The Senate is poised to vote this week on a resolution that would repeal the Bureau of Land Management’s methane venting and flaring rule – an Obama administration regulation that would impose enormous costs on American energy producers.
Meanwhile, new data released by the Environmental Protection Agency show just how unnecessary this rule is. EPA’s data show that methane emissions from venting and flaring have already plummeted by 77 percent since 2011. At the same, time crude oil production increased by 67 percent.
In its report, EPA is very clear the significant drop in methane emissions from the production sector is “primarily due to decreases in emissions from associated gas venting and flaring.” The data are certainly a testament to the fact that states, which regulate oil and gas development, are doing a good job reducing emissions – therefore, BLM’s rule is redundant.
The rule is ostensibly about reducing waste, but serious legal questions have arisen because BLM sold the rule partially on the basis that it would address air quality, specifically global warming. As BLM stated in a fact sheet, “the rule will reduce emissions that worsen climate change.” Congress has delegated air quality regulation to the EPA, not BLM.
Yet, even if you look at BLM’s most ambitious estimates about the rule’s impact, it turns out it will only reduce global greenhouse gas emissions by 0.0092 percent.
While it would have a negligible effect on climate, it will have an enormously negative effect on the economy. By mandating every well install new and costly technology, the BLM rule would drive down production on federal lands and the decrease in revenue from lost production would far outweigh the value of prevented venting and flaring emissions. One study finds the rule would reduce production on federal lands by more than 112 million barrels of oil. That’s worth more than $6 billion in royalties and tax revenues. So in the end, taxpayers would actually miss out on about $114 million in federal and state taxes.
New Mexico Gov. Susana Martinez (R) put it well in a letter to House Speaker Paul Ryan (R-Wis.) noting, “Royalties paid to state and federal governments will decrease, new development on federal lands will stagnate and jobs will be lost if the Venting and Flaring Rule is not repealed.”
Considering all the rules drawbacks, it’s not surprising political leaders and key organizations in the Western states are calling on the Senate to repeal this rule. The Southern Ute Indian Tribe noted that the rule “fails to take into account the cost of compliance versus the production value of some wells, which often can result in net royalty loss to the public and the Tribe.” Carla Sonntag of the New Mexico Business Coalition said the rule threatens to shut down 70 percent of the state’s natural gas wells. She said, it “doesn’t make economic sense and so the operators are now looking at shutting down these wells. New Mexico can’t afford that.” The North Dakota Chamber of Commerce, as well as senators from all over the West, have said the rule should be repealed.
At the end of the day, it really boils down to this: Methane is essentially natural gas. Producers have every desire to capture and sell as much natural gas to the public as possible.
As oil production continues to increase and methane emissions continue to fall across the country, it couldn’t be clearer that proposed federal methane emissions are a solution in search of a problem.
Seth Whitehead is a spokesperson for Energy In Depth, a research and education program of the Independent Petroleum Association of America.
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