(Bloomberg) — The Obama administration said it will issue
rules to cut leaks of climate-warming methane, a step the oil
and gas industry warned could choke the U.S. energy renaissance
fueled by hydraulic fracturing.
The Environmental Protection Agency said Wednesday it will
propose rules this year targeting new oil-and-gas equipment, the
centerpiece of an initiative to reduce methane emissions as much
as 45 percent by 2025. The EPA also plans to expand voluntary
programs with states and industry on equipment already in use, a
move that falls short of the new mandates environmentalists
sought.
“We are outlining a comprehensive set of steps that will
have a positive effect on the climate, on the economy and on
public health,” Dan Utech, a White House adviser on climate and
energy, said on a conference call with reporters. By 2025, the
efforts will reduce gas leaks enough to heat 2 million homes a
year, he said.
The announcement may be President Barack Obama’s last major
new climate initiative, following moves to curb carbon pollution
from cars and power plants. It represents a challenge to
Republicans who won majorities in Congress with promises to rein
in federal regulations.
Higher Costs
“This EPA mandate from the Obama administration will not
only increase the cost to do business in America, but it will
ultimately limit our nation’s ability to become fully energy
independent,” Senator James Inhofe, an Oklahoma Republican and
chairman of the environment committee, said in a statement.
Climate activists pushed Obama to target methane seeping
from wells, compressors, pumps, pipes and storage tanks in the
oil and gas network, arguing it represents the largest source of
greenhouse gases so far unaddressed.
Obama, who pledged to cut U.S. greenhouse gases 28 percent
by 2025, has embraced a boom in domestic oil and gas production
made possible by fracking and horizontal drilling in shale rock.
And the EPA has been relying on increased use of natural gas —
a cleaner alternative to coal — to reach the carbon reduction
goal from power plants.
Methane — the primary component of natural gas — is 25
times more potent than carbon at trapping heat, adding to global
warming. While companies have a vested interest in keeping
methane bottled up en route to customers, some leaks.
Industry Lobbying
The oil and gas industry had been lobbying to head off any
tougher restrictions on methane emissions, arguing that
voluntary measures are sufficient and new rules threaten to
undermine the drilling revival that’s a rare bright spot in the
U.S. economy.
“As oil and natural gas production has risen dramatically,
methane emissions have fallen thanks to industry leadership and
investment in new technologies,” Jack Gerard, president of the
American Petroleum Institute, said in a statement. “Onerous new
regulations could threaten the shale energy revolution.”
The EPA estimates about 30 million metric tons of methane
was emitted in 2012, about 10 percent of the total U.S.
greenhouse-gas emissions. The oil and gas industry accounts for
almost one-third of the methane emissions.
In its statement, the Obama administration announced steps
to address the leaks from the moment the well is drilled,
through the processing, compression and storage stages, to
delivery of the oil or gas to power plants and residential
distribution networks.
‘Landmark Moment’
“This is a landmark moment: direct federal regulation of
methane is essential, and the administration has set the right
goal and launched solid steps to get started,” Fred Krupp,
president of the Environmental Defense Fund, said in a
statement.
The EPA said rules that force gas drillers to capture the
methane released right after a well is fracked will be expanded
to cover oil wells, too. Separately, the EPA will issue rules
aimed at methane leaks from new or modified production and
transportation equipment, including compressors and pneumatic
devices. The EPA didn’t detail what the rules would include, or
how much it would cost companies to comply.
Ozone, Smog
Also, the EPA will set standards for the release of ozone-forming chemicals in regions with frequent smog. Addressing
those compounds forces producers to cut methane leaks, as well.
What the mandates won’t touch — at least initially — are the
valves, pneumatic devices and compressors that are already in
use. It’s a gap in Obama’s plan that worried environmental
groups.
“They just can’t meet their goal without addressing the
existing sources,” David Doniger, climate director for the
Natural Resources Defense Council, said in an interview. “The
lifetime of this equipment is basically indefinite.”
By law the EPA must issue standards for existing facilities
after it does so for new sources, and so — eventually — some
type of standard is likely.
And the EPA rules aren’t the only part of the White House
effort.
The Interior Department would issue standards to mandate
cuts in venting, flaring and leaks in oil and gas wells on
public lands, and the Department of Energy will invest $15
million in leak detection equipment.
The administration also praised a voluntary effort by
companies such as Southwestern Energy Co., Kinder Morgan Inc.,
Apache Corp. and four other companies to band together and
pledge their own cuts in leaks. Their group, named ONE Future,
will coordinate with the EPA on how to measure emissions and
reduction, according to a White House fact sheet.
“What the Obama administration has done here is make an
explicit choice: refrain from regulating methane from existing
sources in order to give the voluntary measures a chance to
work,” said Tom Michels, a Washington-based representative for
the group.
To contact the reporter on this story:
Mark Drajem in Washington at
To contact the editors responsible for this story:
Jon Morgan at
Romaine Bostick, Steve Geimann