EPA is in the process of finalizing a regulation that – if left unchanged – could increase energy costs for American families and businesses across the country and actually hurt our country’s climate leadership.
AXPC companies are focused on reducing methane emissions from their operations and support effective and reasonable regulation of methane that balances the essential value of US oil and natural gas production with the global challenge of addressing climate change.
The men and women of our industry are committed to producing the affordable and reliable energy that our country — and the world— needs, while also reducing emissions by developing and investing in innovative new technologies. In fact, the US not only leads the world in responsible production, we also have one of the lowest emissions intensities coupled with the highest production.
Notably, average methane emissions intensity declined by nearly 66 percent across all seven major US onshore producing regions from 2011 to 2021 due to our industry’s commitment to constant improvement and innovative solutions. The International Energy Administration (IEA) has reported that only five other producing countries have a lower methane factor – but the US produces more than all five of these countries combined.
However, EPA’s new methane rule, as proposed, could harm producers’ ability to meet demand for American energy, and our industry’s ability to invest in innovative new technologies.
If EPA’s rule is left unchanged, it will reduce domestic production of oil and natural gas, which will increase everyone’s energy costs. Despite EPA’s intention of allowing new technologies, it would disincentivize new emissions-reductions technologies that have been more efficient at finding bigger leaks faster, so operators can address them. It will add multiple new layers of regulations, in some cases conflict with other regulatory mandates, and compound compliance costs and burdens.
Additionally, some of the rule’s provisions contain very prescriptive requirements on unrealistic implementation timelines. For example, the rule requires a transition of all sites to zero emitting pneumatics, within 60 days for new facilities. Not only is that timeline practically infeasible, the lack of operational flexibility for equipment used creates unintended consequences that include shifting emissions elsewhere, trading methane reductions for increases in other criteria pollutants, and in some cases pushing wells past their economic breaking points. This could lead to premature shut-ins and stranded reserves that might cause smaller companies to become insolvent, leading to lost jobs and increased burdens on the American taxpayer.
Even EPA acknowledges that its proposed methane rule will have negative impacts on oil and natural gas production, resulting in a significant, adverse impact to American energy production. If the rule is finalized, EPA estimates that the United States in 2026 will produce almost 21 million fewer barrels of oil and 258 million fewer Mcf (thousand cubic feet) of natural gas a year. Additionally, by EPA’s estimates, the rule will impose over $14 billion in compliance costs making it one of the most expensive federal regulations of all time. If the flaws in the rule are not addressed, it will not only drive-up energy costs, it will also impede our ability to support our allies’ energy needs.
As part of the public engagement process, AXPC has offered EPA solutions for a more workable, legally defensible final rule. We encourage EPA to ensure the final rule allows for more operational flexibility for companies to choose the best alternative for net emissions reductions, provide more time for the industry to train workers and to acquire the necessary equipment for navigating today’s supply chain challenges and what will be an exponentially expanded demand, and to be able to physically redesign facilities to meet these new standards. We also encourage EPA to fully consider the economic burden of their rules to the American people – both from increased energy bills and premature shut-ins with the potential creation of a new generation of orphaned wells.
Revising the methane proposal will also help avoid significant implementation challenges for industry and EPA and avoid shifting production of oil and natural gas overseas, where there are less consistent, often less robust environmental protections – a risk to the Biden Administration’s climate goals.
The policies and regulations implemented by this Administration now could be both the most stringent in the world, while also workable of industry, or they could create devastating economic, climate, and energy security effects for years to come.