DOI proposes methane emissions limits for operations on public lands

Feb. 1, 2016
The US Department of the Interior proposed regulations aimed at reducing methane emissions from oil and gas operations on public and tribal lands.

The US Department of the Interior proposed regulations aimed at reducing methane emissions from oil and gas operations on public and tribal lands. Three leading industry associations immediately said the proposed rules are unnecessary because operators already are curbing methane releases voluntarily.

"We need to modernize decades-old standards to reflect existing technologies so that we can cut down on harmful methane emissions and use this captured natural gas to generate power and provide a return to taxpayers, tribes, and states for this public resource," US Interior Sec. Sally Jewell said as the proposal was announced on Jan. 22.

The proposed rule would revise provisions related to venting, flaring, and royalty-free use of gas in a 1979 notice to lessees and operators of onshore oil and gas leases on federal and Indian lands. Comments will be accepted for 60 days following its publication in the Federal Register in a few more days. Public hearings also will be held in February and March.

"I think most people would agree that we should be using our nation's natural gas to power our economy-not wasting it by venting and flaring it into the atmosphere," Jewell said.

Developed by the US Bureau of Land Management, the proposed rule would require producers to adopt currently available technologies, processes, and equipment that would limit the rate of flaring at oil wells on public and tribal lands, make operators periodically inspect their operations for leaks, and replace outdated equipment that vents large quantities of gas into the air.

Operators also would be required to limit venting from storage tanks and use best practices to limit gas losses when removing liquids from wells. The new measures also would clarify when operators owe royalties on flared gas, and ensure that BLM's regulations provide congressionally authorized flexibility to set royalty rates at or above 12.5% of the value of production.

Reflect recommendations

Several oversight reviews, including studies by the DOI's Inspector General and the Government Accountability Office, have raised concerns about the waste of gas from oil and gas operations on public lands and found BLM's existing requirements insufficient, Interior said. It cited a 2010 GAO report that estimated about 40% of the gas now vented or flared from onshore federal leases could be economically captured with current technologies.

Several states, including Colorado, North Dakota, Wyoming, and most recently Pennsylvania, as well as the US Environmental Protection Agency, also have taken steps to limit venting, flaring, and leaks, it noted.

"The commonsense and cost-effective measures we are proposing reflect the recommendations of several government studies as well as stakeholder views and tribal consultation over the last two years," said Janice Schneider, assistant Interior secretary for land and minerals management.

The new requirements, which would be phased in over several years to let operators make the transition at a lower cost, would not only get more gas from federally managed onshore lands into pipelines and delivered to markets, but also reduce pollution and cut greenhouse gas emissions which contribute to climate change, Schneider said.

Noting that 84% of the operators on federal lands already are in compliance with the proposed rule, BLM Director Neil Kornze said the proposed rule could reduce oil and gas-related methane emissions there by 50% and possibly more.

"EPA also is looking at some of these issues," Kornze said. "Its authority relates to pollution from emissions, and its proposals apply to new or modified operations. This proposal applies to all operations because a lot of the problem we're seeing with emissions applies to existing activity." BLM plans to work with EPA to avoid regulatory duplications or conflicts, Kornze added.

Costly and unnecessary

The proposed rule is costly and unnecessary, officials from the three oil and gas associations said on Jan. 22. "We share the desire to reduce emissions and are leading efforts because capturing more gas helps us deliver more affordable energy to consumers," American Petroleum Institute Upstream and Industry Operations Director Erik Milito said.

"The incentive is built-in, and existing BLM guidelines already require conservation," Milito said. "Another duplicative rule at a time when methane emissions are falling, and on top of an onslaught of other new BLM and EPA regulations, could drive more energy production off federal lands."

Reducing emissions through limited venting and flaring is in the government and the industry's best interest, observed Daniel T. Naatz, senior vice-president of government relations and political affairs at the Independent Petroleum Association of America.

"Further, increased natural gas production and use have resulted in cleaner air for the US," Naatz said. "We are concerned that these new rules could create a regulatory regime that prevents the extension of the financial and important environmental benefits generated by American oil and gas production."

Kathleen Sgamma, vice-president of government and public affairs at the Western Energy Alliance in Denver, said, "We support the goal of capturing greater quantities of methane and reducing waste gas, but a command-and-control regulatory approach is not the most effective way to meet that goal, particularly one that exceeds BLM's jurisdiction."

She said, "Often delays in obtaining the rights-of-way required before pipelines and gas gathering lines can be constructed lead to high flaring rates. Rather than a long, drawn-out rulemaking, BLM could reduce venting and flaring rates tomorrow simply by approving permits for gas capture lines after years of delay. By proposing emissions controls on existing wells, it is attempting unlawful Clean Air Act regulation that even EPA doesn't try to assert."

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.