BLM to update venting and flaring rule

James Fenton
Natural gas is flared Jan. 8 at a gas well near Lybrook.

FARMINGTON – The U.S. Department of the Interior announced a proposed update to regulations Friday that is designed to cut methane emissions by the oil and gas industry on public and tribal lands.

The 298-page proposed rule by the U.S. Bureau of Land Management targets the escape of methane gas by the industry practices of venting and flaring, and from leaks of the pollutant during drilling operations and from oil and gas equipment.

The rule, which has not been revised by the federal government in 30 years, aims to reduce waste of U.S. natural gas supplies, address methane's contribution to climate change and deliver more revenue for federal taxpayers, tribes and states. A year ago, the Obama Administration announced, as part of the federal government's Climate Action Plan, the goal of cutting methane emissions from the oil and gas industry from 2012 levels by 40 to 45 percent by 2025.

Methane is a climate-warming pollutant 80 times more potent than carbon dioxide over a 20-year time period, although methane doesn't stay in the air as long.

Interior Secretary Sally Jewell said the proposed rule is an effort to keep up with an industry that has outpaced regulations with now-commonplace technological advances like horizontal drilling and multi-stage hydraulic fracturing.

"I think most people would agree that we should be using our nation’s natural gas to power our economy, not wasting it by venting and flaring it into the atmosphere," Jewell said in a Jan. 22 press release. "We need to modernize decades-old standards to reflect existing technologies so that we can cut down on pollution and cut greenhouse gas emissions and use this captured natural gas to generate power and provide a return to taxpayers, tribes and states for this public resource."

The rule would require more of oil and gas producers, including requiring the installation of equipment that would ensure less methane is released into the atmosphere. It would also clarify when operators owe royalties on flared gas, and ensure that BLM regulations give the agency greater flexibility to set royalty rates at or above 12.5 percent of the value of production.

Don Schreiber said in a statement on Friday that his Blanco ranch has active oil and gas wells that leak methane. Schreiber welcomed the BLM's rule proposal.

“For landowners like me that live near oil and gas wells, today’s BLM decision is a breath of fresh air," Schreiber said. "At a time when rural communities are struggling and New Mexico has the highest unemployment in the nation, we can’t afford to waste our tax dollars or publicly owned energy resources. Cutting natural gas waste will help all New Mexico taxpayers, schools and communities."

Infrared video shot by the environmental group Earthworks documents leaking gas wells on Schreiber's Devil's Spring Ranch. According to a 2010 Government Accountability Office report, about 40 percent of natural gas now vented or flared from onshore federal leases could be economically captured with currently available technologies.

BLM Director Neil Kornze said in a statement the proposed rule update is long overdue.

“It’s time to modernize our regulations to reflect today’s technologies and meet today’s priorities,” Kornze said. “By asking operators to take simple, common-sense actions to reduce waste — like swapping out old equipment and checking for leaks — we expect to cut this waste almost in half. The gas saved would be enough to supply every household in the cities of Dallas and Denver combined — every year.”

U.S. senators Tom Udall and Martin Heinrich and U.S. representatives Ben Ray Luján and Michelle Lujan Grisham, all of New Mexico, welcomed the BLM's proposed rule on Friday.

"New Mexico's natural resources provide jobs and royalty payments and are an important part of our state's economy," the lawmakers said in a joint statement. "But over $100 million worth of those natural gas resources are being wasted each year due to outdated requirements, costing the state of New Mexico $43 million in lost royalties since 2009. The waste is a serious health issue and contributes to smog and climate change."

But New Mexico Oil and Gas Association spokesman Wally Drangmeister said in a phone interview on Friday the BLM's proposed rule — like the federal government's other proposed updated rules that regulate the industry — is unnecessary, since oil and gas companies have made strides in capturing fugitive methane without the federal government intruding on day-to-day operations.

Drangmeister said the industry already does a good job of capturing methane because operators are in the business of selling it. Natural gas is 90 percent methane, and the San Juan Basin is the second-largest producer of natural gas in the U.S. There also other sources of atmospheric methane, he said, including agriculture, landfills and natural seepage from shale formations.

"We have made tremendous progress as an industry capturing methane, which is a commodity the industry is in the business of selling," he said. "Methane emissions have declined 21 percent since 1990 without these regulations, all while oil and natural gas production has gone up significantly."

Operators have already begun retrofitting well site facilities with "low-bleed" pneumatic devices, Drangmeister said. That technology, also called "green completions," automatically controls pressure, gas flow and liquid levels, and operates valves. Replacing "high-bleed"  — sizable releases of natural gas — devices can reduce methane released into the atmosphere.

With increased pressure from the federal government to more closely regulate the industry's current practices of horizontal drilling and multi-stage hydraulic fracturing, Drangmeister said the result may be increased costs and plugged wells.

Drangmesiter said the NMOGA will provide input on the proposed rule to make oil and gas companies' perspectives over the regulations clear.

The BLM will open the proposed rule for 60 days to take public comments after it is published in the Federal Register. The BLM also plans to hold a series of public meetings on the proposed rule in February and March.

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.