Opponents and supporters of the US Bureau of Land Management's proposed venting and flaring rule for oil and gas producers quickly defined their main differences at an Apr. 27 House Natural Resources subcommittee hearing. One side called it a case of classic federal regulatory overreach where an agency is trying to exceed its authority. The other said that BLM simply wants to reduce waste of a public resource that it is supposed to manage.
"This one-size-fits-all approach from a heavy-handed Washington federal regulator is a problem," said Energy and Mineral Resources Subcommittee Chairman Doug Lamborn (R-Colo.). "Methane emissions already are declining in the US. The rule is duplicative, and the unintended consequences will saddle existing sources with extreme compliance costs, forcing many companies to shut in wells rather than continue to operate them."
Ranking Minority Member Alan Lowenthal (D-Calif.) said, "There simply is no good reason to allow the industry to take natural gas-a resource we used to heat our homes-and vent it or burn it off. BLM is mandated by [the 1920 Mineral Leasing Act] to prevent the waste of gas, and this rule would try to do just that…. It's not only within its authority to cut down on venting, flaring, and leaks-it's obligated to do so."
The proposed rule, as it appeared in the Feb. 8 Federal Register, aims "to reduce waste of natural gas from venting, flaring, and leaks during oil and gas production activities on onshore federal and Indian leases." It also would clarify when produced gas lost through venting, flaring, and leaks would be subject to royalties, and when oil and gas production used on-site would be royalty-free.
BLM proposed the rule as the US Environmental Protection Agency began to prepare methane emissions regulations for US oil and gas operations. That is expected to apply to new sources and not address flaring, while BLM's proposal would cover existing onshore activity on federal and Indian leases, Amanda Leiter, the US Department of the Interior's deputy assistant secretary for land and minerals management, told the subcommittee. "BLM's current venting, flaring, and leaks of natural gas were adopted more than 30 years ago, long before innovative technologies unlocked vast new supplies in the US," she said.
Proposal's specifics
The proposed rule's goal is to reduce waste, not control emissions, Leiter said. It would phase in, over several years, limits on the total amount of gas an operator may flare, on average, per well per month on a lease, and prohibit venting on most leases. Operators also would be required to develop a waste minimization plan before they drill.
They also would have to limit venting from storage tanks and use best practices to reduce gas losses when they remove liquids from wells. Operators would be required to inspect their facilities periodically using currently available methods, and repair any leaks they find.
"Several states including Colorado, North Dakota, and Wyoming, as well as EPA, have also taken steps to limit venting, flaring, or leaks of gas," Leiter said. "BLM has worked to ensure that its proposed regulations would not impose conflicting or redundant requirements."
It considered states' requirements and worked closely with EPA to align the agencies' proposals as much as possible consistent with the statutory authorities and responsibilities of each, she said. BLM also proposed specific provisions to exempt operations covered by EPA requirements from comparable BLM rules, and to allow states to apply for variances from BLM requirements where state rules achieve the same results.
North Dakota and Wyoming's top oil and gas regulatory officials, who also testified at the hearing along with commissioners from two Colorado counties, disagreed. They said that BLM did not prepare a federalism assessment of its proposal which clearly would have an impact on the states' relationship with the federal government.
The proposal also duplicates EPA's current and proposed rules regarding oil and gas activities' air emissions, Wyoming Oil & Gas Conservation Commission Supervisor Mark Watson said. The portion of the proposal to regulate emissions from certain storage vessels also involves air pollution regulation, which Congress and EPA have both delegated to states, he told the subcommittee. "Wyoming believes the proposed rule is beyond BLM's authority, and it is the states who are best positioned to regulate air emissions from oil and gas development," Watson said.
Flaring provision problems
BLM's proposed rule's prescriptive limits on flared volumes also are problematic, North Dakota Mineral Resources Department Director Lynn D. Helms testified. "[They] are based upon Wyoming and Utah limits that were developed in the 1980s for associated gas produced from conventional reservoirs. They are not appropriate for control of flaring from unconventional oil reservoirs" such as those in the Bakken play, he said.
"As of February this year, pipelines had reduced that flaring to 11%. That number could be 5% today, except BLM and [the US Bureau of Indian Affairs] didn't approve two new right-of-way applications," Helms said.
"I understand there are only 4-5 gas pipeline right-of-way applications pending in BLM's state office in Dickinson, ND," Leiter subsequently responded. BIA delayed one such application there because of tribal concerns, she added.
The remaining witnesses from two Colorado county governments were divided in their assessments of BLM's proposed rule. Shawn J. Bolton, who chairs the Rio Blanco County Commission, said it was the latest in "an onslaught of mandates, policies, and directives" from the agency. "We know BLM does not want to destroy our oil and gas industry, kill jobs, and handicap our economy, but it must seriously consider the repercussions of overreaching policies."
But Gwen Lachelt, a member of the La Plata County Commission in Durango, told the subcommittee that BLM needs to strengthen its proposed rule by eliminating some of its exemptions. "Any rule is only as good as its inspection and enforcement," she said, adding that a recent study found 90% of operators conduct their own inspections and fix leaks quickly.
Lachelt also called for a stronger partnership with other government agencies and for EPA to extend its proposed methane emissions rule to existing operations. "We're seeing companies being formed and jobs being created to work with operators on reducing methane emissions," she said. "We have lost $2 million of revenue since 2010, so we would like to see more methane captured."
