Methane rule fuels industry-environmental split
FARMINGTON —After a 2014 NASA study that used satellite imagery revealed a 2,500-square-mile "hot spot" of methane over the Four Corners area, a debate about what kind of response would be appropriate has created a divide with the oil and gas industry on one side and the federal government and environmentalists on the other.
Last year, the Obama administration proposed cutting methane emissions from all U.S. oil and gas production by nearly half over the next 10 years. Proposed rules regarding methane emissions by the U.S. Environmental Protection Agency and the U.S. Bureau of Land Management seek to address climate change by reducing methane from oil and gas operations by 40 to 45 percent by 2025 compared to 2012 levels.
New Mexico is the second leading producer of natural gas in the U.S. and the San Juan Basin has been the source of most of that product. Natural gas production has been targeted as a contributor to climate change because the gas is 90 percent methane — a greenhouse gas 80 times more potent than carbon dioxide over a 20-year time period, though not as potent over longer periods of time.
A February public meeting held by the BLM over its proposed methane rule drew more than 600 people to San Juan College in Farmington. At the meeting, Amanda Leiter, BLM deputy assistant secretary for land and minerals management, told the crowd that lost atmospheric methane caused, in part, by the oil and gas industry, could be reduced by better regulations on facilities that leak, vent or flare the greenhouse gas.
Leiter said the lost methane is not only a threat to the environment, but also represents lost revenue because royalties are not collected on "fugitive" methane.
Oil and gas industry executives argue that a new regulation will create additional costs for operators at a time when oil and gas prices are so low that many companies are laying off workers as they struggle to stay in business. And they say many marginal wells that are producing royalty payments will be shut down because it will no longer be cost effective to operate them.
Here are perspectives on both sides of the issue:
Mark Duncan, Kirtland mayor and San Juan County treasurer
"(The proposed regulations) will hurt the industry because if you have got a well that’s not producing a whole lot, that well is going to be shut in. (The federal government) should allow us the opportunity to do away with some of the problem ourselves. Methane gas is a naturally occurring thing. It’s not just created by oil and gas basins. These (regulations) are not based on science. Again, these guys, they want us all on bicycles and if we go back to science and have good science then some of the regulations out of (Washington) D.C. would not be validated. Oil and gas is huge to New Mexico, and the taxpayers will bear the burden when oil and gas companies leave. They are already dropping services like crazy. (Local governments) will be forced to look at raising taxes and that is not a thing to do in this economy."
DJ Simmons CEO John Byrom
"It's one thing to apply to new wells going forward but another to apply to wells that are on the last phase of their life and (the new rule) could be very detrimental. There are a lot of operators who are shutting in wells already because of low gas prices. It means that these wells are not going to be coming back. ... "(I)f you plug it prematurely, it may not make much money but if it becomes cash-flow negative, it gets shut in and then plugged and that well is done. For our wells, they would be effected from the standpoint of marginal production, and that's probably over 50 percent of our wells. It's just extremely bad timing. (The federal regulators) need to be taking a time out to run a cost-benefit analysis and maybe apply (the proposed rules) to new wells going forward. Grandfather the older wells, but this rush to cram down all these new regulations in such a short period, during such a traumatic time in the industry is troubling. The total value (of crude oil and natural gas) is extremely low. (The proposed rules) could not have come at a worse time."
Kathleen Sgamma, Western Energy Alliance vice president of government and public affairs
"BLM does not have jurisdiction to regulate air quality, but that hasn’t stopped it from proposing a new rule that’s redundant with EPA’s proposed methane rule. Both rules are part of (President Barack Obama's) climate change agenda, despite the fact that methane emissions from the wellhead are a very small amount of U.S. greenhouse gas emissions. Meanwhile, industry has achieved dramatic emission reductions without federal regulations. Since 1990, oil and natural gas producers have decreased methane emissions by 21 percent even as natural gas production has climbed 47 percent. The new BLM regulation is simply another case of a federal government fix to something that’s already working well.
In fact, the oil and natural gas industry has delivered more greenhouse gas reductions than any other industry or government climate change program, as a dramatic increase in U.S. production has enabled switching to natural gas electricity generation. Energy Information Administration (EIA) data show that increased natural gas electricity generation has reduced U.S. greenhouse gas emissions 59 percent more than wind and solar power combined. Through innovation, industry has reduced methane leaks and improved gas capture rates, and is no longer the largest source of U.S. man-made methane emissions. By encouraging rather than discouraging natural gas development with more red tape, the federal government could more effectively meet the president’s climate change goals.
However, instead of recognizing that industry has successfully reduced emissions, BLM and EPA are proposing command-and-control regulations to do what industry is already doing voluntarily. But by adding red tape that makes it more difficult and expensive to develop natural gas, these federal agencies are undermining natural gas as a climate change solution.
BLM itself causes higher levels of venting and flaring on federal and Indian lands because of delays in approving rights-of-way for gas-gathering lines. When it takes BLM a year or more to approve a ROW permit for a natural gas gathering project, the operator has no option but to flare in the meantime. Rather than engaging in a long, drawn out rulemaking process, BLM could reduce venting and flaring rates quickly simply by approving ROWs in a timely manner.
Tweeti Blancett, sixth-generation New Mexico rancher, Aztec hotelier and former state legislator
"These BLM hearings are incredibly important for affirming rules to capture methane waste and royalties on public lands. Sensible rules would increase funds for important needs like roads and schools ... and also benefit public health and protect our public lands. We applaud the BLM for taking action to protect taxpayers, our air and water and America's energy security. Oil and gas companies operating on public and tribal lands have wasted $330 million ($100 million from New Mexico) since 2013. Taxpayers have lost out on $800 million as a result of venting and flaring on public lands over 10 years."
Demis Foster, Conservation Voters New Mexico Education Fund executive director
“Conservation Voters New Mexico Education Fund encourages the (BLM) to create strong rules to cut methane waste in New Mexico. The proposed rules are a critical step forward to ensure that our state’s energy sector has the best technologies and solutions in place to minimize potential impacts to New Mexico’s families. We must ensure that the use of methane and other fossil fuels is reduced and escaping methane is captured to prevent waste, and to protect public health."
Mike Eisenfeld, San Juan Citizens Alliance energy and climate programs manager
"It is timely that (the) BLM finally acknowledges its responsibility to participate in analyzing and reducing air emissions from the hundreds of oil and gas projects (the agency approves) yearly in the San Juan Basin. Capturing the currently wasted methane from BLM-permitted oil and gas facilities will potentially reduce the 2,500-square-mile methane 'hot spot' in the Four Corners region."
Results of a follow-up air-and-ground-based study conducted last year by researchers from the University of Colorado, the University of Michigan, the National Oceanic and Atmospheric Administration and NASA that aims to pin down sources of the NASA "hot spot" data are expected to be released later this year.
James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.