EPA methane proposal would end leak-identification program, expand gas flaring

Ceres questions energy-price effects; Environmental Defense Fund warns of pollution

The proposal would amount to an overhaul of the regulatory system the U.S. has built to curb releases in the oil-and-gas industry, according to The Wall Street Journal. It would ease regulations for wells that emit large amounts of methane, rescind a program to identify large leaks and allow fossil-fuel producers to flare more natural gas, among other changes. The changes answer a key demand from some of the administration’s oil-and-gas allies.

The Environmental Defense Fund said rolling back the regulations would create more methane pollution and health risks for communities living near oil-and-gas operations. Ceres senior director Andrew Logan said weakening the rules was unlikely to spur more production or lower energy prices.

President Trump is set to announce the measures at a rally in Lubbock, Texas, on Tuesday, according to an administration official. Bloomberg first reported the planned announcement, according to The Wall Street Journal. Rising energy costs have become a major issue ahead of the midterm elections, and the administration has described the planned rollback as a way to lower bills.

Earlier this month, the EPA said the regulations “posed a monumental threat” to workers and businesses in the oil-and-gas industry and caused higher energy prices. The agency said loosening the regulations would save an estimated $45 billion and lower energy bills.

A separate EPA measure would allow companies to burn more natural gas as long as they flare it efficiently. The Biden administration issued the methane rules as part of a broader global effort to contain emissions. The rules affected thousands of wells, storage tanks and natural-gas processing plants and required companies to replace leaky, older equipment and buy new monitoring tools.

Some of the Biden rules aimed to reduce large leaks or releases of methane at oil-and-gas facilities and force companies to address them. The rules also allowed third parties to notify the EPA of releases. Biden said at the time that the measures would lead to an 87% reduction in U.S. methane emissions from covered sources by 2030 from 2005 levels.

One major target of those rules was the 760,000 wells that produce negligible amounts of fossil fuels individually. Taken together, the National Stripper Well Association said, they account for over 7.4% of U.S. oil production and about 8.2% of U.S. natural-gas production. Studies in recent years have shown that the wells account for approximately 60% of U.S. natural-gas production emissions and about 40% of U.S. oil production emissions.

Large oil-and-gas producers have supported the federal methane regulations in part because they want to keep selling their product to climate-minded buyers abroad. Smaller operators focused on the domestic market have decried the rules as bankruptcy-inducing and said compliance costs were prohibitive and would lead mom-and-pop producers to shut production. Chad McDougall, vice president at JMA Energy, a privately held oil-and-gas producer in Oklahoma City, said, “The methane rules have been very cumbersome for us,” reflecting the concerns of smaller domestic operators.

The Domestic Energy Producers Alliance, the lobby of oil billionaire Harold Hamm, pushed for a full repeal. The group said some rules functioned “less like an emission-control standard and more like a production ban on new domestic energy development.” The Wall Street Journal reported that Hamm and his private company, Continental Resources, donated more than $3 million to help Trump get re-elected.

Oil and gas is the largest industrial source of methane emissions in the nation, according to the EPA. Methane is the main component of natural gas and is 80 times as potent as carbon dioxide at trapping heat from solar radiation over its first 20 years in the atmosphere. Scientists and policymakers said reducing leaks of methane at oil-and-gas wells is crucial to help combat climate change.

The Environmental Defense Fund, an environmental nonprofit, said rolling back the regulations would create more methane pollution and health risks for communities living near oil-and-gas operations. It said the change would also translate into wasted natural gas that is burned instead of being shipped to markets. Jon Goldstein, the Environmental Defense Fund’s associate vice president for energy transition, said, “At a time when Americans are facing high energy costs, EPA should not give oil-and-gas companies more room to waste a domestic resource.”

Andrew Logan, a senior director at environmental nonprofit Ceres, said the regulations had a profound impact. Companies anticipated the rules ahead of time and worked to reduce their emissions. Those early reductions prevented millions of tons of methane from leaking and allowed companies to sell more natural gas and “collect more cash.” Logan said weakening the rules was unlikely to spur more production or lower energy prices; instead, companies “would pocket more profit” from the regulatory savings.

The separate EPA measure to allow companies to burn more natural gas, as long as they flare it efficiently, might damp the appetite for building pipelines to ship the product to markets. “It could actually bring down the amount of gas you would have sold,” Logan said.

Toby Rice, chief executive of EQT, one of the largest U.S. natural-gas producers, said the industry needs “smart regulations.” He said shutting down low-producing wells might help with methane emissions, but coal, a polluting source of energy, would replace the missing supply. “You’d actually be going backwards towards your greenhouse gas emissions objectives,” Rice said.

Source note: The article was written by Benoît Morenne, who covers the U.S. oil-and-gas industry for The Wall Street Journal. Morenne previously worked as a staff writer for the Deseret News in Utah and earlier reported for The Wall Street Journal as an intern in Paris. A French native, he began his career as a reporter in The New York Times’ Paris bureau. He is a graduate of Columbia University’s Graduate School of Journalism, where he was awarded a Pulitzer Traveling Fellowship.