White House Proposes Fines for Oil and Gas Companies Over Methane Emissions -- OPIS
12 January 2024 - 9:57PM
Dow Jones News
The Biden administration on Friday released its proposal for
determining how oil and natural gas companies will be fined for
methane emissions, part of its ongoing effort to reduce release of
the potent greenhouse gas.
The fees, which start at $900/metric ton this year and rise to
$1,500/mt in 2026, were authorized under the 2022 Inflation
Reduction Act, which left it to the administration to establish the
mechanism for imposing the penalties.
The administration said the proposed rule would impose charges
on companies whose emissions exceed specified levels.
The administration said the fines are intended to prod companies
to replace leaky equipment and take other steps to reduce emissions
ahead of new environmental rules that will go into effect in coming
years to crack down on methane leaks.
The proposed rule and accompanying fines will "incentivize
industry innovation and prompt action," EPA Administrator Michael
Regan said in a news release. "We are laser-focused on working
collectively with companies, states, and communities to ensure that
America leads in deploying technologies and innovations that aid in
the development of a clean energy economy."
Oil and natural gas operations are the largest industrial source
of methane in the U.S., according to the EPA, and the
administration has targeted the industry in an attempt to reduce
leaks of the gas.
The White House in December issued a final rule banning routine
flaring of natural gas that is produced by new oil wells, requiring
monitoring of methane leaks from well sites and compressor stations
and establishing standards that require reductions in emissions
from high-emitting equipment.
The administration also said it is implementing a program to
employ third-party remote sensing to detect large methane leaks
known as "super emitters" that studies have shown account for
almost half of methane emissions from the oil and natural gas
sector.
Facilities in compliance with those rules would be exempt from
the methane fines "after certain criteria set by Congress are met,"
the EPA said.
The agency said it expects the number of industry facilities
facing the fine will fall over time as more companies comply with
EPA rules. EPA also said it expects the new rule will have little
impact on oil and gas output.
The administration in June said it would provide $1 billion to
help reduce methane emissions from the sector, with the bulk of the
money going toward cutting well emissions.
Environmental groups welcomed Friday's announcement.
Environmental Defense Fund President Fred Krupp said it is "common
sense to hold oil and gas companies accountable for this
pollution."
"Proven solutions to cut oil and gas methane and to avoid the
fee are being used by leading companies in states across the
country," he said.
But the American Petroleum Institute, an oil industry trade
group, said the rule "creates an incoherent, confusing regulatory
regime that will only stifle innovation and undermine our ability
to meet rising energy demand."
API called on Congress to repeal the methane fee.
"As the world looks to U.S. energy producers to provide
stability in an increasingly unstable world, this punitive tax
increase is a serious misstep that undermines America's energy
advantage," Dustin Meyer, API senior vice president of Policy,
Economics and Regulatory Affairs, said.
API said oil and gas companies are already working to reduce
emissions and that its efforts have led to a nearly 66% decline in
average methane emissions intensity from 2011 to 2021.
This content was created by Oil Price Information Service, which
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Dow Jones Newswires and The Wall Street Journal.
--Reporting by Steve Cronin, scronin@opisnet.com; Editing by
Jeff Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
January 12, 2024 16:42 ET (21:42 GMT)
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