Amid deregulatory push, API launches push to limit methane emissions

Washington (Platts)--5 Dec 2017 720 am EST/1220 GMT

The American Petroleum Institute Tuesday plans to unveil a voluntary industry program aimed at reducing methane emissions from US oil and natural gas operations, an effort to launch as the Trump administration continues its push to weaken and repeal methane rules finalized by the Obama administration.

The API initiative, known as The Environmental Partnership, will initially include 26 oil and gas companies, including Shell, Pioneer Natural Resources and Cabot Oil and Gas, in all major US plays, according to Erik Milito, director of upstream and industry operations for API.

"It's really a good foundation for us to have at the start," Milito told S&P Global Platts in an interview Monday.

Under the initiative, which will launch on January 1, participating companies will: commit to implement leak monitoring using the latest detection methods; replace or retrofit highly emitting pneumatic controllers; and attempt to minimize emissions from manual liquids unloading for gas production sources.

"We've done it in a very surgical way so that we've picked programs that are actually going to help us see tangible improvements and really provide us a platform to really show continued emissions reductions," Milito said.

Milito said the 26 companies already signed onto the program account for "tens of thousands" of US oil and gas sites, including many with multiple wells. He said the companies account for an estimated 25% of all domestic natural gas production. The percentage of total oil output represented was unavailable, he said.

The program is voluntary, however, and, outside of potential removal from the program, there is no consequence for non-compliance. API will compile methane data in an annual report from the partnership, but there will be no formal monitoring and new industry standards implemented, Milito said.

"In the end, we're going to see who is reporting and we're going to see the extent to which companies are reporting," he said. "We think they're all going to do that, we're fully confident they are."

Despite the partnership, API has been a leading proponent of the Trump administration "deregulatory" agenda, which is aimed at rolling back many of the environmental protection rules put in place by the Obama administration. Milito said Monday that API was supportive of "cost-effective regulations."

On Monday, the Trump administration announced it would appeal a US District Court for the Northern District of California ruling in October that it violated federal law by freezing requirements in an Obama-era methane rule.

The rule, developed by Obama's Bureau of Land Management, requires oil and gas producers to use "available technologies and processes" to cut flaring in half at oil wells on public and tribal lands and calls for increased leak inspections and equipment upgrades.

Industry groups and the states of North Dakota, Wyoming and Montana have sued to overturn the rule, arguing that it would shut in oil and gas production on federal lands.

In July, the US Court of Appeals for the District of Columbia Circuit ruled that the Environmental Protection Agency could not suspend an Obama-era rule to restrict methane emissions from new oil and gas wells.

While questions over the future of federal methane regulations will likely be complicated by court battles, industry will likely press forward with voluntary programs, Milito said.

On November 22, eight of the world's biggest energy companies, including ExxonMobil, Royal Dutch Shell, Total and BP, signed on to a series of "guiding principles" aimed at reducing methane emissions from their operations. The principles include broad efforts to reduce venting and flaring, detect emissions from leaking pipes and improve emissions data collection.

"Natural gas plays a major role in meeting global energy demand today," the voluntary agreement states. "Since natural gas consists mainly of methane, a potent greenhouse gas, its part in the transition to the low-carbon future will be influenced by the extent to which the oil and gas industry reduces its methane emissions."

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