EPA cancels coal, oil rule targeting methane emissions

The Environmental Protection Agency this week canceled a special rule to limit methane emissions from new and modified oil and gas wells, a move that attracted criticism from energy and industry groups but raised eyebrows given the Trump administration’s efforts to increase support for the program.

The EPA, which said it canceled the rule as requested by governors and state regulators, ordered that the rule be thrown out after it turned in final “autopsy” findings earlier this week.

“After considering the results of our states’ extensive input, EPA staff determined that continuation of rulemaking was not warranted,” the agency said in a statement.

The decision appears to contradict President Trump’s hard-line stance on regulations, including methane regulations.

In September, he signed an executive order pushing for less-restrictive regulations of everything from new workplaces to water supplies as well as calling for new cuts to existing ones. He has also pushed to open up federal lands to more drilling.

Erik Milito, director of upstream and industry operations for the American Petroleum Institute, said the decision could cost the state as much as $1 billion.

The Obama administration set new strict rules to cut methane emissions from oil and gas wells used to develop oil and gas wells.

Proponents of the rule said they hoped the methane rules would keep prices lower, cutting demand for the fuel. But industry groups said they were expensive to implement and would force drillers to shut down those sites in the event of a major methane spill.

The EPA under Obama implemented a “zero emission” rule requiring that new facilities be equipped with venting devices, heating recovery units and venting and safety systems. The administration also mandated that existing sites reduce the methane they release.

The Department of Interior announced last year that it would phase out those rules on Interior lands over two years, though Interior Secretary Ryan Zinke could opt to put the entire rule in place if he chooses.

Industry groups said the Obama rule resulted in a spike in costs for drillers, adding about 20 percent to their budget, according to Milito.

That spending was then largely passed onto consumers through higher prices, the groups said.

The EPA’s analysis, however, said that the costs were “largely offset by increased demand for methane” in the oil and gas industry as a result of the rule.

The report argued the state had insufficient data to get a detailed picture of the regulations’ effects and said the EPA could have carried out a more rigorous rulemaking process than the Obama administration did.

Energy companies, meanwhile, spent $3.6 billion on oil and gas wells in 2016, according to the latest figures from the EIA, and while oil prices are near an all-time high and the Environmental Protection Agency has said that consumers are among the biggest beneficiaries of high oil prices, a drop in oil prices could result in much higher prices.

Federal authorities haven’t implemented new regulations for methane emissions since 2005.

This story has been updated.

Click here for more Energy Daily news and analysis.

Leave a Comment