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Interior Department Aims to Cut Energy Waste on Oil Fields

December 2, 2022 by Dan McCue

WASHINGTON — The Interior Department on Thursday announced a proposed rule to address the waste of natural gas during the production of oil and gas on federal and tribal lands.

Officials with the department’s Bureau of Land Management said the proposed rule would generate $39.8 million a year in additional royalties for the American public and prevent billions of cubic feet of gas from being wasted through venting, flaring and leaks, boosting efficiency.

“The Biden-Harris administration has taken unprecedented action to tackle methane emissions and support a clean energy economy,” said Interior Secretary Deb Haaland in a written statement.

“This proposed rule will bring our regulations in line with technological advances that industry has made in the decades since the BLM’s rules were first put in place, while providing a fair return to taxpayers,” she said.

Venting and flaring activity from production on public lands has significantly increased over several decades, the department said.

Between 2010 and 2020, the total venting and flaring reported by federal and Native American onshore lessees averaged approximately 44.2 billion cubic feet per year, enough to serve roughly 675,000 homes. This contrasts to an average of 11 billion cubic feet lost per year between 1990 and 2000.

“No one likes to waste natural resources from our public lands. This draft rule is a commonsense, environmentally responsible solution as we address the damage that wasted natural gas causes. It puts the American taxpayer first and ensures producers pay appropriate royalties,” said BLM Director Tracy Stone-Manning. “We look forward to hearing from the public on this proposal.”

With a newly divided Congress, many see this regulation as a harbinger of things to come, with President Biden acting through executive action.

The proposed rule responds to a series of U.S. Government Accountability Office reports highlighting the potential revenue being lost due to the BLM’s outdated regulations. Several states, including Colorado, Wyoming, Pennsylvania and New Mexico, as well as the U.S. Environmental Protection Agency, have taken steps to limit venting, flaring and/or leaks from oil and gas operations.

Key elements of the proposed rule include:

Technology Upgrades: The rule would require the use of “low-bleed” pneumatic equipment as well as vapor recovery for oil storage tanks, where economically feasible.

Leak Detection Plans: The rule would require operators to maintain a leak detection and repair program for their operations on federal and Native American leases.

Waste Minimization Plans: Requires applicants to develop waste minimization plans demonstrating the capacity of available pipeline infrastructure to take the anticipated associated gas production.

Monthly Limits on Flaring: Places time and volume limits on royalty-free flaring. 

Importantly, officials said, this includes a monthly volume limit on royalty-free flaring due to pipeline capacity constraints — the primary cause of flaring from federal and Indian leases.

Flaring is the process of burning excess natural gas at a well. Venting is the direct release of natural gas into the atmosphere. 

While some amount of venting and flaring is expected to occur during oil and gas exploration and production operations, venting and flaring can be minimized when operators take reasonable precautions to avoid waste.

The proposed rule will be published in the Federal Register in the coming days. The draft Environmental Assessment and other supporting documents will be available on regulations.gov. 

Public comments will be accepted via regulations.gov for 60 days after the publication of the rule.

Dan can be reached at dan@thewellnews.com and at https://twitter.com/DanMcCue

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