Press Releases

11 Mar 2016
2016 - U.S. Targets Oil, Gas Wells to Cut Methane Emissions

WASHINGTON—The Obama administration on Thursday announced its first step toward regulating methane emissions from hundreds of thousands of oil and natural-gas wells across the U.S., drawing pushback from an industry battered by cheap oil and cheers from environmentalists.

The administration made the announcement in coordination with Canada, which is taking similar actions. Canada's new prime minister, Justin Trudeau, is visiting the White House for the first time since taking office in November.

The U.S. and Canada will commit to cut methane emissions from oil and gas by between 40% and 45% below 2012 levels by 2025, a commitment the Obama administration has previously made.

The step, being taken under the Clean Air Act, indicates the agency is preparing to write a regulation that is likely to affect hundreds of thousands of existing wells across the U.S.

The Canadian government's environmental regulator also intends to regulate methane emissions from new and existing oil and natural gas sources, publishing initial proposed rules by early 2017.

Canada, under previous Conservative Prime Minister Stephen Harper, never introduced rules limiting emissions from the energy sector, earning rebukes from environmental groups. In contrast, the Liberal government under Mr. Trudeau has pivoted on climate change policy, setting out aggressive goals to reduce carbon emissions.

"Our countries are stepping up to the challenge of methane emissions, and driving forward the regulatory measures necessary to curb methane emissions from existing oil and gas sources," said Brian Deese, senior adviser to President Barack Obama.

The EPA is unlikely to complete a regulation before Mr. Obama leaves office at the end of 2016. Any proposal the EPA issues would likely stay on track if a Democrat wins the White House, while a Republican administration would likely withdraw it. Ms. McCarthy wouldn't say Thursday whether the EPA would propose a rule before Mr. Obama leaves office.

Thursday's announcement is the latest step in a broader effort to clamp down on domestic greenhouse-gas emissions and show the U.S. is moving to address a global deal on climate change that roughly 200 nations agreed to late last year.

The EPA is planning to issue in the coming months its final rule affecting future oil and gas wells. The Interior Department also proposed in January rules to cut methane emissions from existing oil and natural-gas operations on federal lands, which account for a small portion of domestic drilling.

Over the past year, the Obama administration has focused increasingly on methane emissions, which the EPA says have a warming effect on the planet at least 25 times that of carbon dioxide. Methane is the primary component of natural gas.

The EPA says the oil and gas sector's methane emissions account for almost 30% of all U.S. methane emissions, second to agricultural sources, which account for roughly 36%.

Methane emissions from oil and natural gas production have dropped roughly 15% from 2005 through 2012, according to administration data, despite the increase in production. The U.S. government estimates these emissions will rise 25% over the next decade if steps aren't taken to reduce them.

With the onset of the energy boom over the past decade, some companies have practiced flaring, the burning off of excess gas as carbon dioxide, or venting, the emission of methane straight into the atmosphere, if pipelines or other infrastructure aren't immediately available to transport and process it.

Environmentalists and some Democratic lawmakers have been urging the administration to regulate existing oil and gas wells across the U.S., on federal, private and state lands alike, and will likely support the EPA's latest move in that direction.

"The historic agreement addresses one of the most serious aspects of our climate crisis—methane emissions from the oil and gas industry," said Fred Krupp, president of the Environmental Defense Fund, an environmental organization that works with companies to cut emissions.

The oil and natural gas industry has grown increasingly critical of the Obama administration over the past two years as government agencies have rolled out emissions reduction proposals.

Arguing that the federal government is overreaching its executive authority across a range of energy issues, industry executives say new methane rules are unnecessary because companies are cutting emissions voluntarily.

"Even as oil and natural gas production has risen dramatically, methane emissions have fallen, thanks to industry leadership and investment in new technologies," said Kyle Isakower, a vice president at the American Petroleum Institute, the oil and gas industry's biggest trade organization. "These industry-led efforts are a proven way to reduce methane emissions from existing sources, and they are clearly working."

Paul Vieira contributed to this article.

Write to Amy Harder at amy.harder@wsj.com

Read more: http://www.nasdaq.com/article/us-targets-oil-gas-wells-to-cut-methane-emissions-20160310-00600#ixzz42csMpdiN