US methane emissions on track for tighter monitoring and additional regulations

The US Congress recently approved a resolution that reverses a rule from President Trump’s administration, which had lowered the requirements for targeting methane emissions in oil and gas well operations. This makes a 2016 Environmental Protection Agency (EPA) rule the valid standard again with respect to reducing methane emissions and shows that that the current administration of President Biden is moving ahead with initiatives aimed at contributing to a net zero emission targets by 2050. At the same time, the oil and gas industry is aligning with the effort, and although the degree of commitment varies across the many US operators, there is no strong confrontation to these measures, at least in their narrative, reports market analyst GlobalData.

According to the EPA, US methane emissions in 2019 amounted to 197mn tCO₂e. Of this, approximately 48% came from oil and gas production, and within this segment most emissions were generated in pneumatic controllers, gathering and boosting stations.

Adrian Lara, Senior Oil & Gas Analyst at GlobalData, comments: ‘Reducing emissions of methane is in line with what many operators have been doing to monetise natural gas production that is otherwise flared. The main difference is that leaks of methane are normally in small volumes which don’t justify an investment for their recovery. In this respect, it is true that for small operators installing monitoring devices for leaks and replacing pneumatic controllers can be at a relatively high cost for low producing wells.’

Lara continues: ‘In general, issues related to reduction of greenhouse gas (GHG) emissions require a degree of government intervention to regulate and incentivise. While investors are already doing their part by scrutinising sustainability goals of oil and gas companies, given the amount of investment needed, policy is arguably necessary for aligning the also influential oil and gas industry. This legislative action also allows for EPA to further establish other regulations for existing and new wells. Based on statements from major operators, their position is one of support and cooperation with government policy, both at federal and state level, on climate change actions. Still, Republican Party members argue that the reinstatement of regulations in some cases duplicate measures already in place at the state level, and that they will ultimately hurt and reduce the international competitiveness of the US oil in gas industry.’