Regulatory Reform Needed After U.S. Senate Fails to Overturn BLM Methane Rule

One of the oil and natural gas industry’s near-term priorities was passage of a U.S. Congressional Review Act (CRA) resolution overturning the Bureau of Land Management’s (BLM) methane venting and flaring rule. The CRA provides a streamlined process for Congress to disapprove of a federal rule adopted in the final days of the previous presidential administration. While the CRA was enacted more than 20 years ago, it has rarely been used. In regard to BLM’s methane rule, the CRA passed the U.S. House of Representatives in February, but the U.S. Senate voted 51 to 49 to block the CRA passage.

As a result, the oil and natural gas industry now looks to work with the Department of the Interior (DOI) in addressing its concerns with the rule. Per a March 28 executive order on promoting energy independence and economic growth, President Donald Trump requested that the DOI review the subject rule for consistency with current policy. If the Secretary of the Interior finds the rule is not aligned with current policy, the DOI is to suspend, revise or rescind the rule.

The BLM finalized the rule in December 2016 requiring oil and gas producers on public and tribal land to cut well flaring in half and to limit storage tank venting. The industry’s fundamental position has been that the BLM methane rule is unnecessary since there has been a significant reduction in methane emissions during the past decade despite increased natural gas production.

Data from the Environmental Protection Agency’s (EPA) Inventory of U.S. Greenhouse Gas Emissions and Sinks (1990–2015) shows methane emissions from the natural gas industry declined 16 percent during the report period while natural gas production increased 55 percent. Industry-wide successes in reducing emissions as oil and natural gas production has increased dramatically must be recognized. Technologies and innovations by the Petroleum Equipment & Services Association’s (PESA) member companies have been instrumental in providing safer, more efficient and less costly methods of production.

Additionally, the industry has argued that the EPA and the states have the authority to regulate air quality, not the BLM. Under the Mineral Leasing Act, the BLM has the responsibility to manage oil and gas development on public lands and to prevent undue waste, but not to regulate air quality and emission controls.

The industry has expressed concern that the added cost of compliance could lead to the shutting in of a significant number of wells on federal lands, reducing domestic energy production and decreasing revenues to the U.S. Treasury. The Congressional Research Service reports U.S. federal onshore natural gas production was down 18 percent from 2010 to 2015 compared to an increase of 55 percent on state and private land. The decrease in production resulted in federal revenue declining from $2.8 billion in 2010 to $2.4 billion in 2015. BLM’s methane venting and flaring rule will only further deter investment and production on federal lands.

The effective date for the subject rule was January 17. The BLM rule prohibits operators from venting natural gas except in limited circumstances such as during emergencies or when flaring is technically not feasible. One year from the effective date, the rule requires operators to capture 85 percent of their total gas production each month after accounting for specified volumes of allowed flaring. The percentage increases to 98 percent by 2026.

The industry is expected to seek a delay in the compliance date of the rule. Assuming the extension is granted, the industry will work with the DOI to adopt a new rule that is grounded in evidence-based science, adequately considers costs and benefits, and is the product of a transparent and robust rule-making process.

As the national trade association for the oilfield service, supply and manufacturing sector, PESA works in partnership with other trade associations to educate policymakers and advance a smart, practical approach to the venting and flaring rule. PESA member companies continue to produce technologies and innovations to help harness our energy resources, while reducing emissions and protecting the environment.

 

For more information about PESA, visit pesa.org.

 

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