Earlier this week, the Obama Administration announced its plan to reduce methane emissions from the oil and gas industry 40 to 45 percent by 2025. As currently constituted, the plan will involve efforts from multiple agencies, including the Environmental Protection Agency (EPA), Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Energy (DOE), and the Department of Interior’s Bureau of Land Management (BLM).
Although the Obama Administration acknowledged that the oil and gas industry has decreased its methane emissions by 16 percent since 1990, the Administration predicted that methane emissions would increase by approximately 25 percent over the next ten years. The plan envisions a collaborative effort between several federal agencies, states, and members of the oil and gas industry.
As part of its efforts to implement the Obama Administration’s plan, the EPA has announced that it will take a multi-faceted approach to reducing methane and volatile organic compounds (VOC) emissions from the oil and gas industry. Specifically, the EPA stated that it would adopt standards to govern methane and VOC emissions by the oil and gas industry. However, before enacting the standards, the EPA noted that it would consult members of the oil and gas industry and states on the appropriateness of various measures.
In addition, the EPA noted that it would draft the standards under the assumption that states would continue to regulate air pollution from the oil and gas industry. The EPA also plans on publishing Control Techniques Guidelines (CTG) that would evaluate options for reducing VOC emissions in ozone nonattainment areas and states in the Ozone Transport Region. Lastly, the EPA announced that it would increase its efforts at securing voluntary commitments to reduce emissions from the oil and gas industry. As for the EPA’s timeline with respect to these new regulations, the EPA plans on issuing the proposed rules in the summer of 2015 and final rules in 2016.
A number of other federal agencies will also play a significant role in the Obama Administration’s plan. For example, the BLM plans on issuing revised standards later this year that will apply to existing as well as new oil and gas wells located on public land. The revised standards will update the current standards so as to decrease unnecessary venting, flaring, and leaks of natural gas. Moreover, the PHMSA will issue new pipeline standards that are expected to lower emissions.
The Obama Administration also proposes to provide the DOE with approximately 25 million dollars in funding to develop technology to detect and reduce losses from gas distribution and transmission systems and to initiate a program that will quantify emissions from natural gas operations. In addition, the DOE will circulate additional standards for natural gas and air compressors and conduct research on reducing the expense associated with detecting leaks. The Obama Administration will also circulate a Quadrennial Energy Review that will contain policy recommendations on reducing leakage from natural gas operations.
The Obama Administration’s plan is largely viewed as a compromise between the oil and gas industry and environmental groups. The plan only impacts new or modified drilling operations, thereby decreasing the costs incurred by the industry. Environmental groups had advocated for the adoption of rules governing the infrastructure for new and existing drilling operations. In contrast, members of the oil and gas industry had recommended that the Obama Administration rely on voluntary efforts to reduce emissions.
Read the Obama Administration’s announcement.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.
