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Regulation Is Needed: Making “Best” Practices Standard Practice

April 15, 2014

The recent release of the Administration’s comprehensive strategy for reducing methane emissions raises the question of how best to reduce methane emissions, especially from the oil and gas sector. Can voluntary programs really lead to the methane reductions we need, or are mandatory regulatory programs necessary? While voluntary programs can identify important technologies and practices to reduce emissions, without direct federal regulation of methane from the largest sources in the oil and gas industry we won’t see the reductions we need to reduce harmful greenhouse gas emissions, protect public health, and improve public safety.

As part of the Administration’s strategy, the Environmental Protection Agency (EPA) today (April 15) set a course for possible regulations by issuing a series of white papers investigating five key sources of methane in the oil and gas sector for peer-review and comment.  We will be engaging with the Agency to ensure that they have considered all the relevant information on these sources and the available means to clean them up.  This fall, EPA will determine whether regulation of oil and gas methane emissions, from all, some (or none) of these sources, is warranted. The regulations would be finalized by 2016.

Certainly, further research into strategies to reduce emissions from oil and gas will be valuable.  But the data EPA has today makes clear that available technologies can cheaply and significantly reduce emissions from a number of sources in this industry, including all those covered by the EPA white papers.  Given the damage from these emissions and the low-cost opportunity to reduce them, regulation is both warranted and necessary.

Of course approaches in addition to regulation can be valuable as the Administration’s strategy recognizes. Gathering additional information about the cost and feasibility of regulating additional sources not included in the white papers, such as the local distribution system of gas mains that delivers gas to you home, is warranted as well.  Engagement with industry and researchers will develop important means to reduce methane inexpensively from these sources, and will also reveal cheaper ways to reduce emissions further from the sources EPA is already studying. But this doesn’t diminish the need for federal regulations to ensure that companies across the nation are expeditiously adopting the proven, cheap methods and technologies to reduce emissions today.

The predictable backlash from those who oppose the idea of federal oversight of the oil and gas sector has already started, with some in industry and on Capitol Hill claiming that regulation is not needed because voluntary programs for the oil and gas sector will solve the methane emissions problem.  In fact, the opposite has proven true.

Voluntary programs for reducing methane emissions in the oil and gas sector have existed since 1993 with the establishment of Natural Gas STAR, a voluntary EPA program.  Gas STAR has helped accelerate the adoption of best practices and technologies to reduce methane emissions.  But despite their low costs, these technologies and strategies are still seen as “best” practices not “standard” practices, and emissions from many of the sources addressed by Gas STAR technologies remain, nationwide, far higher than they would be if these cleaner technologies were required.  In fact, a recent study shows that emissions from U.S. oil and gas operations are projected to increase 4.5% by 2018 with the continued growth in the industry, particularly from oil production, despite the regulations that are in place.

We know from a number of studies that methane emissions from the oil and gas sector are substantial—about one-third of total US methane emissions. Methane literally spews from wells, compressors, and pipelines, and several recent studies have confirmed that overall, emissions are substantially higher than official inventories report:

  • In an aerial survey of a gas production field in the Uintah Basin in Utah, researchers from NOAA reported a leak rate of 6-12% of the wells’ output.  EPA inventories report that less than 2% of natural gas leaks, all the way from the well to the customer.
  • A study by a group headed by the University of Texas found that while soon-to-be-required “green completions” of hydraulically fractured wells are very effective at controlling methane emissions from that single process, releases from several other types of equipment and leaks at well sites were higher, by about a factor of two, than previous EPA estimates.  They also found a wide discrepancy of emissions between producers. These high-polluting “super emitters” are probably skewing the average for the whole natural gas industry.
  • A team led by Harvard University researchers reported that releases of methane from the entire US could be 50 percent higher than previous EPA estimates.  The paper shows that oil and gas emissions are a big contributor to this excess methane, and that the EPA estimates of emissions from oil and gas are too low.

While these studies don’t point to one single emission level or leak rate, we know that the amount of methane leaking from the system is larger than EPA currently estimates, and we know that a large portion of those emissions can be eliminated at very low, and often negative, cost.

Reducing emissions from the sources EPA is studying is cheap – the cost would be tiny for the industry. CATF recently commissioned experts to review leak detection and repair programs at over 4,200 oil and gas facilities in the US and Canada, and found that even at today’s low natural gas prices, leak detection surveys are a very low-cost way to reduce emissions of methane and other pollutants.  Other recent work by EDF and ICF has found that industry could cut its methane emissions by roughly 40 percent below projected 2018 levels using proven technologies at an average annual cost of less than one cent per thousand cubic feet of produced natural gas – a fraction of a percent of the revenue the industry receives for the gas.

The oil and gas sector’s methane emissions are real and substantial, and the technologies are commercially available and cheap, so why haven’t companies all implemented reduction programs?  First to be fair, some companies are taking this issue seriously and going above and beyond current regulatory requirements to reduce methane emissions on their own. For example, several companies went on the record to support Colorado regulations to reduce emissions, noting that they were already carrying out many of the requirements, and that the costs were very low.  The Center for Sustainable Shale Development, which includes four large Marcellus shale gas producers, has agreed to standards that will reduce methane emissions substantially. These companies follow a more responsible course for a variety of reasons including the desire to maintain their social license to operate, because they understand good environmental management is a part of good overall management, and because by tightening their own systems they are capturing more natural gas that can be sold.  So what stands in the way of these “best” practices becoming “standard” practices? Market barriers.

A variety of barriers can prevent companies from capitalizing on the opportunities to reduce methane. These include diverse ownership of the different parts of the system, lack of ownership of the gas moving through the system, higher rates of return from other investments, lack of knowledge of best practices, lack of incentive by independent contractors, or a simple lack of interest. When markets fail, regulations must be established to ensure the societally beneficial change that needs to happen.  Reducing methane from the oil and gas sector provides an apt example.

When EPA has completed its deliberations, we are confident that the Agency will conclude that direct regulation of methane from oil and gas is necessary to overcome these barriers and to reduce emissions from this sector. Curbing methane is a “win-win-win-win” that can save fuel, reduce greenhouse gas emissions, improve air quality, and improve pipeline safety.

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