Gordon: BLM’s methane rule unworkable in Wyoming

FROM WYOFILE:

Conservation groups hailed the rule as vital to rural economies and a step to addressing climate change, while industry leaders fret over punitive measures.

After years of legal wrangling, the Biden administration last week announced its “final Methane Waste Rule” requiring oil and gas producers to curb gas emissions from operations on federal and tribal lands — designations that describe 70% of Wyoming’s mineral acreage.

The rule has big implications for Wyoming’s environment as well as its bedrock oil and gas industry, which mostly consists of “small producers,” according to industry officials.

The new Bureau of Land Management rule updates a suite of decades-old federal regulations and requires operators to reduce intentional venting and flaring of greenhouse gasses, prevent leaks into the atmosphere and compensate taxpayers for wasting gas that otherwise could be used by consumers.

“The rule is expected to generate more than $50 million in additional natural gas royalty payments each year to the federal taxpayer and tribal mineral owners,” according to a BLM press statement. “This conserved gas will be available to power American homes and industries.”

The BLM’s rule — a stipulation of the Inflation Reduction Act — comes just months after another Interior Department office, the Environmental Protection Agency, published its own methane rule for the oil and gas industry. The emissions reform effort is designed to coordinate with states to implement the new measures, according to the BLM, and it was crafted, in part, based on methane emissions reduction steps that Wyoming began implementing years ago, according to the agency.

But the EPA and BLM have gone too far, Gov. Mark Gordon said.

The agencies’ rules are duplicative and misaligned in many instances, he said, creating a confusing set of regulations that put both the state and its oil and gas operators at risk of noncompliance. The rules, according to Gordon, threaten to muddle Wyoming’s successful efforts to achieve the same goal of preventing methane waste.

“BLM continues to oppress the consumer by imposing ridiculous regulations in an attempt to hinder the oil and gas industry in the Biden crusade’s appeal to their environmental groups,” Gordon said in a March 28 statement.

Environmental groups hailed the Interior’s final methane waste prevention rules as a major step forward in addressing human-caused climate change, noting that reducing methane emissions from oil and gas operations is not only technically feasible but economically beneficial to both industry and consumers.

“Taking action to limit methane waste on public lands offers a win-win-win for taxpayers, producers and communities harmed by this waste and associated pollution,” Environmental Defense Fund Senior Director of Regulatory and Legislative Affairs Jon Goldstein said in a statement.

Curbing waste

Drilling and producing oil and natural gas is an inherently leaky business. Often gasses are intentionally vented to initiate production at a new well or flared — burned — to avoid inhalation and flash hazards. In fact, some 150 billion cubic feet of methane was intentionally vented or flared in 2019 alone, according to the Biden administration. That’s about $400 million worth of gas and enough to serve 2.1 million households.

Based on state data, wasted natural gas from oil and gas facilities cost Wyoming an estimated $9 million to $16 million in lost royalties in 2018, according to the Wyoming Outdoor Council.

But there are affordable and effective “best practices” to reduce the need to flare and vent, as well as detect and patch leaks, according to conservation groups and the Interior. Jonah Energy, for example, was among the first operators in Wyoming to voluntarily implement such best practices, and the company markets its natural gas as “responsibly produced.”

Wyoming, in fact, was among the first states to implement methane waste prevention measures — mostly on a voluntary basis — after a drilling boom in the Pinedale Anticline coincided with dangerous spikes in ozone south of Pinedale.

The Interior Department has noted that preventing gas emissions results in more product for operators to sell. But there are upfront investment costs, which industry officials have argued would place more stringent emission rules financially out of reach for small producers. Acknowledging initial investment costs, the Inflation Reduction Act includes $1.5 billion to help operators comply with the new rules.

“This rule represents a common sense, fair, and equitable solution to preventing waste that provides a level playing field for all of our energy-producing communities,” BLM Director Tracy Stone-Manning said in a statement. “The BLM worked extensively with a wide range of stakeholders to modernize our decades-old regulations and help protect communities across the country.”

Carrot and stick

Neither the BLM nor EPA have struck a fair or workable standard with their methane waste prevention rules, Gordon said. He railed against the EPA’s rule in December, stating, “A majority of Wyoming oil and gas producers are not multinational corporations.”

Gordon took aim at the EPA’s rule again in a March 25 letter to EPA Administrator Michael Regan.

“The cumulative effect of the various proposed rules has an exponential effect upon the oil and gas industry in Wyoming and across the nation,” Gordon wrote. “We now have various agencies of the federal government ‘helping’ us manage our oil and gas industries. In reality that ‘help’ comes down to the federal agencies promulgating a convoluted web of rules.”

Under the EPA’s methane rule, operators would be assessed a “Waste Emissions Charge” for noncompliance. The punitive approach counters cooperative efforts that have worked for Wyoming regulators and the industry in the past, according to Gordon and the Petroleum Association of Wyoming, and the federal government’s methodologies for demonstrating compliance are problematic.

“Rather than incentivizing emissions reductions, the proposed rule would maximize fees paid under the [Waste Emissions Charge] and disincentivize accelerated emissions reductions,” the Petroleum Association said in a statement.

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.

This story was posted on April 4, 2024.