Stay Informed

Last Friday, the U.S. Department of the Interior (DOI) proposed its update to its venting and flaring rule on natural gas emissions regulations for oil and gas operations on public and Native American lands, taking a significant step toward the Obama Administration’s goal of reducing methane emissions from oil and gas operations by 40 to 45 percent by 2025.

U.S. oil production is at its highest level in nearly 30 years and the nation is now the largest natural gas producer in the world. During production, however, venting and leaks are major sources of methane emissions. Between 2009 and 2014, the department said enough natural gas was lost through venting, flaring and leaks to power more than 5 million homes for a year.

The rules proposed by the DOI would require oil and gas producers to adopt currently available technologies, processes, and equipment, limiting the amount of natural gas entering the environment. Operators would also be required to inspect their operations for leaks and replace any outdated equipment that vents large quantities of gas into the air.

The updated rules would also require operators to limit venting from storage tanks, as well as use best practices to limit gas losses when removing liquids from their wells. The new measures would also further clarify when operators owe royalties on flared gas, in addition to ensuring that BLM’s regulations provide congressionally authorized flexibility to set royalty rates at or above 12.5 percent of the value of production.

While the objective of these rules may be to reduce overall carbon emission, the implications for the oil and gas business are significant as the updates to carbon emission limiting technologies will involve significant capital expenditures, leading to litigation over the proposed rule. Changes in the technology used for carbon capture will also likely lead to increased risk of litigation.