At the end of 2016, the Bureau of Land Management adopted a controversial new rule, “Waste Prevention, Production Subject to Royalties, and Resource Conservation,” also known as the “methane rule.” This new set of regulations is a network of provisions, addressing venting, flaring, equipment leaks and royalty payment obligations, designed to curtail releases of methane in the course of developing oil and gas resources.
The natural gas industry does not condone the wasteful leaking of gas into the atmosphere. Because produced methane is natural gas, it is in an operator’s best interests to capture as much methane as possible for sale. Recent studies by the Environmental Defense Fund and the University of Texas confirm that methane emissions from industry equipment have plummeted dramatically. In other instances, intentional, temporary flaring or venting of methane is required for safety reasons or during the early stages of a well’s life while pipeline infrastructure is being installed.
Even assuming that government regulation is needed to protect the best interests of the public from unnecessary releases of methane into the air, how such regulation is fashioned is critical to the industry and to the public as well. The unnecessary layering of duplicative regulatory schemes is ultimately destructive to employers, workers, consumers and the public, whose interests are supposed to be protected by such regulations.
As recognized by the BLM, much of the methane rule duplicates comprehensive air quality laws and regulations already administered by the federal Environmental Protection Agency and by state and tribal governments. In rationalizing its adoption of the new regulations, BLM reasoned, “The EPA regulations are directed at air pollution reduction, not waste prevention.”
Despite the doublespeak, the rule was bureaucratic overreach and appeared to be driven less by a careful balancing of multiple interests and more by a general disdain for fossil fuels as an energy source. In response, Congress is reviewing the rule, and the House of Representatives has adopted a resolution under the Congressional Review Act that would nullify the rule, if the Senate agrees.
A number of letter-writers have suggested that reversing the methane rule would be a catastrophic mistake, and the La Plata County Board of Commissioners has gone on record as supporting its retention. As readers make up their minds about the methane rule, it may be helpful to know why the natural gas industry and others oppose it.
First, there appears to be no clear need for this new mammoth regulatory regime when methane release problem areas are localized and identifiable. As the BLM recognizes, the new rule’s reach will extend to nearly a third of the nation’s mineral lands, which are owned by the federal government and Native American tribes.
The rule applies equally to oil and gas well operations even though the BLM acknowledged that more than 80 percent of flared volumes are associated with oil wells, not gas wells. Almost 90 percent of those volume releases occur in just three states. The majority of wells operated in the San Juan Basin, both in Colorado and New Mexico, are gas wells.
Second, interminable delays in the timely permitting of pipelines – often caused by the BLM itself and often lasting years – are a principal reason why flaring and venting occurs unnecessarily. If the processes for approval of pipelines were more efficient, a substantial decrease in flared volumes associated with oil wells in problem regions would also be avoided.
Third, projections of increased revenues from the rule’s new royalty payment requirements for lost methane volumes do not account for the premature abandonment of wells. One operator in the San Juan Basin projects that its compliance costs will exceed $26 million annually. Particularly for low-volume wells, it will simply be cheaper to abandon the wells rather than absorb the costs of compliance, which will reduce royalty revenue on a widespread basis.
Fourth, the rule complicates efficient interaction among state and tribal governments and the federal government in addressing common regulatory issues, which is one reason why western states and tribes with oil and gas resources, including the Southern Ute Indian Tribe, oppose the rule.
In sum, in attempting to protect air quality and prevent waste, the methane rule does not reflect a reasonable balance of public interests. In La Plata County, where residents rely heavily on existing production for jobs, property taxes and royalty payments to fund tribal and county governments, schools and special districts, we should not be forced to settle for this flawed rule.
Christi Zeller is executive director of the La Plata County Energy Council. Reach her at (970) 382-6686 or czeller@energycouncil.org.
