By September 16, 2016 0 Comments Read More →

Hearing highlights how costly methane regulations yield little benefit

Natural gas reduced carbon emissions and harmful pollutants, sulfur dioxide, nitrogen oxide and fine particulate matter

hearingThe consensus was nearly unanimous at Thursday’s House Science Committeee Environment Subcommittee hearing – appropriately titled “A Solution in Search of a Problem” – that the Environmental Protection Agency’s (EPA) methane regulations would place enormous costs on oil and gas producers while providing little environmental benefits.

As the witnesses noted many times, methane emissions are already plummeting as natural gas production soars and new rules would hit producers at a time when they are already grappling with a difficult price environment.

Just to provide a couple of highlights from the hearing, Dr. Bernard Weinstein, Professor and Associate Director at Maguire Energy Institute and Cox School of Business at Southern Methodist University, noted:

“Even if we did shut in all of our oil and gas wells, it would have little effect on the environment, especially if other countries continue doing what they’re doing. … I think we need a dose of realism.”

Weinstein noted that natural gas production has increased 70 percent since 1990 and during that same time frame, methane emissions have significantly decreased. As he said, “When you consider the economy is 75 percent larger… that’s remarkable.”

Erik Milato, American Petroleum Institute (API) Director of Upstream and Industry Operations, also made this point, and went on to highlight natural gas’ role in bringing down greenhouse gas emissions:

“Thanks to industry efforts over the past several decades, the United States is leading the world in reducing emissions – down to near 20-year lows – all while energy production has been going up significantly. Despite our industry’s success in reducing methane emissions, the EPA and several other agencies continue to seek duplicative regulations that will impose significant costs without corresponding environmental or consumer benefits. We have proven we can protect the environment, grow our economy, and simultaneously save the average American family an average $1,337 in energy costs per year.”

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Milito also explained that “1 billion bcf of natural gas production equates to 32,000 jobs,” highlighting how the shale boom has helped the U.S. emerge from the depths of the Great Recession. Natural gas production has increased nearly 10 trillion cubic feet from 2009 production levels.

An Environmental Defense Fund (EDF) official who also testified at the hearing acknowledged that his organization accepts and acknowledges “the positive role of natural gas on the environment.”

But Elgie Holstein, EDF Senior Director for Strategic Planning, also offered up many of EDF’s long-debunked claims in an attempt to support his organization’s contention that regulations are absolutely necessary to reduce emissions (even though methane emissions have fallen since 1990 without regulations!).

Here are the top five claims made by Holstein at the hearing, followed by the facts.

EDF Claim #1: “The good news is that doing something about methane pollution, including complying with EPA’s methane rules, can be accomplished at low costs using existing technology.”

FACT: EDF’s insistence that federal methane regulations would cost “just one cent per thousand cubic feet of gas produced” is based largely on EDF’s assumption of $4/mcf natural gas prices, with the argument that fugitive methane — the primary component of natural gas — could be captured and sold at that high price.

But natural gas prices haven’t reached the $4 Mcf level since November 2014 and have remained below $3/Mcf over the past 15 months. This is one reason why a recent ICF study found EPA’s regulations would be nearly five times greater than an EDF sponsored ICF analysis indicated.

EDF Claim #2: “Regulating methane emissions from both new and existing sources is an important and cost effective step towards stopping the worst effects of climate change.”

FACT: EDF has used similarly hyperbolic language to characterize methane emissions from oil and natural gas systems before, saying their “environmental impact is staggering.” But the fact is that methane emissions from natural gas and petroleum systems accounted for just 3.5 percent of total U.S. GHG emissions in 2014.

Weinstein pointed out at the hearing that while EDF continues to insist voluntary measures are not effective, a voluntary measure just so happens to be responsible for the most successful reduction of greenhouse gases in the world. Weinstein noted the U.S.’s increased use of natural gas — rather than regulations — is responsible for U.S. power sector carbon emissions dropping toa 27-year low and overall CO2 reductions of about 1 trillion tons per year.

“I would argue increased use of natural gas — not regulations — deserves credit for decrease in carbon emissions,” Weinstein said.

EDF Claim #3: “EPA’s latest inventory estimates that U.S. oil and gas operations released 9.8 million metric tons into the atmosphere — and that was a 34 percent increase over their previous estimates. …We can’t afford to wait for the industry to catch up with the science.”

FACT: EDF frequently points out that oil and gas methane emissions are “higher than previously estimated,” and Holstein’s reference to the EPA’s highly flawed upward revisions in its latest inventory is just the latest example.

But the leakage rate of total production remains the most important figure to consider, andnumerous EDF studies (four of which are featured in the graphic below) find leakage rates far below the 2.7 percent rate of total production EDF calculated is the threshold for natural gas to maintain its climate benefits. This has been the case despite the fact that EDF’s studies have specifically sought out “super-emitters.”

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Methane emissions from oil and natural infrastructure have also remained flat or declined as production has skyrocketed. Even using flawed upwardly revised data, EPA’s latest Greenhouse Gas Inventory still shows methane emission from natural gas systems has declined 0.68 percent since 2005, doing so at the same time production increased 42 percent. Even combining petroleum systems with natural gas systems, EPA’s new data indicates a drop in methane emissions from oil and natural gas systems since 1990 — all at a time in which production has skyrocketed, and all without costly regulations.

EDF Claim #4: “(Natural gas is) cleaner burning relative to coal only if you get the fugitive emissions down at or below one percent.”

FACT: EDF originally stated that natural gas maintains its climate benefits over coal at leakage rates of 3.2 percent before revising its figure to 2.7 percent in 2013.

So Holstein’s attempt to move the goal posts down nearly 300 percent threw Milato for a loop, to say the least:

“It’s news to me that it’s one percent,” Milato said. “All the studies that we’ve seen show you have to be lower than 2.7 percent to 3.2 percent when it comes to coal.”

Milato asked Holstein to elaborate on his statement, but an explanation never really materialized, other than Holstein telling the committee he’d provide more information at a later date. However, EPA data (as well as numerous EDF studies) shows that the current leakage rate is well below the established 2.7 percent threshold, prompting Milato to note, “We are winning. We are doing what we need to do without regulations.”

EDF Claim #5: “We would suggest that that (EPA’s revised methane emissions) are still understated, because scientific evidence suggests that even that dramatic revision does not reflect the amount of methane presented by high, random emissions coming from a small percentage of sites.”

FACT: EDF’s own studies sought out these “super-emitters” and still found leakage rates well below the 2.7 percent threshold. In other words, even if EPA’s revised estimates are understated (and there is evidence that the opposite is true) the leakage rate is still well below what EDF has said natural gas has a climate benefit over coal.

Furthermore, blanket regulations don’t make a whole lot of sense if a handful of “super-emitting” sites are responsible for the bulk of emissions, as Weinstein pointed out.

“If we monitor everything, we are simply wasting resources,” Weinstein said. “I don’t see how blanket regulations make any sense if there are targeted areas that can be addressed.”

Conclusion

Holstein notes that EDF accepts the “positive role of natural gas on the environment,” apparently acknowledging the role natural gas has played in reducing carbon emissions, not to mention harmful pollutants such as sulfur dioxide, nitrogen oxide and fine particulate matter.

Clearly, the risks presented by EPA’s new methane regulation far outweigh the benefits, which is why Weinstein surmised, “I just feel there are better ways to deal with these issues.”

Originally posted Sept 15, 2016 at EnergyInDepth

Ph: 432-978-5096 Website: www.mapleleafmarketinginc.com

Ph: 432-978-5096 Website: www.mapleleafmarketinginc.com

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