Released April 02, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Last December, at the United Nations Climate Summit in Abu Dhabi, the U.S. joined with 50 oil companies and more than 150 nations in a global pledge to reduce methane emissions. Last week, the U.S. moved to deliver on a portion of its promises when the Bureau of Land Management (BLM) finalized a rule to reduce methane emissions due to leaks, venting or flaring from oil and gas operations on tribal or federal lands.
The final rule, which may be litigated, was announced March 27. It becomes effective 60 days after it is published in the Federal Register. The final rule appeared 16 months after BLM issued a draft rule, in November 2022.
The new rule updated rules that are over four decades old, said the BLM, which is a branch of the Department of the Interior (DOI). The rule requires oil and gas companies to avoid "wasteful practices," find and fix methane leaks, and avoid routine flaring or venting of natural gas.
The 227-page final rule said the rules to control methane waste during oil and gas operations needed to be updated due to the "large volume of flaring associated with the rapid development of unconventional 'tight' oil and gas resources that has occurred in recent years." In addition, existing rules do not "account for technological and operational advancements that can reduce losses of gas from oil storage tanks and equipment leaks."
In its regulatory impact analysis, the BLM estimated that the new rule would:
The final rule stated that royalties are not owed on gas that is "unavoidably lost," such as through accidents. The new rule lays out "reasonable steps" that oil and gas operators are expected to take to avoid natural gas waste as well as develop leak detection, repair and waste-minimization plans. When natural gas loss could have been avoidable, the rule said public and tribal mineral owners should be "properly compensated through royalty payments."
The BLM projected that the measures could keep billions of cubic feet of gas out of the atmosphere and in pipelines, where it can be sold and used.
Between 2010 and 2020, U.S. oil and gas operators reported venting and flaring an average of about 44.2 billion cubic feet (Bcf) of gas per year--enough to meet the energy needs of roughly 675,000 homes, according to the Interior Department. The U.S. produces about 36 trillion cubic feet (Tcf) of gas per year.
The BLM's final methane waste prevention rule, which updates 40-year-old regulations, "furthers the Biden-Harris administration's goals to prevent waste, protect our environment and ensure a fair return to American taxpayers," Interior Secretary Deb Haaland said in a statement accompanying release of the final rule. "By leveraging modern technology and best practices to reduce natural gas waste, we are taking long-overdue steps that will increase accountability for oil and gas operators and benefit energy communities now and for generations to come."
Tracy Stone-Manning, director of the BLM, added, "This rule represents a common sense, fair and equitable solution to preventing waste that provides a level playing field for all of our energy-producing communities. The BLM worked extensively with a wide range of stakeholders to modernize our decades-old regulations and help protect communities across the country."
Although methane has a far shorter lifespan in the atmosphere than carbon dioxide (CO2), another greenhouse gas, it is at least 28 times more potent than CO2 at trapping heat in the atmosphere, according to the U.S. Environmental Protection Agency (EPA), which was not involved in the March 27 BLM rule. Companies and nations seeking to slow or reverse global temperature gain as a way to counter the worst ravages of global climate change are increasingly focusing on reducing methane emissions.
The EPA has its own methane-reduction efforts under way.
The EPA said the world's largest methane emitters were China, the U.S., Russia, India, Brazil, Indonesia, Nigeria and Mexico. Oil and gas production is the largest source of man-made methane emissions in the U.S., it added.
The BLM has been trying to update its methane waste reduction rules for public and Tribal lands since 2016, but efforts by the Obama and Trump administrations were overruled by federal courts, for different reasons.
For more on last December's U.N. Climate Summit's agreement to slash methane emissions, see December 5, 2023, article - Slashing Methane Emissions Takes Center Stage at Climate Summit.
Responding to the BLM's March 27 final rule, the largest U.S. oil and gas trade group expressed wariness about government overreach that could hinder progress on voluntary efforts to reduce emissions while also limiting domestic energy production.
Holly Hopkins, Vice President of Upstream Policy for the American Petroleum Institute (API) (Washington, D.C.), said the trade group would review the final rule "to ensure it remains within BLM's statutory authority to regulate waste of natural gas and will consider all options to prevent regulatory overreach."
She continued: "API supports a smart regulatory framework for reducing methane emissions, but overlapping regulations and lack of coordination between policymakers could hinder progress, create unnecessary barriers to development on federal lands and result in regulatory incoherence."
She added that U.S. oil and natural gas producers "are continuously working to meet growing energy demand while reducing emissions, and consistent access to federal resources is essential for maintaining America's energy advantage."
But environmental groups cheered the BLM rule.
"The BLM methane rule is important for making sure that we are not wasting publicly owned resources, and that if companies flare or vent methane that belongs to taxpayers, they pay for it," Aaron Weiss, deputy director of the Center for Western Priorities (Denver, Colorado), told The Washington Post. "That just makes sense from both a climate standpoint and a taxpayer standpoint."
In a statement, Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund (New York, New York), said, "taking action to limit methane waste on public lands offers a win-win-win for taxpayers, producers and communities harmed by this waste and associated pollution."
Certain gas-producing regions, such as the Appalachian and Permian basins, have been dogged by a shortfall of outbound gas pipeline capacity. Traditionally, a shortage of gas pipeline capacity, coupled with low prices, were the main reasons operators flared or vented gas, particularly if that gas, known as "associated gas," was produced alongside crude oil.
Gas-producing states have enacted measures to limit routine venting or flaring, which has lowered the volumes that are flared or vented. The new BLM rule, if it survives expected litigation, could trigger construction of new gas pipeline capacity.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The final rule, which may be litigated, was announced March 27. It becomes effective 60 days after it is published in the Federal Register. The final rule appeared 16 months after BLM issued a draft rule, in November 2022.
The new rule updated rules that are over four decades old, said the BLM, which is a branch of the Department of the Interior (DOI). The rule requires oil and gas companies to avoid "wasteful practices," find and fix methane leaks, and avoid routine flaring or venting of natural gas.
The 227-page final rule said the rules to control methane waste during oil and gas operations needed to be updated due to the "large volume of flaring associated with the rapid development of unconventional 'tight' oil and gas resources that has occurred in recent years." In addition, existing rules do not "account for technological and operational advancements that can reduce losses of gas from oil storage tanks and equipment leaks."
In its regulatory impact analysis, the BLM estimated that the new rule would:
- Impose costs to industry of around $19.3 million per year
- Create benefits to industry in recovered gas of $1.8 million per year
- Increase royalty revenues from recovered and flared gas of $51 million per year, and
- Create ancillary effects society of $17.9 million per year from reduced greenhouse gas emissions
The final rule stated that royalties are not owed on gas that is "unavoidably lost," such as through accidents. The new rule lays out "reasonable steps" that oil and gas operators are expected to take to avoid natural gas waste as well as develop leak detection, repair and waste-minimization plans. When natural gas loss could have been avoidable, the rule said public and tribal mineral owners should be "properly compensated through royalty payments."
The BLM projected that the measures could keep billions of cubic feet of gas out of the atmosphere and in pipelines, where it can be sold and used.
Between 2010 and 2020, U.S. oil and gas operators reported venting and flaring an average of about 44.2 billion cubic feet (Bcf) of gas per year--enough to meet the energy needs of roughly 675,000 homes, according to the Interior Department. The U.S. produces about 36 trillion cubic feet (Tcf) of gas per year.
The BLM's final methane waste prevention rule, which updates 40-year-old regulations, "furthers the Biden-Harris administration's goals to prevent waste, protect our environment and ensure a fair return to American taxpayers," Interior Secretary Deb Haaland said in a statement accompanying release of the final rule. "By leveraging modern technology and best practices to reduce natural gas waste, we are taking long-overdue steps that will increase accountability for oil and gas operators and benefit energy communities now and for generations to come."
Tracy Stone-Manning, director of the BLM, added, "This rule represents a common sense, fair and equitable solution to preventing waste that provides a level playing field for all of our energy-producing communities. The BLM worked extensively with a wide range of stakeholders to modernize our decades-old regulations and help protect communities across the country."
Although methane has a far shorter lifespan in the atmosphere than carbon dioxide (CO2), another greenhouse gas, it is at least 28 times more potent than CO2 at trapping heat in the atmosphere, according to the U.S. Environmental Protection Agency (EPA), which was not involved in the March 27 BLM rule. Companies and nations seeking to slow or reverse global temperature gain as a way to counter the worst ravages of global climate change are increasingly focusing on reducing methane emissions.
The EPA has its own methane-reduction efforts under way.
The EPA said the world's largest methane emitters were China, the U.S., Russia, India, Brazil, Indonesia, Nigeria and Mexico. Oil and gas production is the largest source of man-made methane emissions in the U.S., it added.
The BLM has been trying to update its methane waste reduction rules for public and Tribal lands since 2016, but efforts by the Obama and Trump administrations were overruled by federal courts, for different reasons.
For more on last December's U.N. Climate Summit's agreement to slash methane emissions, see December 5, 2023, article - Slashing Methane Emissions Takes Center Stage at Climate Summit.
Responding to the BLM's March 27 final rule, the largest U.S. oil and gas trade group expressed wariness about government overreach that could hinder progress on voluntary efforts to reduce emissions while also limiting domestic energy production.
Holly Hopkins, Vice President of Upstream Policy for the American Petroleum Institute (API) (Washington, D.C.), said the trade group would review the final rule "to ensure it remains within BLM's statutory authority to regulate waste of natural gas and will consider all options to prevent regulatory overreach."
She continued: "API supports a smart regulatory framework for reducing methane emissions, but overlapping regulations and lack of coordination between policymakers could hinder progress, create unnecessary barriers to development on federal lands and result in regulatory incoherence."
She added that U.S. oil and natural gas producers "are continuously working to meet growing energy demand while reducing emissions, and consistent access to federal resources is essential for maintaining America's energy advantage."
But environmental groups cheered the BLM rule.
"The BLM methane rule is important for making sure that we are not wasting publicly owned resources, and that if companies flare or vent methane that belongs to taxpayers, they pay for it," Aaron Weiss, deputy director of the Center for Western Priorities (Denver, Colorado), told The Washington Post. "That just makes sense from both a climate standpoint and a taxpayer standpoint."
In a statement, Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund (New York, New York), said, "taking action to limit methane waste on public lands offers a win-win-win for taxpayers, producers and communities harmed by this waste and associated pollution."
Certain gas-producing regions, such as the Appalachian and Permian basins, have been dogged by a shortfall of outbound gas pipeline capacity. Traditionally, a shortage of gas pipeline capacity, coupled with low prices, were the main reasons operators flared or vented gas, particularly if that gas, known as "associated gas," was produced alongside crude oil.
Gas-producing states have enacted measures to limit routine venting or flaring, which has lowered the volumes that are flared or vented. The new BLM rule, if it survives expected litigation, could trigger construction of new gas pipeline capacity.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
