Federal agencies in the Biden administration are expected to finalize at least six rules in the next six months affecting methane releases by the oil and gas sector. The rules include regulations for leaky pipelines; energy production on public and private lands; and infrastructure related to processing, transporting and storing natural gas. Even liquefied natural gas (LNG) terminals and offshore petroleum production facilities, which are not covered by EPA’s coming methane rules, could be paying for methane leaks beginning in 2025. The new rules follow Michael Bloomberg’s announced $500 million campaign to close half of all natural gas-fired generation by 2030 and the disclosure that other multi-billionaires are funding a further campaign to ban the use of natural gas.
Biden Administration Proposed Rules
After reviewing EPA’s final rule to limit emissions from new and existing oil and gas production, processing, transport, and storage facilities, the White House released it during the U.N. climate talks in Dubai, United Arab Emirates on December 2 at the methane summit the United States hosted with China and the UAE. The measure builds on an Obama administration new source standard from 2016 that had been modified after study by the Trump administration. In June 2021, during the first year of the Biden administration, the Senate voted to reinstate the Obama standard, though the Biden rules greatly expand coverage with guidelines for infrastructure built before 2015. The vote was party line except for 3 Republicans who crossed over to aid the Democrat Majority. The rule was first released at COP27, and includes all drilling sites, even smaller wells that emit less than 3 tons of methane per year. While more than 150 countries have promised since 2021 to reduce their methane emissions 30 percent from 2020 levels by 2030 under the U.S. and EU-led Global Methane Pledge, few have detailed how they will do it.
EPA will follow that rule with final climate rules for power plants and vehicles, expecting to print those rules in the Federal Register in early 2024 so that a potential Republican president and Congress could not easily undo them in 2025 using the Congressional Review Act, as was done in 2021 with the Trump regulations. Although not yet subject to rules, agriculture emits as much methane as energy activities, according to NASA.
EPA is also writing regulations dictated by the Democrat-approved Inflation Reduction Act (IRA), one of which mandates a “methane emissions” fee. The IRA imposes a fee on energy producers that exceed a certain level of methane emissions. That fee is set to rise from $900 per metric ton in 2024 to $1,500 per metric ton of methane emissions by 2026. The draft rule for the methane fee was sent for White House review in September. The IRA also ordered EPA to overhaul its guidelines for estimating and reporting methane from oil and gas operations, as Congressional Democrats believe that methane emissions are being undercounted from reports undertaken over the last decade. For example, a report by anti-fossil fuel advocacy group Rocky Mountain Institute estimates that gas has higher life-cycle climate emissions than coal when leak rates are fully considered. EPA released its proposal for reporting methane emissions in July, and it is expected to be final early next year. The IRA methane fees will be based on those new reporting methodologies.
The Bureau of Land Management (BLM) has a proposed rule to cut gas leakage from oil and gas production on federal lands, replacing an Obama administration standard that was rescinded by the Trump administration after objections from energy-producing states. BLM’s proposal would tighten limits on gas flaring on federal land and require energy companies to better detect methane leaks. The rule would impose monthly limits on flaring and charge fees for flaring that exceeds those limits. The BLM rule was projected to be final in September but has not yet been sent to the White House for review.
The Department of Transportation is writing a rule for pipeline leak detection and repair under 2020 legislation. According the Biden administration’s regulatory agenda, it is to be finalized in July. The draft rule — from the Pipeline and Hazardous Materials Safety Administration — would update leak detection and repair rules for 2.7 million miles of pipelines under federal jurisdiction. It also would cover the nation’s 400 underground natural gas storage facilities and 165 liquefied natural gas facilities, requiring companies to use commercially available technologies to find and fix methane leaks from pipelines and other facilities.
The Treasury Department is writing guidelines for how “green” hydrogen will qualify for IRA tax credits and will also tackle upstream leak rates from gas used in hydrogen production. Treasury missed its August deadline and is expected to issue the guidance by the end of the year.
The Energy and State departments are working with the European Union — the world’s largest gas importer — and with other countries on international standards that will give low-methane gas preferential access to the EU market. The United States, the European Commission and others recently launched a working group to build a framework to measure and report greenhouse gas emissions from gas. The EU also finalized its first standards for methane from fossil fuels that include import requirements.
The United States and China recently agreed to include methane reduction in all future climate commitments made under the U.N. Paris Agreement. It came after China unveiled a methane plan earlier this month that would strengthen procedures for tracking, reporting and verifying leakage from oil, gas and coal production.
On top of these efforts, the Energy and State departments are creating guidelines to distinguish relatively climate-friendly fuel producers and exporters from more high-emitting competitors. And the Securities and Exchange Commission and federal procurement agencies are writing rules that would require publicly traded companies and government contractors to report on direct and indirect greenhouse gas emissions, including methane, from their supply chains. It is an all-of-government approach on behalf of the Biden Administration.
Conclusion
The Biden administration is crafting a myriad of methane rules affecting the oil and gas industry that it wants finalized before a possible Republican Presidency and Congress could over turn them in 2025 using the Congressional Review Act. The proposed rules are so wide spread that without coordination among the Biden administration agencies, the rulemakings could negatively affect U.S. energy supply. Reliable and affordable energy is critical for American households, businesses and manufacturers to operate effectively and the Biden administration is making it harder all the time to obtain that energy.
