First Methane Limits Created for Gas Drilling

The Obama administration recently announced plans to cap methane emissions resulting from natural gas wells. This is the latest in a series of measures relating to the administration's Climate Action Plan, which is aimed at reducing greenhouse gas emissions. The announcement outlined the goal of reducing emissions by 40 to 45 percent by 2025. The Environmental Protection Agency is expected to issue a proposal in the coming months introducing regulations capable of meeting this goal.

The upcoming EPA regulation will only place limits on the methane emissions of new natural gas wells and existing drilling machinery that is modified after the new regulation takes effect. However, the Obama administration did not rule out further regulation of existing wells and asked the energy industry to be proactive in reducing emissions coming from existing drilling sites. In addition, the Interior Department is assessing possible ways to prevent methane gas emissions from existing natural gas wells located on public lands.

A new federal regulation on methane emissions comes at an important time. While methane accounts for a relatively small percentage of greenhouse gas emissions, it is 35 percent more potent than carbon dioxide. The EPA reports that 29 percent of all methane emissions currently result from the oil and gas industry, down 16 percent from 1990. However, methane emissions are expected to rise by as much as 25 percent in the next decade as oil and shale production continues to increase.

Although EPA estimates of methane emissions may provide a general picture of the impact of the oil and gas industry on greenhouse gas emissions, these figures do not take into account all emissions. Under the current EPA Greenhouse Gas Reporting Program, not all emissions are reported. Only emissions from fracking operations that utilize flaring – the process of burning excess natural gas at well sites – must be reported. This means the EPA figures could be much lower than the actual amount of emissions. One recent study conducted by researchers from Purdue and Cornell showed the possibility that methane emissions could be an astounding 1,000 times higher than the EPA figures.

While the financial impact of complying with the new federal regulation remains to be seen, unlike other regulations targeting the oil and gas industry, there is plenty of incentive to reduce methane emissions. EPA officials have estimated that reducing methane emission by up to 45 percent could amount to 180 billion cubic feet of natural gas. Since methane is a natural gas that can be sold by energy companies, a reduction in emissions would benefit the environment and the oil and gas industry.

While the White House announcement signals a new EPA regulation is imminent, there is still a long way to go before any changes are made. A new regulation on methane emissions is expected to take around two years before going into effect. However, a projection of the effectiveness of the plan and the extent of the impact on the oil and gas industry is expected in the coming months.

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