Trump takes assault on Obama climate rules on oil wells

By Jennifer A. Dlouhy on 9/12/2018

WASHINGTON D.C. (Bloomberg) -- The Trump administration on Tuesday proposed relaxing Obama-era mandates meant to block rogue methane leaks from oil and gas wells, part of a broader assault on federal regulations designed to combat climate change.

The Environmental Protection Agency proposal takes aim at requirements forcing energy companies to find and stop methane leaks at new and newly modified oil and gas wells, amid industry concerns the mandates are unnecessary and too expensive.

The proposal would lessen the frequency of required inspections to hunt for methane leaks, remove a requirement that professional engineers certify some equipment designs and make it easier for energy companies to deploy emerging technologies to monitor emissions.

The EPA said its changes would save an estimated $484 million in regulatory costs from 2019 to 2025 -- or $75 million annually.

“These commonsense reforms will alleviate unnecessary and duplicative red tape and give the energy sector the regulatory certainty it needs to continue providing affordable and reliable energy to the American people,” EPA Acting Administrator Andrew Wheeler said in a statement. “Removing these excessive regulatory burdens will generate roughly $484 million in cost savings and support increased domestic energy production.”

Public Comments

The proposal will now be subject to a public comment period, paving the way for final changes next year. The effort dovetails with a separate Interior Department move to ease Obama administration mandates requiring energy companies keep a better lid on natural gas escaping from wells on public land.

Both efforts are part of a broader assault by President Donald Trump on former President Barack Obama’s climate legacy. Obama built a three-part strategy for combating climate change, with regulations capping greenhouse gas emissions from power plants, automobiles and oil wells.

Trump’s EPA already proposed relaxing carbon dioxide limits for two of those targets in August: power plants and vehicles. Now, with methane, the Trump administration is taking aim at the third and final piece of Obama’s 2013 climate action plan.

The oil and gas industry is the leading source of methane, an intense but short-lived greenhouse gas shown to warm the atmosphere 84 times more than carbon dioxide when measured over two decades. That potency increases when measured over a century; methane is estimated to be 25 times more powerful at warming the atmosphere over that 100-year timeline.

Under the EPA’s proposal, energy companies would generally have to search for leaks at oil and gas wells annually, instead of twice a year as required under the 2016 rule. Very low-producing sites -- generally known as “marginal” wells -- would have to be inspected once every two years. And the requirements would disappear altogether when major production and processing equipment is removed from any site.

The EPA proposal also opens the door to allowing state mandates to take the place of federal methane requirements. Oil industry leaders say that would be a pragmatic change, so companies aren’t forced to satisfy layers of duplicative or conflicting requirements. But critics say the change would translate to lax oversight in states with modest requirements.

Oil industry leaders have said federal regulations are unnecessary considering ongoing work to keep methane from escaping. Because methane is the primary ingredient in natural gas, energy companies have a financial incentive to keep it bottled up as it moves from the wellhead to compressor stations and into storage tanks.

“Methane emissions from the oil and natural gas industry are already down 14% since 1990 while production has increased by 50%, said Howard Feldman, senior director of regulatory and scientific affairs at the American Petroleum Institute. “We welcome EPA’s efforts to get this right and the proposed changes could ensure that the rule is based on best engineering practices and cost-effective.”

Although some energy companies have worked aggressively and voluntarily to plug methane leaks, environmentalists and some investors worry the industry is not moving quickly enough to address the issue. Federal mandates provide essential incentive for companies to spend money capturing methane emissions when the investments won’t swiftly pay off, environmentalists argue.

“With this methane safeguard rollback, President Trump’s EPA just sacrificed public health and climate for oil and gas industry profits,” said Lauren Pagel, policy director at Earthworks. “And he did so despite some of the world’s largest oil and gas companies endorsing the need for methane rules.”

Global Fight

Because methane is such a potent greenhouse gas, cutting it is seen to swiftly make progress in a global fight against climate change.

“Atmospheric methane has been rising rapidly since the start of the shale gas explosion in the United States in 2008,” said Robert Howarth, a professor of ecology and evolutionary biology at Cornell University. “Now is not the time to relax controls on methane emissions from industry.”

The effects of keeping a lid on methane go beyond climate. Methane is an ozone smog precursor in its own right, and when it escapes from oil wells and processing equipment, so-called volatile organic compounds often leak too. Volatile organic compounds can cause eye, nose and throat irritation and other ailments; ozone can worsen asthma, emphysema and other respiratory illnesses, leading to more frequent hospital visits, lost school days and premature death.

EPA’s own scientists estimated that some 1,100 to 2,700 premature deaths could be attributed to emissions from the oil and natural gas sector in 2025 in research published in the Environmental Science & Technology journal in July.

In Tuesday’s proposal, the EPA said it expects the changes would spur increases in hazardous air pollutants and volatile organic compound emissions that may “degrade air quality and adversely affect health and welfare,” but said “data limitations” prevented the agency from specifically quantifying the impact.

The EPA requirements that were imposed under Obama apply to new and newly modified facilities, including oil and gas wells, pumps, compressors and other equipment. Under the mandates, energy companies were required to upgrade pumps and compressors, conduct more frequent inspections of their sites and use “green completion” technology to capture gas surging out of newly fracked wells.

The new EPA proposal to ease those requirements is just the first step in the agency’s two-part effort to dramatically scale back federal limits on methane emissions. The agency has already signaled it is working on a separate rulemaking effort to address whether direct rules on methane are even necessary; Trump’s EPA is expected to ultimately propose they aren’t.

The new EPA proposal represents the agency’s second attempt to suspend the Obama-era methane requirements. In July 2017, a federal court rebuked the agency’s first try: unilaterally suspending the mandates. The coming effort is designed to be more durable because it tracks legal requirements for altering federal regulations, with the new, formal proposal followed by a public comment period meant to guide the agency’s development of a final rule.

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