US proposes broad limits on methane emissions

President Joe Biden is seeking to cut methane emissions from the oil and gas sector by nearly 75pc by 2030, relative to 2005, with new regulations that for the first time would affect hundreds of thousands of existing oil and gas facilities.

The new regulatory proposal from the US Environmental Protection Agency (EPA) would cost industry a net compliance cost of $680mn-$760mn, after accounting for the value of recovering natural gas through methane controls. The administration expects the rules will deliver $5.2bn/yr in global climate benefits by reducing 41mn short tons of methane from 2023-2035, the equivalent of one year of emissions from all US cars and commercial aircraft.

"With this historic action, EPA is addressing existing sources from the oil and natural gas industry nationwide, in addition to updating rules for new sources, to ensure robust and lasting cuts in pollution across the country," agency administrator Michael Regan said.

EPA's decision to regulate existing sources has raised concerns from independent producers and some oil-producing states that have balked at the new compliance costs. But larger producers now say they prefer methane regulations as a way to hit their own climate goals, and as the better alternative to Democratic plans to put a fee on methane leaks that could cost industry billions of dollars a year.

"The appropriate policy tool to further reduce methane emissions is through the EPA regulatory process, rather than adding new, punitive taxes on the industry through a methane tax," American Exploration & Production Council chief executive Anne Bradbury said.

The proposal's release comes as Biden meets with other world leaders at the UN's Cop 26 climate conference in Glasgow, Scotland. The plan represents a key example of how the US administration plans to deliver on Biden's pledge under the Paris accord to cut total US greenhouse gas emissions in half by 2030, relative to 2005 levels. The administration plans to use fuel-economy standards, power plant regulations and expanded clean energy tax credits to help reach that goal.

Biden is also counting on the rule to help the US fulfill its commitment under a "global methane pledge" that sets a goal for global emissions of the greenhouse gas to drop by 30pc by 2030 relative to 2020 levels.

More than 90 countries, including half of the top 30 methane emitters, as of yesterday had joined the pledge, according to the administration.

"This is the single-best strategy to defeat the climate crisis that we have in the near term," a senior administration official said.

EPA's proposal would focus on equipment and industry practices responsible for the largest amount of methane emissions. The proposal would require industry to switch entirely to zero-emission pneumatic controllers at all facilities, eliminate routine venting of associated natural gas, minimize emissions when liquids are removed from wells, and better control emissions from storage tanks and pneumatic pumps.

The proposal would also require operators to survey for leaks of methane at an estimated 300,000 new and existing well sites, with quarterly leak surveys of compressor stations and large wells, and twice-per-year surveys at smaller well sites. But in a win for small producers, EPA said facilities expected to release less than 3 short tons/yr of methane would only need to conduct one survey, after which monitoring will not be required. EPA also said it was giving operators more flexibility to use advanced technologies to detect leaks faster and at lower costs.

EPA also is proposing tougher regulations for new sources that would take effect in late 2022, when the agency plans to finalize the rule. But the agency is writing the regulations for existing facilities under a section of the Clean Air Act where it writes guidelines, after which states will have time to write their own implementation plans, with enforcement required no more than two years after EPA accepts a plan. That means any state that opposes the regulations could delay enforcement of the rules until well after 2024.

By Chris Knight