidan Energy Group (Washington, D.C.), told The Washington Post. "You can cost effectively do a lot of the things that are required."

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