Obama proposes cuts in methane emissions from US oil, gas operators

By MARK DRAJEM and BRIAN WINGFIELD
Bloomberg

The Obama administration proposed rules to cut methane emissions from oil and gas production, the second major climate initiative by President Barack Obama this month.

The proposed rules from the Environmental Protection Agency (EPA) target for the first time oil wells, compressors and other equipment as part of a broad effort to reduce leaks of methane, a more intense greenhouse gas than carbon dioxide, by 40% to 45% by 2025 from 2012 levels.

The industry says it has cut the pollution, and rules could choke a US energy renaissance already dented by oil prices near a six-year low.

“The oil and gas industry is leading the charge in reducing methane,” Jack Gerard, the president of the American Petroleum Institute (API), said in a statement. “The last thing we need is more duplicative and costly regulation that could increase the cost of energy for Americans.”

The centerpiece of Obama’s climate initiative, finalized this month, orders cuts in the carbon emissions from coal and natural-gas fired power plants. Climate activists pushed Obama to tackle methane seeping from wells, pumps and storage tanks in the oil and gas network, calling it the largest source of greenhouse gases that had been so far unaddressed.

Oil Alternative

Obama, who pledged to cut US greenhouse gases 26% to 28% by 2025, has embraced the boom in domestic oil and gas production made possible by fracking and horizontal drilling in shale rock. And the EPA is relying on increased use of natural gas -- a cleaner alternative to coal -- as a key part of its rule to cut carbon emissions from power plants.

That rule, the Clean Power Plan, was released Aug. 3.

“Cleaner-burning energy sources like natural gas are key compliance options for our Clean Power Plan and we are committed to ensuring safe and responsible production that supports a robust clean energy economy,” Gina McCarthy, the head of the EPA, said Tuesday in a statement.

The proposed rule will require oil and gas producers to upgrade their pumps and compressors on new wells, and expand the use of methane-capturing equipment now required for gas wells to oil wells. A separate rule, also proposed Tuesday, would force limits on ozone-forming pollutants from oil and gas wells in areas prone to smog.

EPA Punts

By 2025, the rules would achieve the greenhouse-gas cuts equivalent to removing 2 million cars from roads a year. Still, environmental groups had pushed for the EPA to address methane leaks from existing wells and equipment, and for the most part EPA punted on those proposals for now.

“It’s high time that the majority of oil and gas companies plug their leaks and stop this needless pollution,” said Conrad Schneider, advocacy director for Clean Air Task Force.

Methane is 28 to 36 times more potent than carbon at trapping heat, which adds to global warming. While companies have a vested interest in keeping methane bottled up en route to customers, some does leak.

The EPA estimates methane accounted for about 10% of total US greenhouse-gas emissions in 2012, with the oil and gas industry responsible for almost a third of the emissions.

The gas industry says the EPA’s data shows emissions are down 38% since 2005, at the same time that production is up 35%. Without the new rules, those emissions are set to rebound in coming years, according to the agency.

The EPA plans to finalize these rules in 2016.

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