Smart Oil and Gas Methane Regulations Could Speed Environmental Innovation

(WASHINGTON, D.C.) A new report from Environmental Defense Fund and Environmental Council of the States (ECOS) Shale Caucus identifies opportunities to update methane regulations to advance leak detection innovation. A thorough assessment of regulatory policies and practices from six states and the U.S. Environmental Protection Agency (EPA) reveals strong agreement among environmentalists, regulators, innovators, and operators that improved alternative compliance pathways are needed. The report recommends three key steps to encourage innovation using regulations for methane leak detection and repair.

“Written with innovators in mind, regulations can do much more than mandate a cleaner environment. They can spur competitive markets,” said Aileen Nowlan, Senior Manager at EDF and lead author of the report. “But to do so, regulators must reward innovation and risk. Methane regulations currently do not.”

The report identifies opportunities to reduce methane leaks through aligning regulations with needs from the private sector to accelerate technologies. Currently, the lack of a pathway for approval of new methods for leak detection and repair is the single biggest barrier to investing in and deploying new solutions. Without a pathway for approval of new methods, innovation can slow or even stop once a regulatory mandate is established, with the result that best practice is frozen.

Key recommendations for state regulators:

• Adopt a shared model for equivalency. Methane rules as written prescribe steps for monitoring, instead of outcomes. Innovators would benefit from a manageable numerical model to calculate impact.
• Transparent and rapid process. Innovators need to demonstrate technologies in real-world conditions to gain the confidence of operators and service providers. Developing these solutions is expensive and complicated and innovators and companies need rapid feedback about what works and what is approvable.
• Approvals with powerful benefits. Approvals that increase access to new markets would further incentivize innovators and adoption by more companies. Currently approvals do not translate across state lines.

“While several new methane detection technologies have been successfully demonstrated in pilot projects, none are being used today as widely as they should be,” said Drew Pomerantz, Research Scientist, Schlumberger. “The main impediment to their broad deployment is the lack of a defined pathway for these new methods to gain regulatory approval. In my opinion, the most urgent priority for government, companies, academics and NGOs is to determine a set of performance standards for new methodologies, as well as a pathway to demonstrate performance.”

Leak detection and repair is a pressing concern for the oil and gas industry, as leaks profoundly undermine their social license to operate. Companies are concerned about lost product, current and future regulations, and the impact on their reputations. Recent federal methane regulatory rollbacks only increase these risks to jurisdictions and industry leaders.

Recently, four major oil and gas companies have spoken out in favor of keeping direct regulation of methane, and even expanding Environmental Protection Agency (EPA) rules. These company statements come as a broader focus is being placed on climate action generally, and follow thirteen companies signing onto the Methane Guiding Principles committing to “advocate for sound policy and regulations of methane emissions,” among other things.

Regulations have the potential to work better for everyone. “Designed well, regulations can reduce emissions faster by providing entrepreneurs confidence there will be new markets,” said Nowlan. “If governments get the rules right, they can spark a new wave of innovation.”

A study in the journal Science finds that the U.S. oil and gas industry emits 13 million metric tons of methane from its operations each year—nearly 60 percent more than currently estimated by EPA. In addition, the leaks are a significant contributor to the warming experienced now, trapping heat 84 times more effectively than carbon in the short term. Unchecked leaks also endanger public health. Over twelve million people live within 1/2 mile from an oil and gas facility. Exposure to leaks and related toxins are associated with increased health risks such as asthma and cancer.

The research questions were determined in collaboration with the ECOS Shale Gas Caucus, and industry representatives, technology innovators, environmentalists and federal regulators.