Oil and gas sector faces new federal rules to curb methane emissions

WASHINGTON -- Oil and gas companies in Alaska will have to restrict methane emissions from any future drilling of oil and gas wells after new regulations the Environmental Protection Agency released Thursday aimed at curbing climate change.

The agency also released a proposed plan to collect more information from the oil and gas industry, including in Alaska, later this year -- information that would be used to support further methane regulations for existing oil and gas wells, should the next president be of the same mind about climate change as President Barack Obama.

The new rule exerts regulatory control over methane leaks to new and modified drilling wells and storage tanks, but not existing wells.

The requirements released Thursday are set to take effect later this summer and include limits on some toxic air emissions and volatile organic compounds. They build on a 2012 rule requiring natural gas producers to capture methane leaks at wellheads.

Efforts to reduce methane emissions from the oil and gas sector are one piece of Obama's major push to halt the advance of climate change. They're part of a slew of EPA regulatory programs, including programs to cut greenhouse gas emissions from cars and trucks, encourage energy efficiency, limit carbon dioxide emissions from fossil fuel-fired power plants, and planned regulations limiting airplane emissions.

Last year in Paris, Obama pledged to cut greenhouse gas emissions by 26 percent to 28 percent (calculating from 2005 levels) by 2025 as part of an international agreement to ratchet down global emissions. Obama has also pledged to cut methane from the oil and gas sector by 40 to 45 percent from 2012 levels by 2025.

The administration said the regulations announced Thursday will cut 510,000 tons of methane emissions in 2025. Methane is a particularly potent greenhouse gas, with heat-trapping properties 25 times that of carbon dioxide, though it does not last nearly as long in the atmosphere. The EPA said the methane cuts would be equivalent to cutting 11 million metric tons of carbon dioxide.

Some in the oil industry said the regulatory changes will be too costly and are unnecessary given ongoing voluntary efforts.

"It doesn't make sense that the administration would add unreasonable and overly burdensome regulations when the industry is already leading the way in reducing emissions," said Kyle Isakower, vice president of the American Petroleum Institute. "Imposing a one-size-fits-all scheme on the industry could actually stifle innovation and discourage investments in new technologies that could serve to further reduce emissions," he said.

Sen. Dan Sullivan, R-Alaska, echoed that sentiment. "I find today's released standards especially troubling given the fact that the oil and gas sector is already voluntarily reducing methane emissions. But that doesn't seem to matter to this administration. In a time of record low oil prices, the Obama administration continues to wage war against resource development, once again catering to environmental extremists at the expense of hardworking Americans," Sullivan said.

But EPA Administrator Gina McCarthy said Thursday the agency predicts "it would have very little impact in terms of the cost of natural gas, and literally no impact on the cost of oil production."

And the administration said even more regulations are necessary. "Over the past year, new science and data have shown that methane emissions from existing oil and gas sources are substantially higher than was previously understood," the EPA said in its release of the rule.

Between the time when it was first proposed last year and the release Thursday of the final rule, the agency's estimated costs and benefits both rose. The EPA estimates the regulation could cost companies a total of about $530 million in 2025, but also save the companies even more -- $690 million from lost methane, which can be reused and sometimes sold.

Methane tends to escape at various points of the drilling process for natural gas and oil drilling, and the rule requires industry to find and repair leaks and limit emissions from equipment involved in the transmission process. That could lay some new requirements on Alaska's oil industry.

However, just as in the proposed rule released last year, oil drillers on Alaska's North Slope are excused from some monitoring requirements included in the rule.

The Alaska exception follows a trend among the EPA's climate change regulations. For example, the state is also currently exempt from the agency's carbon dioxide rule governing power plants.

Since the proposed version of the rule was issued in August 2015, the agency has reviewed more than 900,000 comments and made several changes to the final version. There is no more exception for low-production wells, and the agency doubled the frequency of required monitoring at compressor stations.

The EPA also offered another route to compliance for states that already have similar rules and requirements on the books, allowing comparable state programs to satisfy the new requirements.

Environmental groups quickly lauded the rule, calling it a necessary step to combat climate change.

League of Conservation Voters President Gene Karpinski said the new regulations will aid Obama's "legacy of action on climate," and the announcement "again demonstrates the United States' strong commitment to meeting our obligations under the historic international Paris climate agreement."

The rules released Thursday "will protect public health and reduce pollution linked to cancer and other serious health effects while allowing industry to continue to grow and provide a vital source of energy for Americans across the country," McCarthy said.