EPA's Final Methane Rules Would Hit Oil and Gas Industry Hardest
The U.S. Environmental Protection Agency on Thursday finalized a new set of rules aimed at battling climate change. This time, the agency is targeting the oil patch — with big implications for Texas, the nation’s petroleum king.
The standards would slash emissions of methane, a gas that often leaks from well pads, compressor stations, processing plants and other equipment used in petroleum production.
“Today, we are underscoring the Administration’s commitment to finding commonsense ways to cut methane — a potent greenhouse gas fueling climate change — and other harmful pollution from the oil and gas sector,” EPA Administrator Gina McCarthy said in a statement. “Together these new actions will 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 actions rankled Texas petroleum industry groups, who called it a solution in search of a problem that will hurt producers already reeling from low oil prices.
“This is a costly rule that puts a bullseye on the Texas energy economy,” Steve Everley, a spokesman for the industry-funded organization North Texans for Natural Gas, said in a statement. “The rig count in the Barnett Shale recently fell to zero, but EPA’s only solution is more regulation from the federal government. This is not what Texas workers need or deserve.”
Texas Gov. Greg Abbott's office also panned the EPA's action.
“This latest rule is just more hot air from the Obama Administration in an attempt to line the pockets of their buddies in green energy, while ignoring the interests of hardworking Americans,” spokesman John Wittman said in an email.
Texas has sued the EPA two dozen times since President Obama took office in 2009, and is likely to challenge the methane regulations. The office of Attorney General Ken Paxton, who on Thursday appeared in a Dallas courtroom to battle charges of financial fraud, said it was still assessing the methane rules.
The regulations — part of the president’s broader plan to cut methane emissions by 40 to 45 percent of 2012 levels by 2025 — would require the industry to limit releases of methane and volatile organic compounds at hydraulically fractured oil wells. The rules also target leaks “downstream” from production sites, including equipment that compresses and transports natural gas. The proposal would also phase in “green completion” requirements — that operators capture methane that's otherwise burned off at existing wells.
The rules could hit smaller producers particularly hard. A proposal released last August would have exempted low-producing operators from monitoring their wells for leaks. But the agency removed that exemption in the rules unveiled Thursday.
So far, most U.S. efforts to fight climate change have focused on carbon dioxide, which accounts for the vast majority of greenhouse gases emitted in the country.
But methane, the primary component of natural gas, is much better at trapping heat. One pound of methane has more than 20 times the impact on global warming than one pound of carbon dioxide over a 100-year period, scientists estimate.
With that in mind, environmental groups cheered the announcement.
“The U.S. oil and gas industry pumps out almost 10 million metric tons of methane pollution a year from thousands of sites in communities all across the nation,” Fred Krupp, president of the Environmental Defense Fund, said in a statement. “It’s a tremendous threat to our climate, and a needless waste of valuable resources. Cutting this pollution is the fastest, cheapest path to slow the warming we will otherwise see in the next 20 years.”
The petroleum industry has pushed back, saying it is already taking actions to curb emissions. Operators say they have reason to take action on their own because leaks leave them with less natural gas to sell.
“While the oil and natural gas industry continues to make historic gains in improving our environment, unjustified political regulations only set back the cause by freezing private sector investment and innovations that are working,” Todd Staples, president of the Texas Oil and Gas Association, said in a statement.
Just as Texas leads the country in overall greenhouse gas emissions, it’s also a particularly large source for methane. That’s in part because two major methane-emitting activities — agriculture and oil and gas drilling — are huge here. The state pumps about a third of the country's oil and a quarter of its natural gas.
Oil and gas industry representatives have pointed to EPA data showing total greenhouse gas emissions in the country have dropped amid a drilling surge to suggest that fracking yields climate benefits — as cleaner-burning natural gas replaces coal-fired power.
Measuring nationwide methane emissions isn’t easy. In its latest emissions inventory, the EPA, incorporating more data and analyses, dramatically increased its estimate of methane releases from oil and gas industry sources. It concluded that natural gas systems were the biggest U.S. methane emitters — larger than agriculture, as previously thought. And petroleum systems emitted the fourth-highest totals, behind landfills.
Still, natural gas sector emissions fell 14.8 percent between 1990 and 2014, according to the agency’s latest analysis. Meanwhile, emissions increased by 76 percent over the same period for other petroleum systems.
The EPA said its new rules would yield $690 million in climate benefits in 2025, outweighing the estimated cost to industry of $530 million.
Disclosure: The Texas Oil & Gas Association has been a financial sponsor of The Texas Tribune.