Two energy industry groups filed a lawsuit Tuesday challenging the Bureau of Land Management’s (BLM) final rule regarding the venting and flaring of natural gas from oil and gas operations on federal and tribal lands.
In their filing with the U.S. District Court in Wyoming, the Western Energy Alliance (WEA) and the Independent Petroleum Association of America (IPAA) argued that the U.S. Environmental Protection Agency (EPA) and U.S. states hold the authority to create an air quality regulatory program on federal lands, not BLM. WEA and IPAA also argue that businesses operating on public lands already comply with EPA-mandated air quality requirements.
BLM issued a final rule Tuesday updating 30-year old regulations governing the venting, flaring and leaking of gas on public and Indian lands. Under the new rule, oil and gas producers will be required to use currently available technologies and processes to cut flaring in half at oil wells on federal lands, DOI said in a Nov. 15 press statement. Operators are also required to periodically inspect their operations for leaks, and replace outdated equipment that vents large quantities of gas into the air.
The Methane and Waste Prevention Rule also requires oil and gas producers to limit venting from storage tanks and use best practices to limit gas losses when removing liquids from wells. The rule establishes when operators owe royalties on oil and gas. It also restores the U.S. government’s ability to set royalty rates at or above 12.5 percent of the value of production, DOI said in the release.
“This rule to prevent waste of our nation’s natural gas supplies is good government, plain and simple,” said U.S. Secretary of the Interior Sally Jewell in the release. “We are proving that we can cut harmful methane emissions that contribute to climate change, while putting in place standards that make good economic sense for the nation.”
BLM’s rule – which DOI expects to cut methane emissions by as much as 35 percent – is part of the Obama administration’s goal of cutting oil and gas sector emissions by 40 to 45 percent by the year 2025. The new rule, which will be phased in over time, was developed using information gathered in 2014 in public and tribal meetings.
WEA supports the goals of capturing greater quantities of associated gas and reducing waste gas, “but overreaching regulation that fails to acknowledge industry success is not the most effective way to meet those goals,” said Kathleen Sgamma, vice president of government and public affairs with WEA, in a Nov. 15 press statement.
Sgamma added that, since 1990, the natural gas industry has reduced methane emissions by 21 percent, while boosting production by 47 percent.
“The rule is such a vast overreach of BLM’s authority that we feel our chances in court are excellent,” Sgamma told Rigzone in an email statement. “Because this rule has been released so late in the Obama presidency, there are other avenues with the new administration, such as scrutiny under the Congressional Review Act or a complete redo.”
Rather than letting natural gas escape into the air, producers have every incentive to capture and sell as much gas as possible to consumers, said Dan Naatz, senior vice president of government relations and political affairs at IPAA, in a Nov. 15 press statement. But a lack of infrastructure and gathering lines to collect gas at the wellhead make it difficult for producers to safely transport product to market.
“The BLM’s rush to regulate something already being regulated at the state and federal level is an example of poor government policy and a left hand not knowing what the right hand is doing,” said Erik Milito, director of upstream and industry operations with the American Petroleum Institute, in a Nov. 15 press statement. Milito added that the new regulations were technically flawed and could stifle the innovation that has resulted in U.S. environmental successes.
In May, the EPA issued new rules to reduce the emissions of methane, volatile organic compounds and toxic air emissions from new, modified and reconstructed sources in U.S. oil and gas operations. These new regulations also include hydraulically fractured oil wells, some which contain large amounts of gas as well as oil, and equipment used by the oil and gas industry that weren’t regulated under 2012 rules.
In addition to withdrawing from global climate change agreements, newly elected U.S. president Donald Trump could potentially seek to reverse rules governing methane emissions from oil and gas operations.
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