EPA’s New Methane Mandates on Fracking Are a Solution in Search of a Problem

Thu, September 24, 2015

My name is Steve Everley, and I serve as spokesman for North Texans for Natural Gas, a grassroots group of more than 110,000 people who support natural gas development in the Barnett Shale.

While EPA’s proposed regulations on methane emissions[i] from the oil and natural gas industry target a tiny sliver of the nation’s greenhouse gas emissions, they will have a significant impact on domestic energy development, particularly here in North Texans.

Since 2001, Barnett Shale development has added more than $110 billion in value for the North Texas economy; has generated tax receipts of more than $10 billion for local and state governments; and supported more than 107,000 jobs.[ii]

But EPA’s proposed methane rule will make this development harder, not easier. In fact, analysts from Oppenheimer recently stated that EPA’s proposal could wipe out energy companies that are already suffering from a difficult commodity market.[iii]

Restrictions on drilling would also harm other important industries all across Texas. According to the American Chemistry Council, chemical manufacturers have announced more than $145 billion worth of new investments in the United States to take advantage of affordable natural gas, which is used as a feedstock.[iv] These investments, many of which would be in Texas, include expanded production of fertilizers and other products used by America’s farmers.

Drilling restrictions would ultimately mean less affordable energy, which was a key reason why many companies relocated abroad prior to the shale gas boom.

The proposed methane rules are also harmful from a social justice perspective, since affordable natural gas particularly helps the poor. In 2012, cheap natural gas added an average of $1,200 in disposable income for U.S. households.[v]  Energy savings from natural gas in U.S. public elementary and secondary schools totaled almost half a billion dollars in the 2012-2013 fiscal year – equivalent to the salaries of more than 5,000 full time teachers.[vi]

Needless to say, mandates that undermine these benefits are highly regressive. 

While economic costs are a legitimate concern, they’re compounded by the fact that EPA’s rule appears to be a solution in search of a problem.

EPA’s own data show that methane emissions are already decreasing. In the Permian and Gulf Coast Basins here in Texas, methane emissions decreased by 9 percent and 18 percent, respectively, between 2011 and 2013.[vii] Those regions include two of the largest oil fields in the entire world. In one of the most heavily drilled regions of the Barnett Shale here in North Texas, methane emissions fell 37 percent since 2011.

Nationwide, methane emissions from hydraulically fractured natural gas wells declined 73 percent since 2011, again based on EPA’s own data.[viii]

Yet EPA justifies its new rule by asserting that methane emissions will rise 25 percent over the next decade. We reviewed EPA’s supplementary documents to find where this claim originated, but could find no supporting evidence. Although the claim was repeated without scrutiny in many media reports, it remains unclear how the EPA came to this calculation.

Although EPA lists “combatting climate change” as one of its justifications for this rule, peer-reviewed studies confirm that natural gas is already beneficial for the climate. Scientists have estimated that a methane leakage rate of below 3.2 percent will ensure natural gas maintains its greenhouse gas advantage.[ix] Four separate studies published this year showed a methane leakage rate of between 1.1% and 1.6%. Even if leakage were 50% higher, as some have alleged, the climate benefits of natural gas would easily be maintained.

In fact, EPA already lists low-cost natural gas as one of four “building blocks” of its so-called Clean Power Plan, which aims to reduce greenhouse gas emissions from the nation’s power plants.[x]

But the EPA’s goals also contradict each other, as the Clean Power Plan relies on natural gas, while EPA’s methane rule will make it more difficult to produce that natural gas. Coupled with other mandates from the EPA that could restrict drilling, such as reducing the National Ambient Air Quality Standards for ozone,[xi] EPA is trying to have its cake and eat it too.

Finally, methane emissions from oil and natural gas production represent only about 1% of total U.S. greenhouse gas emissions. While EPA allows much larger sources of methane to pursue voluntary reduction measures, the Agency is pushing costly mandates on oil and gas. This is rather bizarre considering that EPA has admitted that voluntary actions by the oil and natural gas industry have contributed the lion’s share of methane emissions reductions in recent years.

In conclusion, methane emissions from oil and gas operations are trending downward, and peer-reviewed research confirms that leakage rates are well below the threshold to maintain the greenhouse gas advantage of natural gas. EPA’s argument for new methane rules is to combat climate change, but the Agency has provided insufficient evidence to support why such mandates are necessary to achieve that goal.

Based on EPA’s own data, this new methane rule appears to be a costly solution in search of a problem.

Thank you.

[i] U.S. EPA, “Proposed measures to cut methane and VOC emissions from the oil and natural gas industry and clarify permitting requirements,” Aug. 18, 2015: http://www.epa.gov/airquality/oilandgas/actions.html

[ii] The Perryman Group, “The Economic and Fiscal Contribution of the Barnett Shale”, Sept. 2014: http://www.fortworthchamber.com/chamber/docs/BSISeptember2014.pdf

[iii] Mario Parker & Mark Drajem, “Obama’s Methane Limits Seen Wiping Out the Marginal Driller” in Bloomberg, Aug. 19, 2015: http://www.bloomberg.com/news/articles/2015-08-18/obama-proposes-deep-cut-in-methane-leaks-from-oil-gas-operators

[iv] American Chemistry Council, “U.S. Chemical Investment Linked to Shale Gas: $145 Billion and Counting” June, 2015: http://www.americanchemistry.com/Policy/Energy/Shale-Gas/Fact-Sheet-US-Chemical-Investment-Linked-to-Shale-Gas-145B-and-Counting.pdf

[v] IHS Inc, “America’s New Energy Future: The Unconventional Oil and Gas Revolution in the US Economy”, Sept. 2013: http://www.energyxxi.org/sites/default/files/pdf/Americas_New_Energy_Future_Phase3.pdf

[vi] IHS Inc, “The Unconventional Energy Revolution: Estimated Energy Savings for Public School Districts and State Local Governments”, June 5, 2014: http://www.api.org/~/media/files/policy/hydraulic_fracturing/ihs-govt-and-school-savings-june2014.pdf

[vii] U.S. EPA, “Greenhouse Gas Reporting Program”, Sept. 4, 2015: http://www2.epa.gov/ghgreporting

[viii] Ibid.

[ix] Environmental Defense Fund, “What will it take to get sustained benefits from natural gas?”: https://www.edf.org/energy/methaneleakage

[x] U.S. EPA, “The Clean Power Plan”, Aug. 3, 2015: http://www.epa.gov/airquality/cpp/cpp-key-topics.pdf

[xi] NERA Economic Consulting, “Economic Impacts of a 65 ppb National Ambient Air Quality Standard for Ozone”, Feb. 2015: http://www.nam.org/Issues/Energy-and-Environment/Ozone/Economic-Impacts-of-a-65-ppb-NAAQS-for-Ozone-(NERA).pdf