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 challenges of addressing climate change.
However, the methane regulation that EPA is close to finalizing did not include in its proposed form important economic and commercial considerations that affect the feasibility of the rule. New studies show that supply chain backlogs, worker shortages, and risk of production loss from EPA’s current proposal underscore the need for changes to EPA’s proposal before it becomes a final rule.
These studies, commissioned by energy trades including AXPC, highlight the need for sufficient implementation timelines and operational flexibility to avoid unintended consequences of lost supply, leading to higher prices for American families and businesses.
EPA’s proposal would add multiple new layers of regulations and compounding compliance costs and burdens. As written, EPA’s proposal does not clearly take into account the practical feasibility of prescriptive requirements for technologies, nor does it clearly address critical economic and commercial considerations relevant to its associated gas provisions and directives to phase out certain pneumatics, which are then beholden to unrealistic implementation timelines.
Not only are the timelines practically infeasible, the lack of operational flexibility for equipment used creates unintended consequences that include trading methane reductions for increasing emissions elsewhere, 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.
One of these studies describes supply chain delays and challenges in procuring the equipment needed to comply with EPA’s draft regulation on the timeline EPA proposed. It finds that the current backorder times for some key components range from six months to more than two years, and implementation of the proposed methane rule is expected to increase current backorder times by an additional six months or more.
An additional study explains that, if the methane rule is finalized as proposed with EPA’s stringent application of the proposed associated gas flaring requirement on accelerated timelines, it could reduce future oil production in the Permian Basin and Williston Basins by 6 percent. The study also found that the zero-bleed pneumatics requirement and leak detection and repair (LDAR) requirement could shut in around 30 percent of existing onshore wells nationally. This loss of production could reduce US energy supply, leading to higher costs for the American people, while also hurting our energy security.
As these studies show, unrealistic implementation timeframes and overly prescriptive rules risk compliance barriers and the potential for significant challenges for oil and natural gas production. While production loss is never good for meeting domestic and international demand for affordable and reliable energy – now is not the time to push more production offline or overseas. America should be leading production of oil and natural gas, not finalizing regulations that could hamper our ability to produce energy to support our citizens and our allies.
EPA still has an opportunity to work with our industry on more realistic timeframes for implementation to allow infrastructure to catch up to the regulations, correct definitions (especially those around associated gas provisions) and treat new and existing sources differently to consider the technical and/or economic infeasibility of requiring zero-bleed pneumatics on existing sources in some cases, especially when other viable alternatives exist.
AXPC has filed comments outlining the need for a timeline for the final methane rule that accounts for the reality of supply chain delays and urges EPA to work with the industry on finalizing and implementing the rule in a way that does not stifle innovation, hurt reliability, raise Americans’ energy costs, or hurt our energy security.
We are committed to working with EPA to find more workable solutions as outlined in our comments and are optimistic that continued collaboration with the agency to address our concerns can result in a more durable and effective final rule.