Methane Emissions Rule Sticks, Won’t Affect Energy Prices

The US Senate’s vote yesterday not to repeal a methane emissions rule issued by the Interior Department’s Bureau of Land Management (BLM) during the Obama era is not likely to significantly impact energy end-users like commercial and industrial companies. “BLM conducted a regulatory impact assessment of the rule in which they found that expected changes in production volumes of oil and gas were small enough not to impact energy prices,” Rebecca Gasper, research analyst for World Resources Institute told Energy Manager Today. However, she added, “In states like Colorado that have been taking their own steps to rein in methane emissions, energy customers and other taxpayers have seen benefits in the form of cleaner air, job creation, and saved revenue. That’s why most residents Colorado support the BLM rule.”

The rule is estimated to prevent about 180,000 tons of methane emissions a year, according to the Washington Post. The close vote to refuse repealing the rule is the first failed attempt at using the Congressional Review Act to overturn Obama era rules since Trump’s took office.

The American Petroleum Institute (API) says the rule is redundant in that it overlaps with existing state and EPA regulations; the institute says it could further reduce activity on federal lands where natural gas production is already down 18% from 2010 to 2015. Analysis by Environmental Resources Management on the proposed rule found that the added cost of compliance could result in up to 40% of wells that flare on federal lands being permanently uneconomic to produce. Based on 2016 royalties reported by the federal Office of Natural Resources Revenue, even a 1 percent loss of royalties due to loss of production would result in lost government revenues of more than $14 million.

The API says that innovations leading to increased use of cleaner-burning natural gas are the main reason US energy-related carbon emissions have fallen to levels not seen since the early 1990s, but that the existing rule will stifle those innovations.

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