Try 1 month for 99¢
Jonah Field

A drilling crew burns off excess natural gas in this 2005 photo prior to moving their rig to another location in the lucrative Jonah Field in southwest Wyoming.

The U.S. Environmental Protection Agency unveiled a proposal Tuesday to cut methane emissions from new oil and gas wells by almost one-third in the next decade, adopting a strategy that borrows large portions from Wyoming's plan to curtail pollution.  

The proposal, which comes as part of a wider effort by the Obama administration to tackle climate change, drew immediate criticism from industry groups, who said it would hinder production and add to costs at a time when oil and gas companies are already struggling with depressed prices.

Environmentalists largely praised the move. They said it would bolster companies' balance sheets by cutting down on waste while keeping a potent greenhouse gas out of the atmosphere. 

But most agreed the impact of the rule would be muted in Wyoming, where the state has already implemented a series of measures aimed at curtailing emissions from oil and gas operations.

Wyoming already requires gas operations in the western part of the state to conduct a leak detection and repair program. That requirement is one of the hallmarks of the federal proposal.

"I think in Wyoming most, if not all, of what’s being proposed in the rule is already being addressed," said John Robitaille, vice president of the Petroleum Association of Wyoming, an industry group. 

There were nonetheless some notable differences. The EPA rule would extend the requirement for so-called "green completions" to oil wells.

In a green completion, companies capture the gas that flows back from a well after its fracked. Previous EPA standards only applied to gas wells. However, oil wells often produce natural gas as a byproduct, creating what EPA officials called a "sizable" source of methane emissions.  

Wyoming has green completion requirements for both oil and gas wells in the western part of the state. However, those requirements do not extend to the Powder River Basin and Laramie County, which have been home to much of the recent oil development in Wyoming.

Industry officials said the requirement could be unrealistic in areas where pipelines do not exist to capture natural gas production.

"If we don’t have a gas sales line that has room for additional gas to go in it, there should be an ability to allow us to use other completion techniques other than the green completion," said Robitaille.

The rule contains an exception for exploratory wells and would not require green completions where installation of pipelines is not feasible, EPA officials said. 

Environmentalists said the green completion requirement should have little impact on industry. The Wyoming Department of Environmental Quality, they noted, is already considering extending the requirement statewide.  

"I think green completions have become the norm in significant parts of Wyoming," said Bruce Pendrey, a lawyer at the Wyoming Outdoor Council. "We have seen green completions are a viable regulatory option and can be done in a way that is not devastating to industry."

Gov. Matt Mead said in a statement that his administration was reviewing the proposal, but lamented that "EPA has again failed to recognize Wyoming’s lead – proposing what appears to be an onerous and unnecessary rule."

Methane is the primary component of natural gas and a powerful greenhouse gas, estimated to be about 25 times more potent than carbon dioxide.

The Obama administration has announced a goal to cut methane emissions by 45 percent of 2012 levels in the next decade.

The measures outlined Tuesday, which would only apply to new and modified wells, would reduce methane emissions by 30 percent. EPA officials, in a conference call with reporters, said the administration has yet to identify how it will cut the remaining 15 percent. 

The new requirements are expected to eliminate 340,000 to 400,000 tons of methane in 2025, or the equivalent of 7.7 million to 9 million tons of carbon dioxide, the agency said. 

It estimated it would cost operators $320 million to $420 million to implement by 2025. However, the agency said it anticipated the climate benefits would outstrip the cost, ultimately yielding a net gain of $120 million to $150 million in 2025.

"Methane clearly is an air pollutant that endangers public health and welfare," said Janet McCabe, acting assistant administrator for EPA's Office of Air and Radiation. 

Industry groups questioned the proposal, noting efforts companies have made to reduce emissions in recent years. Emissions from natural gas wells are down 79 percent from 2005 levels despite a dramatic uptick in drilling nationwide, said the American Petroleum Institute, a lobbying group.  

“The oil and gas industry is leading the charge in reducing methane,” API President and CEO Jack Gerard said. “The last thing we need is more duplicative and costly regulation that could increase the cost of energy for Americans."

But environmentalists noted lower methane estimates only included emissions from gas wells themselves. A new report commissioned by the Environmental Defense Fund found that natural gas operations emit 100 billion cubic feet of methane annually, or eight times more than what the EPA has found.

The study focused on emissions not only from wells, but gas gathering systems like pipelines and compressor stations. EDF said the lost gas had a value of roughly $300 million and has the climate impact of 37 coal plants. 

"The fact is emissions are not going down. They are going up over time," said Jon Goldstein, an EDF policy analyst. "What a lot of the science we've been working on has shown is where emissions have gone down it's because EPA and states have put in regulations that require it."

Subscribe to Breaking News

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Follow energy reporter Benjamin Storrow on Twitter @bstorrow

0
0
0
0
0