CLIMATE

Industry girds for potential new methane regulations

U.S. EPA may be regulating methane emissions from the oil and gas sector by the end of 2016 if the steps outlined by the White House last week come to pass.

The agency will release a series of white papers in the coming months on emissions of methane and volatile organic compounds from the sector, according to the methane reduction strategy announced Friday by the White House. EPA will decide this fall if it has authority to regulate the greenhouse gas from these sources under the Clean Air Act. If it decides that it does, regulations will be in place before the end of 2016.

The strategy comes from an interagency task force assembled under the president's Climate Action Plan to find the best ways to curb methane, a greenhouse gas that is 84 times more powerful than carbon dioxide in trapping heat in the atmosphere. President Obama announced last year that the administration would use a series of executive actions to progress toward the United States' climate goal of cutting greenhouse gas emissions by 17 percent below 2005 levels by 2020.

"While no single step can reverse the effects of climate change, we have a moral obligation to our kids to leave them a planet that is not polluted and not damaged," said Dan Utech, special assistant to the president for energy and climate change, in a call with reporters.

The methane strategy is one of the executive actions. And it has put the oil and gas industry, which is the largest industrial methane emitter in the United States, squarely in the cross hairs. The natural gas and oil supply chain leaks at various points from the wellhead to the stove.

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Industry maintains that regulations are not needed to cut down on leaks, since companies have an economic incentive to capture methane, the key component in natural gas, and sell it. Most producers are already proactively tackling the problem, said Howard Feldman, director of regulatory and scientific affairs at the American Petroleum Institute.

"The industry has led efforts to reduce emissions of methane by developing new technologies and equipment, and recent studies show emissions are far lower than EPA projected just a few years ago," Feldman said. "Additional regulations are not necessary and could have a chilling effect on the American energy renaissance, our economy and our national security."

Part of the chilling effect would be due to the bureaucratic burden associated with regulation, said Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance.

"When you are regulating things people are already doing, all you do is put red tape on that process, making it more expensive and harder to comply with," she said.

Environmental groups argue that methane regulations cost the industry very little. A recent study by ICF International found that cutting 40 percent of the total emissions in 2018 would cost a penny per thousand cubic feet of gas recovered at the wellhead (EnergyWire, March 3).

Given that there are thousands of players in the oil and gas industry, from small mom-and-pop operations employing a handful of contractors to large multinational corporations of the scale of Exxon Mobil Corp., not all of them can be trusted on to self-regulate, said Mark Brownstein, associate vice president and chief counsel of the Environmental Defense Fund's U.S. Climate and Energy Program.

"Some companies have started down the road of tackling this issue, and that is to be commended," he said. "But at the end of the day, the only way one can be assured that everyone in industry will play by the same set of rules is when there is some kind of regulatory framework in place."

Reglation signals

The White House has not yet irrevocably committed to regulations, but environmental and industry groups sense them on the horizon and are girded for a fight.

The Western Energy Alliance's Sgamma sees the groundwork being laid by the government in rules being crafted by the Bureau of Land Management, which oversees oil and gas drilling on federal lands. The BLM proposal, due at the end of 2014, would tackle venting or flaring of methane from oil and gas wells on public lands (Greenwire, March 20).

"When you see the EPA working on white papers, when you see the BLM talking about flaring and venting rules, they are already well on the path toward more regulation," she said.

The White House set out a tight timeline for EPA action, beginning with a series of five white papers in the fall on hydraulically fractured oil wells, liquids unloading, leaks, pneumatic devices and oil wells. The papers will be peer reviewed and open for public comment, which is the usual process when moving toward regulations of this magnitude, said Conrad Schneider, advocacy director for the Clean Air Task Force.

It would be the first time EPA would regulate methane emissions under the Clean Air Act, although the agency has had experience regulating greenhouse gases such as carbon dioxide from power plants.

"We see this as a good first step that is consistent with the administration taking action to regulate methane from the oil and gas industry," Schneider said.

Even as EPA examines the need for new rules, it would enhance the existing Natural Gas STAR program, in which companies volunarily sign up to curb their greenhouse gas emissions. A new partnership would be announced by the end of 2014, according to the methane strategy report.

Better measurements

Methane has been a recent focus of environmental groups that have realized it is the "low-hanging fruit" of the greenhouse gas problem. Existing technologies can curb emissions at little cost compared to the expense and technological challenges of curbing CO2 emissions from power plants.

With methane, the challenge lies in detecting leaks along a system that diffusely spans the nation, from wells to pipelines crisscrossing cities, carrying gas into homes. Many of these sources are not systematically tracked by statistics agencies and are uncertain, the methane strategy report states.

"This uncertainty is why setting up a monitoring system to track methane emissions is so critical to controlling emissions," said Colm Sweeney, a scientist at the National Oceanic and Atmospheric Administration's Earth System Research Laboratory. "Our experience suggests that unlike many other greenhouse gas sources, methane emissions from oil and gas may be very easy fix if adequate monitoring systems are in place to find the leaks."

The methane strategy states that a $4.7 million Department of Energy program proposed under the 2015 budget would speed the development of technologies to identify and monitor leaks, and repair them. The program focuses on the transmission and distribution system, where pipelines carry gas between states and into homes. Those pipelines are responsible for 54 percent of the emissions from the natural gas sector.

DOE's ARPA-E program will also fund projects on making methane sensing cheaper and thus more ubiqutous, the strategy states.

The strategy suggests a budget increase to $8 million, up from $6.5 million, for a NOAA program that operates tall towers that monitor levels of methane and does periodic aircraft measurements over oil and gas regions. The program has already yielded landmark studies that measured the levels of methane leakage from shale plays (Greenwire, Feb. 14, 2012). The budget increase would add six more tall towers to the existing eight and triple the frequency of aircraft flybys, the strategy states.

And EPA's greenhouse gas reporting program and inventory will receive fresh scrutiny to ensure that records are accurate. Studies in recent months have found that the agency may be understimating emissions by as much as 50 percent (EnergyWire, Feb. 14).

The methane strategy, fully implemented, would cut emissions by 90 million metric tons of greenhouse gases in 2020, said Utech, the White House energy and climate adviser. To put that in context, the United States emitted 6,501 million metric tons of greenhouse gases between 2011 and 2012. Thus, the methane strategy is a small but key piece of the large climate puzzle.

"When fully implemented, the policies in the methane strategy will improve public health and safety, while providing more energy to power communities, farms, factories and power plants," he said.

Twitter: @gayathriv | Email: gvaidyanathan@eenews.net

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