US EPA's methane rules seen as too restrictive, threatening innovation

Environmental Protection Agency rules should help drive methane emission reductions in the US oil and gas industry this decade, but they risk stifling innovation if they are overly prescriptive, according to speakers at a Nov.15 event hosted by the Center for Strategic and International Studies.

EPA proposals for updates to methane performance standards have included language that technology must be 'commercially available,' which producers like Chevron and BP have criticized as potentially restricting innovation.

"Right now the proposals seem to dis-incentivize [new technologies] so I'm really hoping when we get to final we're going to be encouraging people to use the most sensitive, accurate technologies," said Vanessa Ryan, methane reduction manager at Chevron.

Ryan pointed to the rapid pace of change in developing technologies. "We've desktop evaluated 60 technologies and field piloted almost 20. This is up from just two five years ago."

The EPA should focus on setting targets and let states figure out how to meet them, Representative Kelly Armstrong (R-ND) argued. Companies can often go beyond what is required in EPA but not meet EPA regulatory guidance, he said. New Mexico has a stricter methane regime than the EPA, "but their regulatory is different than the EPA... So now they need to figure out how they can meet their regulations and still comply with EPA. That doesn't make any sense."

While the new rules are "imperfect" they should be very effective, said Erin Tullos, senior research fellow at the University of Texas at Austin.

"The bottom line is we'll go from hundreds of thousands of wells that are effectively unregulated today... to a very tightly controlled production and midstream segment over the next three to five years, unlike anything else we see anywhere maybe outside of Norway."

Incremental progress

Progress will be "a little incremental at first" as the controls will apply just to new facilities, Tullos said. The real significance will be when rules kick in for existing facilities irrespective of their age. "I think it will take two to three years to implement their state rulemaking and implementation timeframes... and then this massive step change where the type of things we expect today from new sources are going to be required across the board," she said.

This could shift the economics of marginal wells and lead to closures, Tullos said. "Wells are considered on the economics of the individual wells. If you have to go through a bunch of retrofits and bunch of expensive monitoring... they'll just shut it in."

Matthew Kolesar, ExxonMobil chief environmental scientist, emphasized the need for collaboration across the entire oil and gas exploration industry.

ExxonMobil recently got a grant from the Department of Energy to grow a research program with the University Texas that explores establishing a distributed methane monitoring network, Kolesar said. "The whole premise of that wasn't for ExxonMobil or Chevron. It was, 'can I provide cost effective mitigation across a wide area across a whole basin? Because I need every operator in the United States to be a good performer. I don't want a differentiated product. That doesn't help me.'"

On that note, Kolesar welcomed the EU's recent agreement on a regulation for methane emissions. "It does appear there's an import standard, which we've always been supportive of."

Beyond North America

Methane is expected to have a central role in the upcoming UN Climate Change Conference, especially regarding how to bring the solution set beyond north America and Europe, said Ben Cahill, senior Fellow at CSIS.

There are already big regulatory moves announced in the run-up to this year's event in Dubai, in particular the EU news and an agreement between the US and China to include methane in their 2035 Nationally Determined Contributions.

"I am incredibly optimistic about the energy we're seeing outside of North America and hoping that we can really take what we've learned here and speed deployment across the globe," Ryan said.

Satellite monitoring technology should "give us a better sense of how the rest of the world is comparing," Tullos said. "I have a sense we're chasing the last mile on [methane] sources in the United States, while there are what we would consider very antiquated practices going on in other parts of the world."