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Supermajors warn against US methane rollback

Industry giants hit back at move to ease rules as IPAA supports efforts by administration

Major oil and gas players joined environmental groups last week in panning efforts by US President Donald Trump's administration to weaken emissions rules at onshore oil and gas sites in the US.

Supermajors BP, ExxonMobil and Shell have previously argued that the US Environmental Protection Agency (EPA) should directly regulate methane emissions, and they all re-iterated that position after the administration proposed rolling back Obama-era rules.

"While voluntary efforts by individual companies are important, they only capture a fraction of industry’s overall emissions," said Staale Gjervik, president of ExxonMobil shale gas subsidiary XTO Energy.

"Full industry participation is required to maximise the benefits to society. That’s why our views on EPA’s regulations haven’t changed, and we urge EPA to retain the main features of the existing methane rule," Gjervik said.

The proposal, unveiled on 29 August, would rescind emissions limits for methane from production and processing operations, including well completions, pneumatic pumps, pneumatic controllers, gathering and boosting compressors, natural gas processing plants and storage tanks. However, the changes would keep existing limits for ozone-forming volatile organic compounds (VOCs) in place.

The publication of the changes kicked off a 60-day comment period, and a hearing on the proposal is to be scheduled in the near future.

The changes would also remove from regulation emissions sources in the transmission and storage segment, including compressor stations, pneumatic controllers, and underground storage vessels.

The EPA said it was making the changes in accordance with Trump's 2017 executive order for agencies to review existing regulations that potentially "burden the development or use of domestically produced energy resources".

"EPA’s proposal delivers on President Trump’s executive order and removes unnecessary and duplicative regulatory burdens from the oil and gas industry," said EPA administrator Andrew Wheeler.

"The Trump administration recognises that methane is valuable, and the industry has an incentive to minimise leaks and maximise its use.

"Since 1990, natural gas production in the United States has almost doubled while methane emissions across the natural gas industry have fallen by nearly 15%. Our regulations should not stifle this innovation and progress."

However, the supermajors said they would continue to work to drive down their own emissions.

"Shell remains committed to achieving our target of maintaining methane emissions intensity below 0.2% by 2025 for all operated assets globally," Shell US president Gretchen Watkins said.

"Despite the administration’s proposal to no longer regulate methane, Shell’s US assets will continue to contribute to that global target.

"Additionally, Shell remains committed to cutting the Net Carbon Footprint of our energy products by around half by 2050. While the law may change in this instance, our environmental commitments will stand."

BP said it would review the rule, but also said it would continue efforts to cut methane emissions. "We have to reduce methane emissions for natural gas to realise its full potential in our energy mix," said BP America president Susan Dio.

"That’s why BP is relentlessly driving down methane emissions in our own operations and collaborating with others to do more. It’s not only the right thing to do for the environment, there is also a clear business case for doing this.

"Simply, the more gas we keep in our pipes and equipment, the more we can provide to the market — and the faster we can all move toward a lower-carbon future."

US supermajor Chevron also said it would review the rule, adding it supported "reasonable" regulations on emissions.

While the supermajors took the hard line against rescinding the rules, industry lobby groups, which represent smaller players as well as large companies, threw their support behind the Trump administration's efforts on the issue.

The Independent Petroleum Association of America (IPAA), which claims to represent thousands of upstream and services companies, endorsed the changes, saying they would be more cost-effective.

"IPAA has consistently believed and recommended that a VOC‑based programme is the appropriate pathway for regulating natural gas and oil production emissions," executive vice president Lee Fuller said.

"American producers are committed to managing their greenhouse gas emissions and continue to invest in the development of new technologies to mitigate and reduce emissions.

"These actions have and will continue to reduce methane emissions from natural gas and oil production operations," Fuller added.

The EPA said that the proposed changes to the emissions rules would save the oil and gas industry between $17 million and $19 million a year, meaning savings of $123 million through to the end of 2025.

Meanwhile, green group the Environmental Defense Fund (EDF) said the plan would "completely eliminate" rules for methane emissions from the entire oil and gas industry supply chain and remove all federal rules for both methane and VOCs for transportation and storage facilities.

"This proposal is irresponsible, dangerous and out of step with calls from oil and gas industry leaders to preserve and strengthen federal methane rules," said EDF energy vice president Matt Watson. "Without a strong federal framework in place, the case for natural gas evaporates."

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