EPA stays oil, gas methane rule, plans to prepare new proposal

The U.S. Environmental Protection Agency on May 31 stayed its rule limiting methane emissions from new sources in the oil and gas sector.

The agency put the regulation on hold for 90 days past its planned effective date, June 3, for the fugitive emissions, pneumatic pumps and professional engineer certification requirements from the 2016 rule. The new-source oil and gas methane emissions rule, proposed in August 2015 and finalized in May 2016, was expected to reduce 510,000 tons of methane emissions in 2025, cost about $530 million that year, and result in $690 million in climate benefits during that year.

During the stay, the EPA will review certain provisions of the final rule that were not included at the proposal stage, which did not allow for the public feedback on those elements. Specifically, the agency said the previous administration had not given the public a chance to respond to how the final rule would apply to low-production well sites and the process for getting approval to use "alternative means of emissions limitations," among other things. The agency plans to prepare a proposed rule during the reconsideration process and take public comment. The EPA's decision follows a March executive order from President Donald Trump directing the agency to reconsider the rule.

Aside from Big Oil, US gas producers quiet on Paris accord debate

Despite projections that natural gas demand would climb steeply in the first decade of a carbon-constrained future, America's natural gas producers were largely silent about whether President Donald Trump should move the U.S. out of the Paris Agreement on climate change.

After integrated oil companies like Exxon Mobil Corp., which is the nation's top natural gas producer and placed a $41 billion bet on shale gas with the purchase of XTO Energy Inc. at the height of the shale gas boom, none of the independent exploration and production companies contacted by S&P Global Market Intelligence wanted to comment on a withdrawal from the climate change agreement.

ExxonMobil has reaffirmed its support for U.S. participation in the Paris agreement, as have fellow supermajors such as Chevron Corp., BP plc and Royal Dutch Shell plc. The distinguishing feature of all is a history of loading up on natural gas reserves and infrastructure to grab portions of an expanding global market for gas that will be fed in part by methane from U.S. shale plays.

W.Va. high court shifts toward allowing more oil, gas royalty deductions

The West Virginia Supreme Court of Appeals voted to allow oil and gas producers to deduct processing and transportation costs from the royalties of landowners in certain circumstances.

The decision may signal a change in the court's thinking. In a 2006 decision on more recent lease configurations, Tawney v. Columbia Natural Resources (a company now owned by Chesapeake Energy Corp.), the justices ruled that drillers had to pay the minimum royalty without deductions unless the lease said otherwise.

The old flat-rate leases had producers paying a fixed rate for gas from a lease and predate a 1982 law requiring a minimum 12.5% royalty to the leaseholder.

Pa. hearing board cuts EQT fine for leaky gas well pond to $1.1M

Appalachian shale gas producer EQT Corp. was assessed a $1.14 million fine by the Pennsylvania Environmental Hearing Board for a leaky Tioga County well impoundment in 2012, smaller than the $4.5 million the state Department of Environmental Protection sought.

But the driller did not get all of what it wanted. EQT's contention that per-day fines should be levied only for the days the impoundment leaked, not the number of days waters were polluted, was shredded in the board's decision. The hearing board said EQT aggravated its case by continuing to use water in the impoundment pond to frack a well after the leak was discovered, rather than ceasing operations to investigate the leak.

Report outlines gas utility cost projections under Ontario cap-and-trade program

Ontario's gas utilities cost for complying with the province's carbon goals will heavily depend on whether Ontario links with California and Quebec's cap-and-trade program as planned.

Ontario has said it hopes in 2018 to link its emissions market with the existing one with California and Quebec under the Western Climate Initiative. If the province moves ahead with that plan, the larger marketplace will help keep carbon costs down long-term, relative to a scenario in which Ontario kept its carbon market within its own borders only, according to a report the Ontario Energy Board released May 31.

"The Ontario carbon price would follow an entirely different trajectory for an Ontario-alone market versus a linked WCI [or Western Climate Initiative] market," said the report, produced by ICF Consulting Canada Inc. "This is because Ontario is expected to be short of allowances from early in the program if Ontario emitters are unable to buy emissions units (allowances and offset credits) from WCI partner jurisdictions."