The Obama administration's proposal to regulate emissions from new and modified oil and natural-gas sources will provide some new work for environmental services companies.
That assessment is according to companies that have been working to help oil-and-gas exploration and production companies, pipeline owners and other energy-sector firms identify and mitigate leaks of methane—one of the most potent greenhouse gases. The administration says the plan is critical to achieving its efforts to address climate change. But critics say it would be costly and unnecessary.
The White House's plan, outlined on Jan. 14, calls for establishing a goal for reducing emissions of methane—the primary component in natural gas—from 2012 levels by 40% to 45% by 2025. Methane emissions made up about 9% of total greenhouse-gas emissions in 2012, and about 30% of those methane emissions came from the production, transportation and distribution of oil and gas.
The administration's strategy has many components. The Environmental Protection Agency plans to set standards for methane and volatile organic compound (VOC) emissions from new and modified sources tied to oil and gas production and transmission. The rules, to be formally proposed this summer, would reduce emissions from new oil and gas well sites and gathering systems as well as from pneumatic pumps and compressor stations. The EPA also plans to develop new guidelines to help states to reduce ozone-forming pollutants from existing oil and gas systems in areas that do not meet the ozone health standard and in states in the so-called Ozone Transport Region. Further, the EPA will strengthen its Greenhouse Gas Reporting Program, and the Dept. of Transportation's Pipeline and Hazardous Materials Safety Administration will propose natural-gas pipeline safety standards that, while focused on safety, are expected to lower methane emissions, as well.
Further, the White House's proposed fiscal 2016 budget will include funding for the Dept. of Energy to develop and demonstrate next-generation compressors and more cost-effective technologies to detect and repair pipeline leaks as well as to develop energy-efficiency standards for natural-gas and air compressors.
"The strength of the Obama administration's plan is the goal of [reducing] methane emissions by 40% to 45%," says Jeremy Symons, senior director of climate policy at the Environmental Defense Fund. "Our concern, though, is that it's a 10-year goal. We could achieve that goal a lot faster. We already have the technology we need."
However, notes Symons, the plan does not call for regulation of existing sources, Over the next five years, 90% of methane emissions from the oil and gas industry will come from existing sources, not new well sites, pneumatic pumps or compressor stations, he says.
Key Republicans and groups that represent the oil-and-gas industry are not on board. Sen. James Inhofe (R-Okla.), the new chairman of the Environment and Public Works Committee, has been critical of the concept of regulating methane emissions. In a Sept. 3 letter to EPA Administrator Gina McCarthy, he said the agency "lacks a fundamental understanding of the industry's practices and inner workings" and "believes it has the capacity to actually help oil and natural-gas companies operate more efficiently and profitably by mandating more guidelines and regulations."
The EPA itself has acknowledged that methane emissions from hydraulic fracturing—the technology driving the U.S. energy boom—have fallen 73% since 2011 through existing federal and state regulation and voluntary efforts to improve practices, says Jack Gerard, president and CEO at the American Petroleum Institute. "Another layer of burdensome requirements could actually slow down industry progress to reduce methane emissions," he says.
Institute for Energy Research President Thomas Pyle calls the proposed regs on methane "redundant, costly and unnecessary. Energy producers are already reducing methane emissions because methane is a valuable commodity."
If regulations of new and modified sources of methane emissions in the oil-and-gas industry are, in fact, implemented in 2016, "there will be more work—no doubt"—for environmental services companies, says Paul Wehnert, senior vice president at Houston-based Heath Consulting, which provides lead-detection and methane-mitigation services to oil and gas companies and utilities. Wehnert says the gas-distribution part of the industry has been heavily regulated for years, mostly to eliminate the possibility of gas-leak explosions, but the upstream and midstream parts—the wells, gas-gathering pipelines and transmission pipelines—have faced less scrutiny.
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