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Amid deregulatory push, API launches push to limit methane emissions

  • Commodity Oil

The American Petroleum Institute Tuesday plans to unveil a voluntary industryprogram aimed at reducing methane emissions from US oil and natural gasoperations, an effort to launch as the Trump administration continues its pushto weaken and repeal methane rules finalized by the Obama administration.

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The API initiative, known as The Environmental Partnership, will initiallyinclude 26 oil and gas companies, including Shell, Pioneer Natural Resourcesand Cabot Oil and Gas, in all major US plays, according to Erik Milito,director of upstream and industry operations for API.

"It's really a good foundation for us to have at the start," Milito told S&PGlobal Platts in an interview Monday.

Under the initiative, which will launch on January 1, participating companieswill: commit to implement leak monitoring using the latest detection methods;replace or retrofit highly emitting pneumatic controllers; and attempt tominimize emissions from manual liquids unloading for gas production sources.

"We've done it in a very surgical way so that we've picked programs that areactually going to help us see tangible improvements and really provide us aplatform to really show continued emissions reductions," Milito said.

Milito said the 26 companies already signed onto the program account for "tensof thousands" of US oil and gas sites, including many with multiple wells. Hesaid the companies account for an estimated 25% of all domestic natural gasproduction. The percentage of total oil output represented was unavailable, hesaid.

The program is voluntary, however, and, outside of potential removal from theprogram, there is no consequence for non-compliance. API will compile methanedata in an annual report from the partnership, but there will be no formalmonitoring and new industry standards implemented, Milito said.

"In the end, we're going to see who is reporting and we're going to see theextent to which companies are reporting," he said. "We think they're all goingto do that, we're fully confident they are."

Despite the partnership, API has been a leading proponent of the Trumpadministration "deregulatory" agenda, which is aimed at rolling back many ofthe environmental protection rules put in place by the Obama administration.Milito said Monday that API was supportive of "cost-effective regulations."

On Monday, the Trump administration announced it would appeal a US DistrictCourt for the Northern District of California ruling in October that itviolated federal law by freezing requirements in an Obama-era methane rule.

The rule, developed by Obama's Bureau of Land Management, requires oil and gasproducers to use "available technologies and processes" to cut flaring in halfat oil wells on public and tribal lands and calls for increased leakinspections and equipment upgrades.

Industry groups and the states of North Dakota, Wyoming and Montana have suedto overturn the rule, arguing that it would shut in oil and gas production onfederal lands.

In July, the US Court of Appeals for the District of Columbia Circuit ruledthat the Environmental Protection Agency could not suspend an Obama-era ruleto restrict methane emissions from new oil and gas wells.

While questions over the future of federal methane regulations will likely becomplicated by court battles, industry will likely press forward withvoluntary programs, Milito said.

On November 22, eight of the world's biggest energy companies, includingExxonMobil, Royal Dutch Shell, Total and BP, signed on to a series of "guidingprinciples" aimed at reducing methane emissions from their operations. Theprinciples include broad efforts to reduce venting and flaring, detectemissions from leaking pipes and improve emissions data collection.

"Natural gas plays a major role in meeting global energy demand today," thevoluntary agreement states. "Since natural gas consists mainly of methane, apotent greenhouse gas, its part in the transition to the low-carbon futurewill be influenced by the extent to which the oil and gas industry reduces itsmethane emissions."

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