The Biden administration has issued a final rule cracking down on methane leaks from oil and gas drilling on public lands.

The Interior Department on Wednesday said the new rule modernizes 40-year-old regulations and that between 2010 and 2020, the department has seen venting and flaring of an average 44.2 billion cubic feet per year of natural gas.

The department said it expected the new rule will generate more than $50 million in additional royalty payments annually.

"By leveraging modern technology and best practices to reduce natural gas waste, we are taking long-overdue steps that will increase accountability for oil and gas operators and benefit energy communities now and for generations to come," Interior Secretary Deb Haaland said in an announcement about the change.

The changes require those drilling for oil and gas on public lands "to take reasonable steps to avoid natural gas waste from the very beginning of operations, carry out leak detection and repair across ongoing operations, and cut down on wasteful gas venting and flaring, according to the department.

The rule also sets limits on "royalty-free" flaring, requiring companies to pay royalties on what the department said is "avoidable losses of natural gas" through venting and flaring.

The American Petroleum Institute, an energy industry trade group, signaled it was considering a challenge to the new regulations, saying the department's Bureau of Land Management is only allowed to assess royalties on gas that can be captured economically.

"We are reviewing the final rule to ensure it remains within BLM's statutory authority to regulate waste of natural gas and will consider all options to prevent regulatory overreach," said Holly Hopkins, API's vice president of upstream policy.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


--Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com


(END) Dow Jones Newswires

03-27-24 1735ET