Both the Bureau of Land Management (BLM) and the EPA have recently issued proposed rules aimed at reduced methane emissions from both new and existing oil and gas production sources.
The BLM’s proposed rule aimed at curbing flared, vented, or leaked methane waste on federal and tribal lands is similar to a 2016 Obama administration proposed rule. A federal court shot that down when it ruled that the purpose of the BLM’s regulation was designed to protect air quality, which is the sole authority of the EPA. It determined the BLM exceeded its statutory authority.
Analysts predict that this proposed rule will face similar legal challenges.
However, the BLM received new authority under the Inflation Reduction Act (IRA), which includes the “Royalties on All Extracted Methane” provision, providing “that, for leases issued after the date of enactment of the IRA, royalties are owed on all gas produced from federal land, including gas that is consumed or lost by venting, flaring, or negligent releases through any equipment during upstream operations,” reports an article by Holland & Hart LLP.
According to the Regulatory Impact Analysis, the proposed rule would have the following economic impacts:
- $122 million per year in costs to industry
- Benefits to industry of $55 million per year in recovered gas
- Additional royalties of $39 million per year for federal or tribal governments
- Benefits to society from reduced methane emissions of around $427 million per year
The supplemental proposed rule, published December 6, 2022, will impose significant costs on the oil and natural gas industry.
The original proposed rule to reduce greenhouse gas (GHG) and volatile organic compound (VOC) emissions, published by the EPA on November 15, 2021, received substantial comments requesting the Agency to further strengthen the proposed standards.
As summarized in a second Holland & Hart article, the proposed rule, applicable to both new and existing sources, includes the following:
- “Fugitive Emissions: Ties fugitive emissions monitoring requirements to the types and amount of equipment at a site rather than to estimated emissions and increases frequency of monitoring for all sources.
- Alternative Monitoring: Allows facilities (and regulators) a wider selection of methane detection technologies for fugitive emissions monitoring in lieu of OGI surveys or EPA Method 21.
- Well Closure: Imposes ongoing fugitive monitoring requirements until wells are plugged according to [a] well closure plan submitted to [the] permitting authority.
- Flaring: Restricts flaring to times when there is no other feasible route to a sales line or other beneficial use.
- Super-Emitter Response Program: Creates a new program requiring owners and operators to undertake a root cause analysis and take prompt corrective actions when an approved third party detects large methane emissions events.
- Pneumatic Controllers, Pneumatic Pumps, and Centrifugal Compressors: Requires the use of zero-emissions pneumatic controllers and pumps at both new and existing facilities. Pneumatic pumps at an affected facility could not be driven by natural gas.”
Comments on the proposed rule can be made until February 13, 2023.