Despite pleading with oil and gas companies to increase production in recent months, to tackle global shortages and rising prices, President Biden is once again hitting the industry hard by proposing a bigger cut emissions in operations. And he’s not alone, as the UK and EU seek to reduce gas flaring and venting practices to reduce 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 would build on the expansion of the Environmental Protection Agency’s (EPA) 2021 rule that requires drillers to detect and seal leaks at well sites across the country. The Interior Department is recommending the new rule to support Biden’s goal to cut emissions and meet U.S. climate commitments. That would mean stricter monthly time and volume limits on gas flaring in oil and gas operations. Scientists to believe that a significant reduction in methane emissions worldwide would have a major impact on climate change, helping to reduce the effects of global warming in line with the goals of the Paris Agreement.
As well as reducing flaring levels, the proposal would mean energy companies must establish waste minimization strategies, showing they have the pipeline capacity needed for their planned gas production. This could lead to the rejection of new projects if they are deemed to have gas flaring levels beyond the stipulated maximum. Home Secretary Deb Haaland Explain, “This proposed rule will align our regulations with the technological advances the industry has made in the decades since the BLM (Bureau of Land Management) rules were put in place, while providing a fair return to taxpayers.”
If passed, the proposal would generate $39.8 million a year 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 said, “This proposed rule is a common-sense, environmentally friendly solution as we address the damage caused by wasted natural gas.” 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 over the past few months, which are expected to change the landscape of the oil and gas industry. In addition to new EPA and BLM rules, Biden’s Inflation Reduction Act (IRA) is expected to help reduce carbon and methane emissions by taxing oil and gas producers who exceed emission limits.
The United States has pledged to reduce methane emissions by 30% by 2030 from 2020 levels. At the COP27 climate summit in November, White House National Climate Advisor Ali Zaidi declared that the US government will engage in “a relentless focus to stamp out emissions wherever we can find them”. And since oil and gas production releases the highest level of methane emissions, it’s no surprise that Biden is aiming new emissions reduction policies at fossil fuel companies. EPA Administrator Michael Regan said at COP27, “Our regulatory approach is very aggressive in terms of timing and stringency.” He suggested that the old and new rules would reduce energy waste by around 80%, cutting 36 million tonnes of carbon emissions.
This movement comes after years of criticism around the American methane problem. Studies have repeatedly shown that oil and gas companies in the United States underreport methane leaks in their operations. A 2022 reportsaid methane emissions in the Permian Basin from the operations of major oil and gas companies “are likely much higher than official data.” He suggested that “a very large proportion of methane emissions appear to be caused by a small number of super-emitting leaks”. Earlier this year, 21 oil wells revealed methane leaking in California at a level of 50,000 parts per million of methane or more, which led to a huge patching operation.
And this problem is not 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 massively reduce methane emissions, pressuring 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 Oil and Gas Authority (OGA) has ordered a end to routine flaring and venting by 2030. This would give the OGA the power to shut down production if flaring and venting levels are deemed too high.
In response to growing pressures to reduce greenhouse gas emissions, particularly carbon and methane waste, governments around the world have begun to introduce stricter policies on oil and gas operations. The supportive policy framework, developed in recent months in the United States, should contribute to the effective implementation of the BLM waste gas proposal if adopted. And other powers, such as the UK and the EU, are expected to follow in America’s footsteps by introducing their own flaring and venting limitations.
By Felicity Bradstock for Oilprice.com
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