US EPA's repeal of methane limits for oil, gas wells to have muted output impact for now

The US Environmental Protection Agency's Aug. 13 rollback of methane emissions limits on new oil and gas wells is expected to have limited production impact for now, given that it mostly affects marginal wells already under pressure from weak prices.

Like other recent regulatory changes by the Trump administration, the fate of the methane limits will also ultimately depend on November's presidential election.

The rule could be reversed through the Congressional Review Act if Democrats take control of the Senate and hold the House of Representatives. Or a potential Biden administration could simply abandon EPA's defense of the rollback as it faces inevitable court challenges, said ClearView Energy Partners.

EPA issued two final rules Aug. 13 that overturn parts of the Obama administration's New Source Performance Standards, largely deferring methane regulation to states.

One rule removes transmission compressor stations, pneumatic controllers and underground storage vessels from federal regulation, EPA said in a press release.

Oil and gas operators would still be required to reduce emissions of ozone-forming volatile organic compounds, or VOCs, during production and processing.

EPA said the second rule exempts low-production wells -- those that pump less than 15 b/d on an annualized basis -- from spending significant funds to monitor leaks.

It also reduces monitoring of leaks at gathering and boosting compressor stations from quarterly to twice a year, eases the required schedule for repairing leaks and cuts costs for reporting requirements by an estimated 25% per site, EPA said.

Industry split

When the agency proposed the actions in August, it divided the oil and gas industry -- with smaller, independent producers cheering the rollback while bigger players that are exposed to tougher international climate rules urged the Trump administration to keep the methane standards.

Asked about the pushback from multinational oil companies, a senior EPA official said during an Aug. 13 background briefing that they were just one set of voices considered during the comment period.

"We have heard from many others that pointed out technical flaws, the burdens of reporting, complicated and convoluted reporting requirements, conflicts with state issues ... as well as the outright ineffectiveness of it," she said. "Like any industry that we work with from a regulatory perspective, there are a diverse range of voices."

The Independent Petroleum Association of America commended the rollback and said independent producers recognize the need to manage their air emissions.

"Sound regulations of new production that capture volatile organic compounds and methane are retained while efforts are made to allow for the use of more effective leak detection and repair technology and small business, low production wells, sometimes called marginal wells, are relieved of inappropriate regulatory burdens that were never designed for these operations," said Lee Fuller, IPAA's executive vice president.