Emissions study finds EPA's proposed methane rule might not go far enough

An environmental study found 40% of all the oil and natural gas sites analyzed in the Permian Basin were leaking significant amounts of methane as the US Environmental Protection Agency pursues a new rule to crack down on emissions.

The Environmental Defense Fund study, conducted via helicopter between Nov. 12 and Nov. 21, detected "significant plumes" of methane from about 40% of the 900 sites surveyed.

The study, released Dec. 14, discovered methane emissions from multiple sources, including malfunctioning flares, surveyed pipelines and about half of all surveyed midstream facilities.

"The fact that EDF can still see those plumes of methane is a travesty," said Chris Romer, CEO of the certification firm Project Canary. "It is giving a black eye to the reputation of US oil and gas at a time when clean US oil and gas should be driving the climate solution."

In November, the EPA proposed new regulations to reduce methane emissions from the oil and gas industry. The proposed rules would require operators to regularly find and fix their emissions. The agency's goal is to reduce 30% of all methane emissions by 2030. The EPA is accepting public comments on its methane proposal through Jan. 31.

"Under the current proposal, operators of smaller leak-prone facilities would only be required to conduct a one-time inspection of their well sites," reads the EDF study. "This study suggests a single inspection will not be sufficient to reduce total methane levels, since there are over half a million of these wells across the country, many with recurring leaks that could go permanently undetected."

"There are dozens of reasons why a site might be emitting high levels of methane," said EDF senior scientist David Lyon. "The only way to know what's going on and to ensure things are operating properly is to regularly check sites for problems that lead to massive pollution. Our research has consistently shown that leaks can and do happen at all types of facilities, including smaller, leak-prone wells, and the best way to control emissions is to find and fix them."

The prolific Permian not only features the highest internal rates of return per well of all North American shale plays, but its centralized location provides easy access to growing markets, including LNG terminals and pipeline exports to Mexico.

Exports to Mexico from Texas are up nearly 120 MMcf/d in December, averaging 5.2 Bcf/d month to date as of Dec. 15, according to S&P Global Platts Analytics. The monthly increase comes as Mexico demand has climbed nearly 100 MMcf/d on the month to 7.7 Bcf/d month to date, 250 MMcf/d above the five-year average, due to warmer-than-normal temperatures across the country.

December exports are up nearly 200 MMcf/d on the year due to lower LNG imports, which are down to 13 MMcf/d this month compared with 130 MMcf/d in December 2020. Mexico's LNG imports have gradually fallen over the past couple years due to multiple pipeline expansions, falling from 580 MMcf/d in 2019 to 260 MMcf/d in 2020 and just 56 MMcf/d in 2021. This has largely been supportive for the Permian as exports from Texas have climbed from 4.4 Bcf/d in 2019 to 5.4 Bcf/d in 2021, according to Platts Analytics.