UPDATE (8/14/2020, 11:20 AM EST): The U.S. Environmental Protection Agency recently issued the final rules for what’s commonly referred to as the Obama administration’s Methane Rule.
According to EPA, the rules will “make it simpler and less burdensome for the oil and natural gas industry to comply with the New Source Performance Standards (NSPS) for the Oil and Natural Gas Industry. Combined, the two rules combined are expected to save the industry millions of dollars in compliance costs each year.”
As EPA Administrator Andrew Wheeler explained:
“EPA has been working hard to fulfill President Trump’s promise to cut burdensome and ineffective regulations for our domestic energy industry. Regulatory burdens put into place by the Obama-Biden Administration fell heavily on small and medium-sized energy businesses. Today’s regulatory changes remove redundant paperwork, align with the Clean Air Act, and allow companies the flexibility to satisfy leak-control requirements by complying with equivalent state rules.”
Reducing emissions from its operations is a key focus of the U.S. oil and natural gas industry. In an interview with the Pittsburgh Business Times, Wheeler explained that oil and gas methane emissions have been significantly reduced, despite record production:
“That’s an incredible record. No other industry has that kind of record. They’re already doing very innovative things to reduce their methane emissions. We want to stay out of their way and let them come up with new technologies and still have the standards in place, the thorough backstops, in case states don’t have their processes or controls.”
In response to this week’s announcement, the Independent Petroleum Association of America issued the following statement:
“The Independent Petroleum Association of America commends the Environmental Protection Agency for the corrections it has made to the air emissions regulations affecting oil and natural gas production operations. These changes retain the basic framework of air emissions regulations of oil and natural gas production but they modify flawed provisions, particularly in the 2016 New Source Performance Standards fugitive emissions program driven by the political pressures to rush those regulations to completion.
“To be clear, America’s independent oil and natural gas producers recognize the need to manage their air emissions. In fact, prior to the first EPA New Source Performance Standards in 2012, oil and natural gas producers participated in the EPA’s Gas STAR program that identified and developed cost effective emissions technologies. Many of these – reduced emissions completions, low bleed pneumatic controllers, storage tank vapor recovery – were the basis for the 2012 EPA regulations that covered the majority of production emissions. Now, producers continue to be engaged in voluntary efforts that go beyond their regulatory commitments such as The Environmental Partnership and funding research into cost effective controls. The issue for producers has never been whether regulations were necessary; it has always been whether the regulations were sound and cost effective.
“Contrary to the hyperbolic characterizations of these regulatory changes from the Keep It in the Ground environmentalists, EPA regulations on oil and natural gas producers will be retained. Because production air emissions contain both methane and volatile organic compounds, both are managed by the same technologies. While these regulatory revisions change the targeted emission, the specific regulations remain in place and will manage both methane and volatile organic compounds. The 1.2 percent of the U.S. Greenhouse Gas Inventory that comes from oil and natural gas production will still be regulated by federal and state programs.
“The technical changes made by the EPA regulations are important corrections that are necessary to address flawed programs resulting from the politically driven rush to complete the 2016 regulations. Most of these changes relate to the fugitive emissions program. This program relies on expensive and rapidly out dated technology. Among the issues the revisions address are the use of alternative technologies and low production wells.
“The Clean Air Act provides for Alternative Methods of Emissions Limitations to specific regulatory requirements. However, the Act was largely written with large permanent factories as the model and does not function for small, scattered, numerous production wells. The EPA has provided some flexibility in its revised regulations, but the challenge of utilizing more cost effective technologies will continue to be an area of concern.
“When the EPA proposed its fugitive emissions program in 2015, it did not include low production wells – wells that produced less than 15 barrels per day of oil or 90 mcfd of natural gas. When it finalized the regulations, it expanded the scope to include low production wells under pressure from Keep It in the Ground environmentalists. However, the EPA never revised the technology requirements to reflect this expansion. When it proposed its reconsideration in 2018, it attempted to create a distinction for low production wells, but it was unworkable. The finalized revision will allow a wellsite to be excluded from the burdensome fugitive emissions program when the wellsite falls below 15 barrels/day or 90 mcfd. While this change will have little effect on the large hydraulically fractured shale wells that have 15 to 20 wells on the site, it will lift an unreasonable burden from the small business wellsites where there are only one or two wells per site.”
Continue reading for more information on these new rules.
—
Original Post: August 29, 2019
As the U.S. Environmental Protection Agency has worked to revise its regulation of methane emissions from the oil and natural gas industry, “Keep It In The Ground” activists have upped their game in spreading false information, often relying on misguided studies like those from the Environmental Defense Fund.
The EPA’s proposed changes include ways to regulate “fugitive emissions” that escape from equipment and processes during oil and natural gas production.
As the rule’s implications are debated, it’s critical to consider important context around the industry’s role in contributing to global methane emissions, how those emissions are estimated, the validity of studies like EDF’s, and whether further regulations will actually impact emissions from today’s technologically advanced and highly regulated oil and natural gas wells.
Here are four key issues to consider when discussing methane regulations.
1. Understanding the Scope of Methane Emissions and How They’re Measured
Limiting methane emissions is no doubt an important piece of the overall greenhouse gas (GHG) emissions issue. But the fact is regulations targeting only the U.S. oil and natural gas industry can have little global impact, given the industry’s relatively small contribution to worldwide emissions.
According to the National Oceanic and Atmospheric Administration and the Global Carbon Project, wetlands are the world’s largest source of methane emissions. Natural sources make up 40 percent of all emissions. The remaining 60 percent are related to human activities including agriculture. Fossil fuel production and use account for 20 percent of global methane emissions.
In the United States, that share is even smaller. The EPA’s greenhouse gas reporting data show that the aggregate share of the inventory for oil and natural gas is about three percent and, importantly, the production share is just 1.22 percent of U.S. GHG emissions.
And that percentage is likely higher than the real figure, given the outdated factors used to estimate emissions from various equipment and components used in oil and natural gas production. It’s quite an understatement to say technology and leak detection has improved since emission factors and estimated failure rates for equipment were developed in the 1990s.
As just one example of these improvements, the Environmental Partnership – a group of 66 top U.S. natural gas producers – recently noted that its participants had replaced, fixed or removed more than 31,000 high-bleed pneumatic controllers on their equipment. And 38 of the participating companies no longer use the devices, which are a notable source of leaks. Additionally, the partnership found that just 0.16 percent of surveyed equipment required repair, which raises significant doubts about the assumptions EPA uses to estimate equipment failure rates as a factor in emissions.
Such progress being shown by the industry to voluntarily reduce emissions highlights a clear piece of evidence that excessive regulations don’t necessarily equal improved outcomes: U.S. methane emissions are falling even as production of both oil and natural gas are skyrocketing. As EID has reported, methane emissions from onshore U.S. oil and natural gas production fell 24 percent, while oil and natural gas production rose 65 percent and 19 percent, respectively, from 2011 to 2017, according to data from the EPA and the Energy Information Administration.
2. A 100-Year Timeframe is Crucial for Accurate Emissions Measurements
Because different greenhouse gases absorb heat at varying rates while remaining in the atmosphere for varying amounts of time, scientists and regulators developed a measurement tool called the global warming potential (GWP) to more accurately compare GHGs.
The standard timeframe used to calculate GWP is 100 years, according to the EPA and other agencies. Methane emitted today will last for about 10 years, and has a 100-year GWP of between 28 and 36.
In an attempt to overstate methane’s role in warming the atmosphere, environmental interests have moved to calculating GWP on a 20-year timeframe, which as EPA states, “prioritizes gases with shorter lifetimes, because it does not consider impacts that happen more than 20 years after the emissions occur.” Using that shorter timeframe, methane’s GWP jumps to 84-87.
This inflated number better fits with the activist narrative in their push to claim natural gas has the same climate impact as coal. But using a 100-year timeframe generates a more accurate picture, given the long-term benefits of natural gas.
A brief published by the Washington D.C.-based environmental think tank Resources for the Future (RFF) notes:
“If more than about 4% of the natural gas produced in the United States is emitted as methane (rather than being burned), the climate benefits of gas’s displacement of coal disappears over a 20-year time frame. If the time frame is 100 years, the leakage rate would have to be more than 8% for natural gas to be a climate loser relative to coal.” (emphasis added)
3. Relying on EDF’s Studies is Not a Sound Basis for Policy Decisions
A series of EDF-sponsored studies that over-estimated methane emissions from the industry have found their way into many discussions around EPA’s methane rules. The studies’ flaws, however, should exempt them from those discussions.
Notably, EID last year debunked the study in which EDF found methane leakage rates of 2.3 percent – 60 percent higher than the EPA’s published rate of 1.4 percent. In fact, multiple other studies have shown methane leakage rates to be between 1.1 percent and 1.65 percent.
The inflated number is very likely due to EDF’s questionable methodology and poor data quality.
The study relied on remote sensing of emissions – and not the “bottom-up” onsite measurements that groups like the National Academy of Sciences recommend – which means it could not differentiate between fugitive losses and permitted emissions.
EDF also used data from other studies, which was collected before many in the industry had begun updating their operations with lower-emitting technologies – updates that actually preceded implementation EPA’s 2012 rule that targeted methane as a “co-benefit.” Using the data it had, EDF took the unusual step of ignoring any sites that had no measurements of emissions, and arranging the remaining sites into a bell curve that assumed a distribution of varying levels of emissions.
This is not good science, and should not serve as the basis for policy decisions that could impact small businesses all across the country.
4. The Majority of High-Producing Wells Are Already Regulated
On methane, there have been two major regulatory movements from the U.S. EPA over the past decade. The first occurred in 2012, which actually targeted emissions of volatile organic compounds (VOCs). Since the technologies available to capture VOCs also typically capture methane, the 2012 rule has colloquially been identified as EPA’s first “methane rule.”
The second push came in 2016, when the EPA formally targeted methane under what’s known as Subpart OOOOa. This is the rule that the Trump administration has proposed to update; the 2012 rule targeting VOCs remains intact.
Because production from oil and gas wells declines over time – and rapidly in the early years – a look at the lifecycle and related production levels of the industry’s well inventory will greatly inform the emissions discussion.
There are about one million oil and natural gas wells in operation around the United States, of which around 770,000 are classified as “low-producing wells.” These wells produce, on average, 2.5 barrels of oil per day or 22-24 thousand cubic feet (mcf) of natural gas daily.
That means that more than 75 percent of the wells in America account for just 10 percent of U.S. oil production and 11 percent of natural gas. As low-producers, they account for an insignificant share of leaks or emissions.
Of the remaining 230,000 higher-producing wells, approximately 125,000 were completed from 2012 to 2017 under the current requirements for new sources (enacted in 2012) and another 20,000 to 30,000 will be completed from 2018-2019. As noted above, many wells were completed by companies who voluntarily switched to lower-emitting technologies before EPA’s 2012 rule was completed.
This essentially means that by the time any additional regulations are completed to cover existing sources of emissions, which is what the rule in question aimed to do, most if not all wells that are not low-producers will already be covered in some shape or form by EPA’s 2012 rule.
This highlights the folly of attempts to bolt on additional regulations, and likely explains why activists wanted to use the 2016 update to target low-producing wells. Because such wells are economically vulnerable and more likely to be operated by small businesses, additional costly regulations would overwhelm their owners and eliminate their production.
Conclusion
The EPA realizes the important role natural gas plays in both powering the American economy and providing environmental benefits. Revising its methane rules will help strengthen both aspects in a more efficient way.
