Despite telling oil and gas companies to increase production in recent months to cope with global shortages and rising prices, President Biden is once again cracking down on the industry by proposing a major reduction in emissions from operations. And he’s not the only one, as Britain and the EU try to reduce gas flaring and venting practices to curb their methane emissions in line with climate pledges.
The Biden administration has proposed a rule to further limit methane leaks and gas flaring on public lands, which could have a significant impact on the industry if passed. It will build on the expansion of the Environmental Protection Agency̵[ads1]7;s (EPA) 2021 rule that requires drillers to detect and plug leaks at well sites across the country. The Department of the Interior is recommending the new rule to support Biden’s goals of reducing emissions and meeting US climate pledges. It would mean stricter monthly time and volume limits on gas flaring in oil and gas operations. Researchers believe that a significant reduction in methane emissions worldwide will have a major impact on climate change, and help reduce the effects of global warming in line with the Paris Agreement’s goals.
As well as reducing levels of flaring, the proposal will require energy companies to establish waste minimization strategies, which demonstrate that they have the necessary pipeline capacity for their expected gas production. This can lead to new projects being rejected if they are assessed to have levels of gas flaring in excess of the stipulated maximum. Home Secretary Deb Haaland explained, “This proposed rule will bring our regulations in line with the technological advances the industry has made in the decades since the BLM’s (Bureau of Land Management) rules were first put in place, while providing a fair return to taxpayers.”
If passed, the proposal is expected to generate $39.8 million annually in royalties for the United States, as well as prevent billions of cubic feet of gas from being released into the atmosphere. BLM Director Tracy Stone-Manning stated, “This draft rule is a sound, environmentally responsible solution as we address the harm that wasteful natural gas causes.” She added: “It puts the American taxpayer first and ensures producers pay appropriate royalties.
Several steps have been taken to reduce various greenhouse gas emissions in recent months, which is expected to change the landscape of the oil and gas industry. In addition to the new EPA and BLM rules, Biden’s Inflation Reduction Act (IRA) is expected to help reduce both carbon and methane emissions by taxing oil and gas producers who exceed emission limits.
The United States has pledged to cut its methane emissions by 30 percent by 2030 from 2020 levels. At the climate summit COP27 in November, national climate adviser Ali Zaidi in the White House tired that the US government will embark on “a relentless focus to eradicate emissions where we can find them”. And with oil and gas production releasing the highest levels of methane emissions, it’s no surprise that Biden is targeting new emissions-cutting policies at fossil fuel companies. EPA Administrator Michael Regan said at COP27: “Our regulatory approach is very aggressive from a timing and rigor standpoint.” He suggested that the old and new rules will reduce energy waste by around 80 per cent, and cut 36 million tonnes of carbon emissions.
This move comes after years of criticism around the USA’s methane problem. Studies have repeatedly shown that oil and gas companies in the US have underreported methane leaks in their operations. A 2022 reportstated that methane emissions in the Permian Basin from major oil and gas operations “are likely significantly higher than official data.” It suggested, “A very significant proportion of the methane emissions appear to be caused by a small number of super-emitting leaks.” Earlier this year, 21 oil wells in California were found to be leaking methane at a level of 50,000 parts per million methane or more, leading to a huge plugging operation.
And this problem is not just limited to the US, with the EU and UK responding to years of neglect of abandoned oil wells. Earlier this year, the European Commission proposed regulations for greatly reduce methane emissions, putting pressure on oil and gas companies in the region to do more. The proposal includes reporting obligations for EU importers and restrictions on gas flaring. Similarly, the UK’s Oil and Gas Authority (OGA) has ordered one end of routine flaring and ventilation by 2030. This will give OGA the authority to stop production if flaring and ventilation levels are deemed too high.
In response to increasing pressure to curb greenhouse gas emissions, particularly carbon and methane waste, governments around the world have begun to introduce stricter guidelines for oil and gas operations. The supportive policy framework, developed in recent months in the United States, is expected to help the BLM’s gas waste proposal effectively be implemented if adopted. And other powers, such as Britain and the EU, are expected to follow in America’s footsteps by introducing their own restrictions on flaring and venting.
By Felicity Bradstock for Oilprice.com
More top reads from Oilprice.com: