EPA: Cut methane from oil, gas by nearly half

Local oil and gas industry officials say the proposed rule will raise costs and force companies to cut back production

Matthew Daly
The Associated Press
A well head at an XTO Energy natural gas well facility is pictured March 11 near Piedra Vista High School in Farmington.
  • The Obama administration has issued a rule to drastically reduce methane emissions from oil and gas.
  • The EPA rules aims to cut emissions from drilling by 45 percent by 2025.
  • The rules apply to new drilling, but the EPA is formulating regulations for existing operations.
  • San Juan Basin oil and gas officials say the new rules will force company to cut production.

WASHINGTON — The Obama administration issued a final rule today to sharply cut methane emissions from U.S. oil and gas production, a key part of a push by President Barack Obama to reduce methane emissions by nearly half over the next decade.

The rule by the Environmental Protection Agency is the major element of an administration goal to reduce methane emissions from oil and gas drilling by up to 45 percent by 2025, compared to 2012 levels. It will require energy producers to find and repair leaks at new or modified oil and gas wells and capture gas that escapes from wells that use the common drilling technique known as hydraulic fracturing, or fracking.

Methane, the key component of natural gas, tends to leak during oil and gas production. Although it makes up just a sliver of greenhouse gas emissions in the United States, it is far more powerful than carbon dioxide at trapping heat in the atmosphere, making it a top target for environmentalists concerned about global warming.

Officials estimate the rule will cost the industry about $530 million in 2025. Those costs would be outweighed by reduced health care costs and other benefits totaling about $690 million, officials estimate.

EPA administrator Gina McCarthy said the new rule would "protect public health and reduce pollution linked to cancer and other serious health effects while allowing industry to continue to grow and provide a vital source of energy for Americans across the country."

The mandate, which will take effect this summer, will apply only to new and modified sources, such as wells, pumps, pipes and compressors, but it will set a framework for the EPA to impose similar requirements on nearly 1 million existing wells and other equipment nationwide. Those rules are not expected before Obama leaves office.

A worker helps monitor water pumping pressure and temperature at a hydraulic fracturing and extraction site outside Rifle in western Colorado on March 29, 2013.

With his presidency drawing to a close, Obama has been in a rush to propose and finalize sweeping regulations targeting greenhouse gases blamed for global warming.

The methane rule follows a landmark regulation Obama finalized last year to cut carbon dioxide emissions from coal-fired power plants by 32 percent. The plan, the centerpiece of Obama's climate change strategy, has drawn legal challenges from power companies and dozens of Republican-led states.

Obama also has proposed regulations targeting carbon pollution from airplanes and set new standards to improve fuel efficiency and reduce carbon dioxide pollution from trucks and vans.

In January, the administration proposed new rules to clamp down on oil companies that burn off or "flare" natural gas on public lands, saying it will reduce waste and harmful methane emissions. Between 2009 and 2014, enough natural gas was lost through venting, flaring and leaks to power more than 5 million homes for a year, officials said.

The president has set a goal to cut overall U.S. emissions by 26 percent to 28 percent over the next decade, as he seeks to leave a legacy of using the full range of his executive power to fight climate change and encouraging other countries to do the same.

Fred Krupp, president of the Environmental Defense Fund, an advocacy group, called methane "a tremendous threat to our climate" and said cutting methane pollution "is the fastest, cheapest path to slow the warming we will otherwise see in the next 20 years."

Locally, Mike Eisenfeld, San Juan Citizens Alliance’s energy and climate program manager in Farmington, said in a press release that the rule will help balance energy production with environmental protection in the Four Corners.

“The identification of the Four Corners Region of the U.S. Southwest as a methane ‘hot spot’ is cause for alarm with a responsibility to reduce documented high oil and gas facility methane emissions,” Eisenfeld said. “The EPA rule is important for northwestern New Mexico to balance energy development with protection of resources and public health, and larger-scale economics of a region dependent on tourism.”

Aztec Commissioner Katee McClure said in a conference call on today that her support of the rule was not to be taken as anti-oil-and-gas.

“As a city commissioner, but more essentially as a human being, I’m speaking out in favor of accountability not against oil and gas,” McClure said. “I live in the Four Corners area where the nation’s largest methane cloud is, but we are also in a basin that traps smog which leads to the astounding asthma problem we have here. We can capture the gas and plug the leaks. Oil and gas makes money and people are healthier. Everyone is happy.”

Workers tend to a well head during a hydraulic fracturing operation outside Rifle in western Colorado.

But. oil and gas industry officials say that, even as oil and natural gas production has risen dramatically, methane emissions have fallen thanks to new technologies installed voluntarily that have reduced waste and improved efficiency.

The American Petroleum Institute, the largest lobbying group for the oil and gas industry, said the new rule could harm a drilling boom that has lowered costs for American consumers to heat their homes and drive their cars. Fracking and other advanced drilling techniques have made it easier for energy companies to extract oil and gas from hard-to-reach sites.

"It doesn't make sense that the administration would add unreasonable and overly burdensome regulations when the industry is already leading the way in reducing emissions," said Kyle Isakower, API vice president of regulatory and economic policy.

Hearing the news of the rule’s release at the Four Corners Oil and Gas Conference at McGee Park today, state Rep. James Strickler, R-Farmington, said WPX Energy is a prime example of the industry effectively seeking efficiencies before federal rules dictate them.

Ken McQueen, WPX Energy’s vice president of San Juan Basin operations, said the Oklahoma-based company, with offices in Aztec, has installed vapor recovery units, or VRUs, on facilities in the Chaco Canyon area in anticipation of the new federal rules.

“I’m a bit biased on this point, but (WPX) has been able to read the crystal ball pretty well with what we see as regulations coming down the road,” McQueen said. “We’ve really been leaders in putting VRUs in place on all of our tank batteries. When you talk about flaring, flaring is something you can see. Venting is something you cannot see. For years all of these vapors on all these tanks have vented. All of our facilities now have VRUs, so we’re capturing all of these vapors off of those tanks and reusing them as fuels (at well sites).”

Strickler said the oil and gas industry is being challenged with a wide range of proposed rules and regulations.

"You have to be proactive like WPX has done with their processes and engineers who figure it out," he said. "(Rules such as the EPA’s) are increasing our costs. Is it necessary or not? I don’t know. Is it right or wrong? I don’t know. But as you drive up industry costs, you’re going to cut back on activity – you’re not going to drill as many wells … We have our work cut out for us.”

Rachel Richardson, director of the Stop Drilling program for Environment America, another national advocacy group, called the new rule a step forward, but said it "falls short of what's needed to avert climate disaster."

Richardson and other advocates said better controls on existing fracking and drilling operations are needed, along with a commitment to phase out fossil fuels such as oil, gas and coal in favor of renewable energy such as wind and solar power.

The EPA said today it is also asking energy companies to provide a range of information on existing drilling wells, including the types of technologies that could be used to reduce methane emissions. EPA will collect the information for the next year, with the intent of issuing a rule sometime next year.

Daily Times Business Editor James Fenton contributed to this story.