Rocky Mountain High: US looks to Colorado for methane emissions policy

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WASHINGTON, Oct. 24 (Reuters) – U.S. environmental regulators are expected to base new rules for controlling methane emissions from oil and gas operations on the domestic policies of a state that has been cracking down on the powerful greenhouse gas since seven years old – Colorado.

The U.S. Environmental Protection Agency is expected to unveil the rules, which will have major implications for oil and gas drillers, this week, according to sources familiar with early drafts of the proposed regulations.

The proposal, which will be rolled out just days before the start of the United Nations global warming conference in Glasgow, is a key pillar in the Biden administration’s broader crackdown on climate change.

As drillers in major producing states like Texas and North Dakota brace for a slew of new requirements, for Colorado companies, stricter government rules around methane emissions remain unchanged.

The state has both strong environmental ambitions and a large oil and gas industry. It first implemented national methane regulations in 2014, and gradually expanded those requirements with the goal of reducing methane emissions from the drilling industry to more than half of 2005 levels by 2030.

“Colorado’s regulations are the strictest on the planet,” said Dan Haley, president of the Colorado Oil and Gas Association, adding that the rules were developed with input from the industry.

Methane, a gas that escapes from oil and gas infrastructure, livestock farming and landfills, is the second leading cause of climate change after carbon dioxide. It has a higher heat-trapping potential than CO2, but it breaks down faster in the atmosphere, so rapid reductions in methane emissions can quickly have a big impact on reducing greenhouse gases. .

The United States and the European Union launched an effort last month by two dozen countries to reduce methane emissions by 30% over the next decade.

Current federal rules limit methane emissions from new sources, leaving existing operations unregulated in states that do not have their own standards.

Colorado rules require oil and gas companies to find and repair methane leaks and install technologies to limit or prevent emissions in existing operations. As of 2019, it has required semi-annual leak detection, tank checks and performance standards for the transmission. The rules, which also apply to low-production wells, or so-called marginal wells, also prohibit routine methane flaring and require the installation of valves that reduce emissions.

EVOLVING PRODUCTION

Colorado’s oil production jumped 57% between 2015 and 2019 due to the rise in horizontal drilling techniques that supported the U.S. shale gas boom before dropping in 2020 at the start of the coronavirus pandemic , according to data from the US Energy Information Administration.

The growth in methane emissions has been lower than the increase in production, climbing 9% during the 2015-2019 period, according to the state. In the Permian Basin, meanwhile, the country’s largest and most productive oil field that covers parts of Texas and New Mexico, methane emissions from oil production have soared by more than a quarter. during this period at large facilities under the jurisdiction of the EPA, according to federal data. .

“It should be noted that Colorado’s emissions have remained fairly stable despite an increase in oil and natural gas production,” Colorado Department of Public Health and Environment spokesperson Andrew Bare said. , in a press release sent by email. He added that the 2019 figures do not reflect the emission reductions expected from the additional policies the state has since developed.

“Since 2014, it feels like we’ve been engaged in almost continuous regulation,” said Garry Kaufman, director of the air pollution control division at CDPHE.

The state has deployed overflights and ground measurements in an attempt to refine its measurement of methane emissions.

According to EPA spokesperson Nick Conger, the EPA has reviewed a number of state programs and has spoken to state regulators, including the one in Colorado, when assessing news methane rules.

THE CLEANER GAS ADVANTAGE

Some Colorado drillers have taken the opportunity to market what they charge as low-emission natural gas to customers eager to sell their environmental credentials.

“Being a Colorado operator has really given us a huge advantage over the rest of the United States in terms of the environmental quality of our operations,” Brian Cain, vice president of government affairs for Extraction Oil and Gas Inc. (XOG) based in Denver .O), said in an interview.

His company, which produced an average of 88,907 barrels of oil equivalent per day last year, is merging with two others to form Civitas Resources Inc and focus on low-emission drilling in Colorado’s Denver-Julesburg Basin.

Jon Goldstein, of the Green Environmental Defense Fund group, said that the state’s increase in production since 2014 “shows the oil and gas industry’s lie of the myth that strict and comprehensive methane rules put the ‘bankrupt industry’.

Others say the new rules have made doing business in the state untenable, especially for smaller, less well-capitalized producers. Some have started looking elsewhere for future operations, said Trisha Fanning, who heads the Colorado Small Operator Society, representing 60 oil and gas companies.

“Some operators are no longer able to operate economically within the state,” she said. That doesn’t bode well for smaller operators nationwide, Fanning added, because “we expect the federal methane rule to eventually take on several aspects of Colorado.”

Industry players have expressed concern that the EPA could follow Colorado’s lead and enforce methane rules on small producing or “marginal” wells, which environmental groups say are a problem. major source of methane emissions, according to sources who have seen earlier versions of the proposal.

A study conducted by EDF this year found that there are 565,000 marginal well sites in the United States in active production, representing 5.8% of combined oil and gas production, but a disproportionate share of oil and gas production. emissions. For example, in the Appalachian Basin, gas wells which represent 0.2% to 0.4% of production represent 11% of federal methane emissions, according to EDF.

Kathleen Sgamma, president of the Western Energy Alliance, said federal regulations on marginal wells would affect 20% of current oil and gas production. “A lot of these wells should be closed,” she said.

Reporting by Valerie Volcovici in Washington and Nichola Groom in Los Angeles Additional reporting by David Gaffen Editing by David Gaffen and Matthew Lewis

Our standards: Thomson Reuters Trust Principles.


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